- So far in this Advanced Financial Management course, we’ve offered you an assortment of tools designed to enhance your ability to value a business. You’ve learned how to assess a business through the lens of several competitive advantage frameworks. You’ve learned numerous ways to quantify the value of a stock. And, you’ve become familiar with the thinking behind valuing a company’s fixed income. Now, as you might have suspected, it’s time to implement some of this new-found knowledge.
- Here’s the assignment. Pick a publicly traded company of your choosing. It should be one you’re familiar with, one that sells a product that you’ve used or seen, and one you would like to understand better. Then, we’re going to ask you to evaluate the company closely. You should go about doing this using any materials you can get your hands on, including:
- Financial Statements
- Investor Presentations
- Industry Reports
- Newspaper/Magazine Articles
- Consumer Reviews
- Once you’ve gotten a firm hold on the company, it’s financial standing and it’s competitive positioning, we want you to use the tools we introduced in the first four lectures to evaluate the company from a variety of different angles. The successful assignment will include all of the following:
Write a 3-4 page paper in which you:
- Analyze the company’s competition advantages, including the Sellers framework.
- Analyze the company’s stock value. This will include analysis of a company’s present P/E, PEG, P/B, and P/S multiples versus competitors in the industry and versus historic multiples going over the past 1, 3, and 5 year periods. You are expected to offer an opinion as to the current priciness of the company’s stock. You are also welcome to perform a DCF analysis utilizing appropriate growth rates and discount rate, but this is not required.
- Assess the company’s fixed-income make-up. Please identify the bonds that the company has issued, the amounts of those bonds, their structure, their various due dates, and their various interest rates. You may also want to identify their market values versus par values, but it is not required.