Business Analysis and Valuation

Name of Unit: Business Analysis and Valuation

A) Group BV Assignment

Outline

The assignment will require you to progressively analyse a company using the strategic, accounting,
financial and prospective analysis tools identified in the course
The BAV project is aimed at developing your understanding of,
and practical skills in financial statement analysis and valuation. It is
also designed to enhance teamwork, and analytical and communication skills.
Upon successful completion of the project you will have acquired a working
knowledge and practical skills in undertaking an equity valuation using
‘leading-edge’ financial statement analysis techniques. From past experience,
the final report often provides excellent evidence of your analytical skills that
can presented to prospective employers when applying for jobs.
The submission will be online and in the form of a written
report.

Weighting

20%

To complete
this project, you are required to:
(1) Get
approval of the company, from your lecturer, on which your group want to
progressively analyze
2) Conduct
analysis using the strategic, accounting, financial andprospective analysis
tools identified in the course.

Prepare a Business Valuation Report for the client/company
detailing the following sections:
The analysis
project consists of seven sections:
1. Strategy
Analysis
2.
Accounting Analysis
3. Financial
Analysis
4.
Prospective Analysis
5.
Conclusion
6. List of
references
7. Exhibits

Format of the
Report

1. You at least should have the following details:
a. Assignment Cover page clearly
stating your members name and student number s
b. A table of contents, executive
summary
c. A brief introduction or overview
of what the report is about.
d. Body of the report with sections
to answer the above sections and with appropriate section headings
e. Conclusion
f.
List of
references.
2. Diagrams and tables clearly
labelled and explained.
3. Ensure all materials are
correctly referenced. Plagiarism will be severely penalised.

MARKING SCHEME FOR REPORT:

Contents of the report

Excellent
8-10

Good
6-7

Average
5

Not adequate
3-4

Poor
0-2

1.
Format of the Report
a)
Assignment Cover page
clearly stating your name and student number
b)
A table of contents,
executive summary
c)
A brief introduction or
overview of what the report is about.
d)
Section headings
e)
Conclusion
f)
List of references

Comments:
/5%

2.
Strategy Analysis

a) Industry analysis: five forces or alternative approach: industry
profitability
b) Competitive strategy: price leader, differentiation, total
customer satisfaction, system lock
in, or other
c) Corporate strategy analysis: how well the business segments
support each other

Comments:
/20%

3.
Accounting Analysis
a) Key success and risk factors: which accounting lines capture
them?
b) Accounting flexibilities of 2a: accounting policies and
estimates used by the firm
c) Do you agree with the policies and estimates in 2b, justify
d) Is accounting strategy hiding or revealing
e) Red Flags
f) Undo what managers did

Comments:
/20%

4) Financial Analysis
a) Ratio
analysis
i) Growth
and profitability: the big picture
(a) Interpretation
of the Du Pont alternative
(b) Decomposition
and analysis of sales growth
ii) Operation

iii) Investment
iv) Finance
v) Dividend
policy
vi) Other
ratios, including Recurring NOPAT and Sustainable Growth Rate
b) Cash
Flow analysis
i) Four
segments of cash flow and their dynamics: the big picture
ii) Key
drivers in each segment: the details

Comments:
/20%

5) Prospective Analysis
a) Dividend
Discount Models
i) Valuation
of equity or asset: justify your goal
b) Baseline
forecast: what set of assumptions is consistent with the current stock price?
i) Defining
terminal value and years until terminal year
ii) Forecasting
performance until terminal year
iii) Defining
the discount rate: quote your resources
c) Scenario
analysis:
i) Value
the firm under three different scenarios:
(1) Best
scenario
(2) Worst
scenario
(3) Most
likely scenario
ii) Interpretation
of the most likely scenario, based on the pro formas and graphs
d) Valuation
using price multiples (comparable companies)

Comments:
/20%

6)
Conclusion:

proposed action and its justification

Comments:
/10%

7) List
of references
8) Exhibits:
BAV printouts and others

Comments:
/ 5 %

Overall Comments
TOTAL /100%

TOTAL /20