FIN80002: Business and Entity Valuations - Management Assignment Help

Assignment Task:

Task:

Requirements for Research Assignment 2
Note: This assessment task is worth 25% of total grade and it is due on 21 May 2021 Friday 11:59 pm AEST.
You will conduct an in?depth research and prepare a report on the background of your chosen firm, evaluate the qualitative and quantitative aspects (which are the key inputs of valuation), state your assumptions and estimate the value of the firm and its equity using any one valuation model discussed in this unit.
This assessment component intends to develop your skill in researching a firm from a valuation perspective and building assumptions that can be clearly justified based on the data.

The objective of this assessment is to highlight the importance of qualitative data in supporting quantitative data and to assess your ability to diligently analyse the crucial inputs in valuation keeping in mind the varying degrees of sensitivity of the inputs to the final valueof the firm.

You are required to submit a word document and an excel spreadsheet (details given below) in fulfilment of Research Assignment 2.

Steps for valuation:
Step 1: Conduct a business strategy analysis of the chosen company using the five?forces model discussed in Chapter 2 of the textbook. Based on this, make assumptions about the firm’s growth phase: is your firm in a stable growth phase or two?stage growth phase? Justify the basis of your assumption.

Step 2: Recast financial statements (balance sheet, income statement, and cash flow statement) based on the format given in textbook Chapter 4. Refer to Chapter 9 of Damodaran’s book for lease and R&D adjustments.
Step 3: Conduct Ratio and DuPont analysis (focus only on important ratios in all categories).
Step 4: Work out all the variables required for valuation of the firm and equity:

•  Beta of the firm
•  Length of high growth period with justification, if relevant, from step 1
•  Current growth rate using any one: net income, EPS, dividend, or EBIT
•  Assume an appropriate stable growth rate (refer to Chapter 12 of Damodaran’s book for a better understanding of stable growth rate)
•  Adjusted earnings (for lease and R&D adjustments)
•  Reinvestment rate
•  Terminal value

Step 5: Use any one valuation model to estimate the value of the firm and value of equity (refer to textbook Chapter 7 for valuation models and Chapter 12 of Damodaran’s textbook for terminal value calculation). Provide justification for the choice of the model in your word document.

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