Analysis of a freely chosen company from STOXX All Europe 100 (http://www.stoxx.com/indices/index_information.html?symbol=SXEBCP)

 

Financial Decision-Making

 

Assessment 1: Individual Assignment 75%

a)    
Intended learning outcomes:

·        
Acquire a thorough understanding of the role, key methods and techniques of valuation, and be aware of the subjectivity and limitations that underpin objective inputs to a financial decision

·        
Critically analyse investment information contained in financial statements, take positions, form opinions and make financial decisions independently

b)    
Aims of the paper: you are asked to make a 2,500 word long analysis of a freely chosen company from STOXX All Europe 100
[1]
. It is required from you to include in your paper financial valuation analysis based on

a.      
the Dividend Discount Model (DDM), or

b.     
the Free Cash flow to Equity Model (FCFE), or

c.      
the Free Cash flow to Firm (FCFF) Model,

and

d.     
Relative valuation, specifically:

                                                              i.     
Price / Earnings Per Share (P/E) valuation,

                                                            ii.     
Enterprise Value / Earnings Before Interests, Taxes, Depreciation and Amortization (EV/EBITDA) valuation,

                                                          iii.     
Price / Book Values (P/BV) valuation,

                                                          iv.     
Enterprise Value / Sales (EV/S) valuation, and

                                                             v.     
Other industry-specific valuation metrics.

 

c)     
Purposes of the paper: The purpose is to have a comprehensive picture about the company you have chosen including

a.      
the model chosen,

b.     
the inputs chosen,

c.      
the valuation characteristics,

d.     
the mechanics of the valuation

e.      
the outcome of valuation

f.       
sensitivity of the valuation

g.      
triangulation with ratios

h.     
limitations of the financial information

 

 

d)    
Task description: students should critically analyze financial terminology and techniques, a set of company accounts, valuation inputs and management accounting information. Students should audit published financial information, determine the limitations of such information and generate relevant recommendations as well. State valuation problems that the chosen company is facing and provide solutions through the use of valuation concepts within a business context. Finally, critically appraise the limitations of valuation figures, sensitivities for business decision-making by using relative valuation techniques outlined above. 

 

The description of the company and the real financial management situation shall be no longer than 25 percent of the paper, 625 words. Students here have to introduce the chosen STOXX All Europe 100 company from a financial management perspective outlining the industry, the company and the main Financial Reports findings. Tools may include the Five Forces analysis for the industry, SWOT analysis for the company and vertical or horizontal analysis for the Financial Reports. The bottom line is the financial analysis preparing the financial measures and the Discounted Cash Flow analysis (DCF).



[1]
http://www.stoxx.com/indices/index_information.html?symbol=SXEBCP

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