Reference no: EM133150836

B01BAVA320 Business Analysis and Valuation - Kent Institute Australia

Assessment Project -Analyst Report (Same group of the Assessment)

Learning Outcome 1: Demonstrate strong foundation knowledge on the tools and techniques of financial analysis and business valuation.

Learning Outcome 2: Evaluate the linkage between industry analysis, strategic business analysis, accounting analysis, financial analysis and prospective
analysis.

Learning Outcome 3: Compare and contrast inter-relationships among various business disciplines that include financial accounting, financial management and strategic management.

Learning Outcome 4: Apply and explain the relationships between strategic business
analysis, accounting analysis and financial analysis. Identify and utilise value-relevant information contained within financial statements.

Assessment Task: The group (4 students) assignment is aimed at developing your practical skills in financial statement analysis and valuation. It is also designed to enhance teamwork and develop your analytical and communication skills. Details of the assignment will be discussed in week 4

ASSESSMENT DESCRIPTION:

You Can locate Business Analysis and Valuation Model (BAV Model) /spread sheet in the Assessment Brief folder on Moodle. You need to use it for the assignment. When working on your assignment, please follow the following steps:

Step 1: Download the financial reports of your company

Download the financial statements for the past five years of your chosen company.
(These can be accessed through DatAnalysis premium /Morningstar DatAnalysis . DatAnalysis Premium is a premier research tool, providing comprehensive data on all companies listed on ASX, as well as those delisted since 1989. The database is updated daily from announcements lodged at the ASX and includes corporate details, full dividend history, operational history, company announcements; financial and annual reports in PDF from 1988. It includes reports, announcements, company histories, shareholdings, company profiles, takeovers and financial data.)

Step 2 : Reformatting/ Standardised Financial Statements, Common sized financials ( Income statements and Balance sheets) & DuPont Analysis
a) Reformat/ Standardised / recasting Financial Statements of the company's financial statements for the past five years.
b) Common sized financials ( Income statements and Balance sheets) i Income Statement- Common Sized (% of Total Sales)
ii Balance Sheet -Common Sized (% of Total Assets)
c) DuPont Analysis for the past five years . You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model).

Step 3 : Development of forcasting assumptions and Financial-statement forecasts . Your analysis should provide solid support for the assumptions and forecasts that drive your valuation.
a) Development of forcasting assumptions
b) Financial-statement forecasts:
On the basis of the above assumptions, forecast the firm's future 5 years income statements and balance sheets.

Step 4 : Valuation:
Use either the residual income (i.e. abnormal earnings) model or a discounted cash-flow model to produce an estimate of firm value. Focus on the value per share of equity in the company and compare your valuation to the market valuation, providing possible explanations for any differences.

Requirements:

Requirement 1: Download and import 5 years financial reports for the company in BAV Model

a) Download the three major financial statements for the past five years. These can be access through DatAnalysis premium /Morningstar DatAnalysis . DatAnalysis Premium is a premier research tool, providing comprehensive data on all companies listed on ASX, as well as those delisted since 1989. The database is updated daily from announcements lodged at the ASX and includes corporate details, full dividend history, operational history, company announcements; financial and annual reports in PDF from 1988. It includes reports, announcements, company histories, shareholdings, company profiles, takeovers and financial data.

b) Import financial statement data into the respective tabs of the Business Analysis and Valuation Model (BAV Model) .

Requirement 2: Reformatting/ Standardised Financial Statements, Common sized financials ( Income statements and Balance sheets) & DuPont Analysis

a) Reformat/ Standardised / recasting Financial Statements of the company's financial statements for the past five years in the BAV Model.
b) You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model) . Conduct classification exercise across three sheets, using Classification Lookup tab for reference. Ensure that all INDIVIDUAL line items (excluding totals and sub-totals) are appropriately classified to ensure accuracy of the standardised financial statements and forecasts.
c) Prepare Common sized financials (Income statements and Balance sheets) for the past five years . You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model).
a. Income Statement- Common Sized (% of Total Sales)
b. Balance Sheet -Common Sized (% of Total Assets)
d) DuPont Analysis for the past five years. You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model).

This would be one of the raw materials for the development of forecasting assumptions.

Requirement 3: Development of forcasting assumptions and Financial-statement forecasts .
Your analysis should provide solid support for the assumptions and forecasts that drive your valuation. You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model)

a) Development of forcasting assumptions :

This is the critical part of the project so provide detailed justification. The forcasting assumption may based on past 5 years treds that can be captured from common sized financials { refer to Req 2 (b) above } , comparisons with other firms in the industry, an industry report ( refer to your assessment 2 ).
The following are the main areas of forecasting assumptions :
1) Revenue growth rate
2) Margin Growth rate
3) Net Operating Profit margin
4) Start of year Operating Working Capital / Sales
5) Start of year Net Operating Long-Term Assets / Sales
6) After-tax Cost of Debt
7) Start of year Debt to Capital ratio
8) Shares Outstanding
9) Risk-free rate of return
10) Equity Beta
11) Market risk premium
12) Cost of Equity
13) Cost of Debt
14) Tax Rate
15) Book Value of Net Debt

b) Financial-statement forecasts:

On the basis of the above assumptions, forecast the firm's future 5 years income statements and balance sheets. You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model).

Requirement 4: Valuation:
a) Use either the residual income (i.e. abnormal earnings) model or a discounted cash-flow model to produce an estimate of firm value. You need to use the respective tabs of the Business Analysis and Valuation Model (BAV Model).

b) Focus on the value per share of equity in the company and compare your valuation to the market valuation, providing possible explanations for any differences.

2 (two) deliverables :

1. Analyst Report 2500 words (word count including executive summary, table of content, references, appendix & tables)
2. Completion of all tabs/sheets of the Business Analysis and Valuation Model (BAV Model)

Format of the Analyst Report
2500 words (word count including executive summary, table of content, references, appendix & tables) You at least should have the following details:
a. Assignment Cover page clearly stating group members' name and student ID Numbers
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 the answers/findings/briefing/summary/highlights of the above questions/requirements (Req 1 -4)
e. Conclusion
f. Diagrams and tables clearly labelled and explained.

Attachment:- Business Analysis and Valuation.rar