...Project part 1 1. Pick a mutual fund. The mutual fund we pick is Fidelity Focused Stock (Ticker: FTQGX) 2. Calculate the return. Monthly return for R1000V, R1000G, R2000V, R2000G and our mutual fund FTQGX is in the spread sheet named project part1_mutual fund. 3. Style analysis Here is the statistic style analysis we do in the spread sheet – project part1_mutual fund. ( the steps is just replace data from the original excel, then use solver) 1 R1000V R1000G 0.9 0.8 0.7 0.6 0.5 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.4 0.3 0.2 0.1 R2000V 0 R2000G Comment: though it looks a little dispersed, we think the style analysis is consistent and stable. 0 The below is morning star’s holding style analysis. Comparison: Since the holding style analysis says the fund is Large Growth, it is consistent with our statistical analysis where the dots are in the north east corner. 4. Pick a Global Equity Fund. Pick Vanguard Global Equity Fund. (Ticker: VHGEX). 5. Pick the indexes. Since it is a Global Equity Fund, we think the main differentiator for the systematic risk is country and region. So we pick these indexes: S&P 500 (represent the USA, ticker: GSPC), MSCI EAFE (represent the Europe, Australasia and the Far East, ticker: EFA), MSCI Emerging Markets (represent other regions of the world, ticker: EEM). 6. Verify the indexes Here is the VHGEX top 25 holdings: Prudential PLC, Nestle SA, Roche Holding AG...
Words: 6144 - Pages: 25
...Valuation is the estimation of an asset’s value, whether real or financial, based on variables perceived to be related to future investment returns, on comparison with similar assets, or, when relevant, on estimates of immediate liquidation proceeds (Pinto, Henry, Robinson, Stowe; 2010). Correct valuation of real assets can present challenges to financial analysts. Different models can be used to arrive at the closest estimate of value and yet certain issues will always arise. This case attempts to tackle two approaches in real asset valuation: Discounted Cash Flow (DCF) analysis and the issues surrounding such, as well as the Black-Scholes Model for Real Options. Questions to be addressed in the study are: 1. Evaluate Amoco’s and Apache’s corporate objectives and strategies. Is it reasonable to expect that the MW properties are more valuable to Apache than to Amoco? What sources of value most plausibly account for the difference between buyer and seller? 2. Structure and execute a DCF valuation of all the MW reserves. How much are the reserves worth? Is your estimate more likely to be biased high or low? What are the sources of bias? 3. How would you structure an analysis of MW as a portfolio of assets in place and options? Specifically, which parts of the business should be regarded as assets in place and which as options? What kinds of options are present? Should this approach yield a higher or lower value that the DCF approach? 4. Execute the analysis you structured in...
Words: 996 - Pages: 4
...2 Graduate Thesis By Teia R. Merring Copenhagen Business School Strategic and financial analysis and valuation of B&O 0 1 Executive Summary................................................................................2 Introduction............................................................................................6 1.1Motivation.................................................................................................................. 6 1.2Problem Specification................................................................................................ 8 1.3Problem Identification................................................................................................ 8 1.4Problem Handling .................................................................................................... 10 1.5Structure and Methodology...................................................................................... 12 1.5.1Introduction and Presentation........................................................................... 12 1.5.2Strategic Analysis............................................................................................. 12 1.5.3Financial Statement Analysis ........................................................................... 13 1.5.4Prognoses and Budgets..................................................................................... 14 1.5.5Valuation.......................................
Words: 60014 - Pages: 241
...Instructions and Requirements You will select a firm/stock and perform a Valuation and Investment Analysis. You must select one of the companies that you contributed to your team portfolio (ORACLE CORPORATION). You will make a recommendation based on your complete analysis. Your analysis should include (but is not limited to): 1. Your recommendation and 1 year target price. 2. An explanation of the key inputs and assumptions that support your financial analysis (such as industry and market share trends, end market growth rates, expected growth rates, profitability levels and trends, business drivers, risks, competition, etc.) 3. A valuation analysis of your selected firm. Use the Operating Free Cash Flow method and Relative Value method to arrive at the fair value of the company. This should include the use of appropriate historical ratios and forward ratios. Develop financial statement forecasts with key line items to support your analysis. 4. An explanation of your conclusion and how it compares to investor expectations for the company. 5. A recommended option hedging strategy based on your 1 year target price. Assume you own 1000 shares of the stock. Select either a covered call strategy or a protective put strategy. Calculate the outcome assuming the stock attains your 1 year price target. 6. A recommended...
