AFE-7 - CFM Corporate Financial Management Assignment

Assignment Task

Question 1 - Bloomberg Market Concepts- BMC

• Bloomberg offer a financial training course called Bloomberg Market Concepts (BMC) which explores the foundations of our global financial system and economy while teaching you the most frequently used commands on the platform.
• You are required to complete BMC by the coursework deadline this part accounts for 10% of the total coursework mark.
• 5% for successful completion of each of 4 modules: economic indicators; currency; fixed income and equities.

Question 2 - Equity Analysis and Valuation 

How Disney Makes Money

Disney has four operating segments: Media Networks, Parks, Experiences & Consumer Products, Studio Entertainment, and Direct-to-Consumer & International. The table shows the proportion of Disney’s total revenues and operating income that come from each segment.

Disney's Numbers

Use the following information on Disney to answer the case questions.

• Disney’s current stock price is $140.00 per share. The average growth rate of the company’s dividend has been 17.7% from 2004 through 2018.
• Disney’s return on equity is 28.0% and the company retains approximately 80.0% of its profits while paying out the remaining 20.0% in dividends.
• The company’s stock currently trades at 21.21 times its cur- rent year earnings estimate of $6.60 per share.
• Analysts expect the company to earn $6.19 per share in 2020 and $6.93 in 2021.
• Disney’s peers in media networks trade at 25.5 times their current year earnings estimate while peers in parks, experiences and consumer products at 21.9; studio entertainment is at 19.1and DTCI at 14.1.
• Assume the expected return for Disney’s stock is 6.9%.

1. What is Disney stock’s intrinsic value using each of the four models?

• Constant Growth Model
• Multi-Stage Growth Model
• Discounted Dividend Model
• Market Multiples Approach                                                                                       

2. Reconcile Disney stock’s intrinsic value, considering the strengths and weaknesses of each valuation approach.                                                                               

3. Discuss the main difficulties that are faced in calculating an appropriate cost of capital using models like the dividend growth model or capital asset pricing model, and the particular problems of estimating a cost of capita

Question 3 - Industry and Company Analysis 

Industry analysis is the analysis of a specific branch of manufacturing, services or trade. Understanding the industry in which a company operates provides an essential framework for the analysis of the individual company- that is, company analysis.

• As an analyst, how do you go about choosing a peer group of companies for an individual company? 
• As an experienced analyst, write a list of suggested steps and questions that could be given as practical aids to a new joined and inexperienced financial analyst.

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