FIN/571: Corporate Finance – Entire class
FIN/571: Corporate Finance
Wk 1 Discussion: Market Influence on Business Valuation
Explain to the class what you consider to be a top mechanic of a primary market and a top mechanic of a secondary market. How would you explain the way the performance of your company is influenced by the activity of the markets you described?
FIN/571 Wk 1 Assessment Prep: Identifying Financial Information for a Company
Throughout this course you will work towards creating a financial plan for a company as if you were its business manager. This week you will start your research that will be used in the Summative Assessments in Weeks 2, 4, and 6.
For this course, we will use Apple, Inc.
Research financial information and key performance indicators (KPIs) for the company. You may find this information on Yahoo! Finance.® There are points for accuracy, so you must use Yahoo! Finance.
Your financial plan will need to include KPIs for Apple, Inc. Use the attached Word template provided. No discussions are necessary. Simply state the figures exactly as they appear on Yahoo! Finance. Do not add any extra information. Again, there are points for accuracy, so this is very important.
- The company: Apple, Inc.
- Its ticker symbol
- TTM cash flow from operations (in thousands)
- Price-to-earnings ratio
- Forward stock dividend and yield
- Earnings per share ratio
- Ave revenue estimate for the next year
- Revenue from the previous 3 years (in thousands):
- Cash flows from operating, investing, and financing activities over the past 3 years (in thousands)
- Average trade volume
- Current stock price
- The 52-week high (not the range)
- The 1-year estimated stock price
- Analysts’ recommendation for the stock (buy, sell, or hold)
- Market cap
FIN/571 Wk 1 Wk 2 Discussion: Metrics for Business Valuation
If you were a financial and investment analyst for a publicly traded company, you may be asked to give a presentation on how the company uses performance metrics in corporate valuation. Think about how you would present return on equity (ROE) and earnings per share (EPS) to a group of investors or senior management. Review a publicly traded company’s ROE and EPS. What do these results say about the company?
FIN/571 Wk 2 Summative Assessment: Business Valuation Presentation
Business managers are often responsible for the financial transactions and planning for a company. In Week 1, Apple, Inc. was selected. This company will be referred to as “your company” or “the large company selected in Week 1.”
As the new business manager working for the Chief Financial Officer (CFO) of your company, you want to review historical financial information to be fully informed of your company’s business valuation so you can provide guidance on near future financial decisions. You decide to put together a presentation on your company’s financial performance that assesses the cash flow, valuation, and KPIs for financial stability that you will present at the next management meeting. Your ultimate plan is to write a financial plan that will lead to future company growth.
Use Apple, Inc. and your research from Week 1. Use the PowerPoint template provided above to address the following:
- Identify 2 key performance indicators within the discussions below. To be clear, we will use PE and market cap as those will be specifically addressed within the discussions below for Apple, Inc.
- Relate the stock price to price-to-earnings ratio.
- Explain the market capitalization and what it means to the investor.
- Identify trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified.
- Determine, based on your analysis, whether you think the organization is going to meet its financial goals, describe the outlook for growth and sustainability, and explain why you do or do not recommend this stock for purchase and how your recommendation compares to that of other analysts. This discussion will require numerical facts and figures as justification whether or not you agree with the analysts.
Cite references to support your assessment according to APA guidelines. Your textbook and Yahoo reference are already included in the template. If you use other references, please make sure to format those properly in accordance to APA guidelines. References are required so that any potential plagiarism issues are mitigated.
FIN/571 Wk 3 Discussion: Budget Techniques for the Financial Market
You are a finance manager for a major utility company. Think about some of the capital budgeting techniques you might use for some upcoming projects.
Discuss at least 2 capital budgeting techniques and how your company can benefit from the use of these tools.
FIN/571 Wk 3 Assessment Prep: Financial Report
Continue your work with the company selected in Week 1 (Apple, Inc.).
In preparation for the Week 4 Summative Assessment, research your company’s financial report from the past fiscal year, along with the market conditions from that same year. Links to each are as follows:
Apple 2021 Annual Report and Monetary Policy Report 2021
Use the template provided to you above and compare your company’s most recent annual report with the market conditions (Fed Monetary Policy) from that year. Focus on interest rates, labor force, inflations, supply chain bottlenecks and international developments.
Wk 4 Discussion: Economic and Market Factors in the Financial Market
One responsibility of an organizational investment analyst may be to evaluate performance for a company. Think about some of the influences and measures of company performance that you read about this week.
Share the return on assets (ROA) and price to earnings (PE) ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company? Which economic and market factors may have influenced the financial health?
Wk 4 Summative Assessment: Financial Market Shareholder Analysis
A company’s financial reports are used for a variety of reasons, including determining how the company is doing in the financial market. You decide to evaluate the effects of economic and market conditions on your company’s financial performance. Completing this exercise provides you with financial market research to present to your management team to inspire new KPIs and policies.
Using the PowerPoint template above, address the following:
- Evaluate economic conditions that influence company performance in general. Discuss the following five economic conditions: political, environmental, currency (money), global economics, and government influences. This is a general discussion and is not specific to Apple, but applies to any company. So, define the term and provide examples as to their affect on company performance. You need FIVE paragraphs for this discussion.
- Compare market conditions from the previous year with the company’s performance for that same year. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected. This is simply a “write-up” from your Week 3 prep assignment. Make sure to use complete sentences in paragraph form comparing the Fed Monetary Policy and how it affected Apple in 2021. Make sure you take into account any grading feedback provided to you.