Words: 284 - Pages: 2
...ultimately reduced their business risk. In analyzing the financial risk, the continuous acquisitions have definitely increased the operational risk for the company. Since the case didn’t provide us with the financial statements for Monmouth, we can assume that in order to complete the acquisition they have to issue stocks as they exhausted (or will pretty soon exhaust) their debt capacity. 2. Based on the DCF valuation and using a WACC of 8.25% (the beta assumed to be 1, the average beta of comparable firms and the coupon rate to be 7.96%, the rate for BB rated companies) and a growth rate of 5.5%. The fair price is $40.4 per share for Robertson, lower than the $50 offered by Simmons to sell their stocks but higher than the current market price of $30. As for the peer multiples, and due to the lack of information for the comparable companies we only managed to calculate the EBIAT multiple, the earnings multiple and the book value multiple using the three comparable companies, Actuant Corp, Snap On Inc., and Stanley Works. The result of the multiple valuation showed a fair price of $40.1 per share based on the EBIAT multiple and a value of $29.61 per share based on the earnings multiple. Both prices are below the fair price calculated by the DCF. Only the book value multiple exceeded the DCF fair value with a value of $65.25. The first two multiples failed to capture the future potential and growth of the corporation, where the DCF managed to include it as a factor in the...
Words: 681 - Pages: 3
...a multiples analysis, calculating and defending an estimate of Crocs value. Soln: Comparable companies analysis – Done to determine appropriate valuation multiple for Crocs, Inc. • • Selected peer group based on industry, business and financial characteristics Included explosive growth stocks such as Lulelemon & Under Armour having similar prospects for growth and ROIC as Crocs, Inc. and some mature, stabilized businesses with stable industry growth rates – Nike, Deckers & Timberland. This mix will help us provide valuation from an aggressive sales growth and maturing sales context. Some characteristics used in selection include – o Primary or at least significant portion of business revenue comes from footwear & apparel – analogous to Crocs primary business o Has product appeal to large group of customers o Has distinct product attributes (innovative/creative) and differentiation from competition o Has wide range of distribution channels o CAGR Sales growth, COGS to Sales & Significantly less debt exposure on their balance sheets o Have characteristics of high octane growth and show signs of maturity and stabilizing long-term growth similar to well established footwear brands. • Valuation Multiples The objective was to compare operating metrics and valuation multiples in a peer group to that of Crocs, Inc. for equity valuation. The market multiple model is based on the idea that on average, a company, over time would have roughly the same value as its peers. Assumption:...
Words: 2072 - Pages: 9
...sensitivity? -What is the buyers’ relative bargaining power? Bargaining power of suppliers -How many numbers of suppliers? -How much critical the product is to buyers? Competitive Strategy Analysis Which competitive strategy the company has taken? Cost leadership or Differentiation Corporate Strategy Analysis -Are there significant imperfections in the product, labor or financial markets in the industry in which the company is operating? - Does the company have special resources such as brand names, proprietary know how, access to scarce distribution channels, and special organization process that have the potential to create economies of scope? -Is there a consistency between the company’s specialized resources and the portfolio of businesses in which the company operate? -Does the company allocate decision rights between the headquarters office and the business units optimally to realize all the potential economic of scope? -Does the company have internal measurement,...
Words: 317 - Pages: 2
...According to 820-10-35-54-c, it was reasonable to determine that market is not active. Because the adjustments were based on management’s assumption, FFC didn’t used level 1 inputs in the income approach valuation technique (present value technique). In addition, significant adjustment inputs includes credit adjustment (level 3 inputs) and liquidity risk adjustment (level 3 inputs), and implied rate of return (level 2 inputs) under ASC 820-10-35-48/52. According to ASC 820-10-35-37A, when the inputs are categorized within different levels of the hierarchy, the entire instrument should be in the same level of hierarchy as the lowest level inputs that is significant to the entire measurement. So, CDO should be categorized within level 3 of the fair value hierarchy. Instrument 2 There was no significant decrease in the volume and activity for the MBS, because no significant factors occurred. Therefore, the market should be still active, even the market became increasingly volatile with some declined activity in the Q4 2012. In my opinion, FFC should still use market approach valuation because (1) quoted prices were highest priority inputs in accordance with ASC 820-10-35-37 (2) the theoretical income-approach pricing model needed significant assumption. In the market approach valuation, quoted prices for the similar observed transactions was level 2 inputs. Then, FFC should classify the MBS into level 2 of the fair value hierarchy. Instrument 3 According to...
Words: 775 - Pages: 4
...• IMPAIRMENT OF ASSETS: A GUIDE TO APPLYING IAS 36 IN PRACTICE. • PUBLISHED IN MARCH 2014. Explanation of the basis of key assumptions and the valuation approach used to determine the recoverable amount (IAS 36.132(encouraged), 134(d)(i)-(v), (e)(i)-(v), 135(d)) • Key assumptions usually left out. • If discussed they were not sufficient. • Key assumptions include gross margin, government bond rates, exchange rate for the period, raw material price, inflation, market share, etc. • Comparative information is required Where goodwill or indefinite life intangibles have been allocated to a CGU (or group of CGUs), but no impairment has been recognized, reasonably possible changes in assumptions if such changes would cause the unit’s carrying amount to exceed its recoverable amount (IAS 36.134(f), IAS 36.135(e)) • Sensitivity Analysis is not provided. • If provided, it is not consistent. • If book value increases, investors would expect a clear sensitivity analysis. • sensitivity analysis should incorporate all key assumptions (beyond discount rate and growth rate) . Description of the entity’s CGU when it recognises or reverses an impairment loss for the CGU during the period (IAS 36.130(d)(i)) • Disclosures did not provide description. • If they did, they lacked substance. • Users did not have an idea of the impact of the impairment on the financial activities. Explanation of the events and circumstances that contributed to the impairment loss or reversal (IAS 36.130(a))...
Words: 403 - Pages: 2
...After reading the case, we need to figure out three questions, which are a. FFC’s determination of whether the respective markets for the instruments were active or inactive and whether there was a significant decease in the volume and level of activity for the instruments. b. The valuation technique used by FFC c. The classification in the fair value hierarchy for each input into the fair value measurement and how these classifications affects classification in the fair value hierarchy of the entire instrument. We will answer these questions by each instrument separately: First, Collateralized Debt Obligation (CDO) Before September30th, 2010, FFC was in an active market, and it determined the fair value of the CDO by using a market-based valuation technique that relies on inputs such as quotes prices for similar CDO securities and requires only insignificant adjustments. After that, there was a significant decrease in the volume and level of activities and the CDO’s market was not active. Besides, significant adjustments are required to determine fair value as of the measurement date given the lack of recent and relevant transactions. The valuation techniques FFC used for CDO is income approach, because this way could maximize the use of relevant observable input and minimize the use of unobservable inputs. There are two factors FFC mainly considered in the fair value measurement. Frist, FFC considered the implied rate of return on September 30, 2010, which...
Words: 470 - Pages: 2
...rate of return for Bill: n = 4 r = ? PV = -$195,000 PMT = 0 FV = $168,000 r = ? PV = r = -3.66% A11. (Calculating the PV and FV of an annuity) Assume an ordinary annuity of $500 at the end of each of the next three years. a. What is the present value discounted at 10%? b. What is the future value at the end of year 3 if cash flows can be invested at 10%? a. to get present value: n = 3 r = ? PV = ? r = 10% PMT = $500.00 FV = 0 PV = PV = $1,243.43 b. to get future value: n = 3 r = ? PV = 0 r = 10% PMT = $500.00 FV = ? FV= FV = $1,655 Chapter 5 A1. (Bond valuation) A $1,000 face value bond has a remaining maturity of 10 years and a required return of 9%. The bond’s coupon rate is 7.4%. What is the fair value of this bond? Calculating PV factor i= required return = 9% = 0.09 n= 10 years Coupon Rate to get value Annuity Cash Flow of $1000 to get present value Cash flow= $1000 * 7.4/100 = $74 Cash flow=...
Words: 524 - Pages: 3
...INTRODUCTION To value the business we need to forecast some or all of the following depending upon which model of valuation we intend to use: dividends, future free cash flows, earnings per share, EVA which itself requires NOPAT and the Balance Sheet. Note that even if we are interested in cash flows we will usually forecast these using the indirect method rather than the direct method because the basic building blocks of profitability, growth, investment and financing are more readily framed in terms of accrual based accounting and moreover corporate tax is profit based – ultimately we are interested in the prospects for profitability. We should use at least two methods of valuation to value a company and in any one method look to undertake some sensitivity analysis or scenario analysis. The forecasting should be comprehensive and be conditional upon the corporate and business strategy, the accounting analysis and the financial analysis. Importantly, the forecasts should impound the evidence on key financial variables such as sales growth, EPS over time and ROE over time.EVIDENCE ON SALES GROWTH AND EARNINGS We begin with some evidence which is useful in the context of a forecast. But do remember this is what occurs on average. If the forecast is largely at variance from the evidence then this will need explaining within the context of the business strategy or the accounting. In addition if strategy or accounting changes we need to assess the consequences for the forecast...