- Analyze year-over-year performance from the past two years. Consider key metrics or ratios such as PE, price to book, return on assets, and return on equity in your conclusions. You must use Macrotrends for these figures as there are points for accuracy. Provide a discussion as to the year over year comparison. For each ratio: (1) define what the ratio measures, (2) state the 2020 & 2021 figures (use 09/30/20 & 09/30/21 dates), and (3) discuss the % change and what it implies for Apple. You need FOUR paragraphs for this discussion, one for each ratio. Links are as follows: Apple PE Ratio, Apple Price to Book Ratio, Apple ROA Ratio, and Apple ROE Ratio.
Wk 5 Discussion: Systematic and Unsystematic Risks in Capital Structures
You are the operations manager for a one of the businesses listed below and you’ve been tasked with identifying the areas where your company is exposed to systematic and unsystematic risks.
Small business choices:
- Arts and craft store
- Toy store
- Family-owned seafood restaurant
- Franchised frozen yogurt store
- Chain grocery store
Name 3 or more systematic or unsystematic risks your company might face. Think of some implications if your company decides not to be proactive and plan for these risks. Be sure to list your small business name and industry within your response.
Wk 5 Assessment Prep: Business Case Research
Your company, Apple, Inc. wants to acquire more funding for a project and will need a business case to do so. This business case will be featured in your financial plan that you will create next week. To get yourself prepared for developing the financial plan, create an outline of your business case in which you do the following:
- Determine why funding is needed for the company. As the business manager, it is up to you to choose the project. HINT: Keep the project refined. If you choose something such as; increased revenues or increased working capital, you will still need to explain how you propose to accomplish this task. So, choose something “you can put your arms around”. For example; a new product, a new app, a new store, a new warehouse, upgrading the customer service experience, etc. Choose a project that is tangible. You will see why this is important below.
- Determine the total amount of funding required. HINT: You need to state a specific amount.
- Determine how the total amount of funding in #2 will be spent. HINT: No discussion is required for this portion. Instead, simply include a table that lists the categories, amounts and a total. The total here must match the total amount of funding in #2 above.
- Determine your funding options. Discuss self-funding, borrowing, and equity. Evaluate the requirements and risks of each funding source. Options must be relevant to Apple, Inc. HINT: For self-funding, think in terms of cash assets, profitability and cash flow. For debt, think in terms of loans and bonds. For equity, think in terms of selling shares of stock.
- Decide which source or sources are the best fit for your company based on the requirements of each. Justify your decision. If you choose a combination of one or more options (ie self-funding, debt and/or equity), you must provide the breakdown of the total amount of funding required between each option. HINT: If your firm is able to 100% self-fund and you are able to justify this with numerical data from the financial statements on Yahoo! Finance, then this is the way to go as this will simplify #6 below.
- Estimate the cost of capital or (WACC) for your firm based upon your prior decisions. You have a couple of options below. Read through these carefully.
- If you are able to justify 100% self-funding, then no calculation is required. You are able to simply do a web search for “Apple WACC” and use the figure from that site (ie Finbox, GuruFocus, ValueInvesting, etc). Your discussion would be as follows: (1) define WACC (2) state AND cite your figure (3) include a sentence that since you are 100% self-funding, this amount is already included within the WACC figure as part of the total equity variable (4) discuss what this WACC figure implies for your firm (ie minimum discount rate)
- If you raise additional capital via debt or equity or some combination including either, then you will need to recalculate your WACC using an online WACC calculator. You will need to source variables for total equity, total debt, cost of equity, cost of debt, and tax rate. Total equity and total debt variables may be found on Yahoo!Finance. Make sure your variable is updated to include the funds you are raising. Cost of equity, cost of debt and tax rate may be found on sites such as FinBox, GuruFocus or ValueInvesting. Plug in the variables into your calculator for an updated WACC figure. For the discussion: (1) define WACC (2) state AND cite BOTH your overall figure AND your variables (3) discuss what this figure implies for your firm (ie minimum discount rate).
Wk 6 Summative Assessment: Capital Structures Financial Plan
You as the business manager need to be able to determine larger sources of funding by creating a financial plan to help reduce duplication of resources, identify requirements and risks, and determine various financing options. Completing this planning is an important step for all businesses to take if they want to succeed. Larger companies may delegate this process to financial managers, financial analysts, or operations managers.
You decide to create a financial plan for your company to help distinguish between sources, requirements, and risks associated with various types of long- and short-term financing capital structure that your company can potentially use in the future.
Draft a 3- to 4-page financial plan for your company. This plan should include sections for a business case and profit-and-loss statements. Include the following items:
- A business case that includes a description, type of business, and sources of funding. Note: Use your Wk 5 Assessment Prep: Business Case Research assignment and feedback. This is the write-up from the Wk 5 assignment.
- A profit-and-loss statement for a 3-year period along with a discussion as to your assumptions and growth expectations. Project revenue. Use the template provided. ONLY enter the % increases within the YELLOW boxes as the rest of the figures will automatically calculate for you.
- A conclusion that includes an explanation of what working through a financial plan can do for a larger company.
Cite references to support your assessment according to APA guidelines. References are required so that any potential plagiarism issues are mitigated. The reference for Yahoo! Finance is included on the Excel spreadsheet.
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