Words: 302 - Pages: 2
...on the corresponding valuation date of every Individual; Hindu Undivided Family and Company at the rate of 1% of the amount by which the net wealth exceeds Rs.15 Lakhs. Education Cess of 3% is not leviable on the amount of Wealth Tax. Applicability of wealth tax: 1. Individual: The following persons treated as ‘individual’ u/s 3 of the wealth tax. a) Legal hires of an Individual. b) Holder of an impartible estate. c) Hindu deities (it means formal a god/goddess ) d) Trustees of a trust who are liable u/s 21A. e) Trade unions 2. HUF 3. Company 4. AOP chargeable u/s 21AA : Situation Shares of members of an AOP are determinate or known. Shares of members of an AOP are indeterminate or unknown. Wealth Tax assessment Interest of members in the assets of the AOP shall be valued as per Rule 16 and 17 of Schedule III. Wealth tax is levied on the AOP. It is liable to tax at the rate leviable upon and recoverable from an individual who is any Indian citizen and resident. Valuation Date: Sec.2 (q): It refers to the 31st March immediately preceeding the assessment year. This provision does not apply to – a. Company registered U/s 25 of the companies Act, 1956 b. Cooperative society and c. Any social club d. Any political party e. Any mutual fund U/s 10(23D) CHARGEABILITY Individual HUF / Companies Nationality Residential Status Location of assets as on the valuation date Residential Status Location of assets as on the valuation date Direct Tax...
Words: 12386 - Pages: 50
...f92007 2008 2009 2010 2011 2012 2013 Pilot Dec Jun Dec Jun Dec Jun Dec June Dec Jun Dec Jun Funding of working capital 3 3 4 2 2 3 Overtrading 2 Cash management 3 1 2 Receivables management 3 4 3 2 1 3 2 2 3 Inventory management (EOQ) 4 3 3 4 2 NPV with inflation and/or tax 4 2 4 3 2 3 1 1 1 1 1 Return on capital employed 4 2 1 Payback period 2 Lease or buy 1 Capital rationing 1 1 Replacement 1 3 1 Internal rate of return 4 2 4 2 1 Risk and uncertainty 2 1 1 1 Sources of finance 2 4 4 2 3 3 3 4 Rights issue 3 2 1 4 3 4 Dividend policy 3 4 3 Theories of gearing 1 1 2 Weighted average cost of capital 1 1 3 1 2 2 4 2 3 4 3 2 Capital asset pricing model 1 3 2 4 1 4 2 Share / business valuation 1 2 1 1 2 4 3 4 4 4 Market efficiency 1 2 2 Forecasting exchange rates 2 4 3 Foreign exchange risk management 2 4 4 3 3 4 3 3 Interest rate risk 2 3 Financial ratios 1 3 2 4 2 4 Please do read the following notes carefully: 1 The purpose of this table is to help you find which questions to practice for specific topics. Do not use this table to try and predict what will be in the next exam - the examiner does deliberately repeat topics! The numbers in the columns are the question number in the exam. Many questions cover more than one area of the syllabus - that is why the same question number sometimes appears more than once, 2 For latest course notes, free audio & video lectures, support and forums please visit...
Words: 314 - Pages: 2
...Valuation of Intellectual Property: Approaches We have moved into an information age characterized by increasing competition and shorter product life cycles; companies are more dependent on their intellectual properties (IP), as it has being recognized as a Valuable Business Asset. The Value of IP is much different & Valuation is much difficult than the value of any other assets. IP is creation of Human mind but to know the value or to trade that property we have to “value” them. The three main approaches are Market Approach, Income Approach & Cost Approach. Introduction Business enterprise is comprised of Working Capital, Fixed Assets, Intangible Assets and Intellectual Property. The increasing challenges of corporate world everyone wants to earn competitive advantages over others resulting into more dependence on Intellectual Property . Intangible assets Working Business Fixed Capital Enterprise Assets Intellectual Property According to economic theory, the value of an asset is best determined by the market, in the form of a transaction between two unrelated entities dealing at arm’s length. Unfortunately, intangible assets and IP that will eventually support products seldom benefit from open market conditions, either due to novelty or secrecy factors. In consideration of the growing investments required to develop and market products, there is a growing need for assessing the economic value of...
Words: 1278 - Pages: 6
