Valuation Case Studies Samples For Students

Economic evaluation involves the business aspect monitoring and analysis in a company. This analysis is intended to carry out comprehensive auditing of the profit and/or loss making aspects of the company. The end result is expected to put the management of the company in the know that theirs is a profit or loss making venture. During such evaluation, several aspects are considered especially the financial aspects. The analysis is intended to identify the various needs of the company and try to propose practical solutions to the identified needs of the company. Such solutions may include a change in the structure of the ...

How should Jonathan describe the rationale of the dividend discount model (DDM) and demonstrate its use in calculating the justifiable price of PCU share?
Firstly, Jonathan should explain to Dwayne that there are different methods how a financial or a security analyst can analyze the fundamental and technical aspects of a security, which in this case is the PCU share, including its price, the forecasted growth rates, and a lot of other aspects. There is more than one way of predicting the future stock price of a company . A security analysis can focus on the fundamental aspects of the company such as the ...

About the case:

Rodney Chu, the managing director of Sierra Capital Partners is interested in purchasing 60% equity interest in Arcadian Microarray Technologies, a biotechnology firm founded in the year 2003. At present, Sierra Capital Partners have offered $40 million to Arcadian for selling their equity interest. This amount will be used for expansion of the firm. While Arcadian management have forecasted an optimistic projection for their firm’s performance over the period of 11 years, however, Sierra’s projections reveal a conservative outlook. Therefore, Mr. Chu is interested in ascertaining the terminal value and discounting the cash flows and the terminal ...

SpiffyTerm

- assumptions suggested
These assumptions suggest that the valuation is through the venture capital method of valuation. This is because the founders intend to find and use only one venture capitalist to finance their venture. The valuation that they are taking also involves raising an initial amount of $4 million and making share allocations for that amount. They later intend to raise an additional amount at a later date (after two years).
Further support that the valuation is on the venture capital method of valuation is that there is a pre-money valuation of the company which the owners have ...

CAPLAND AND REAL ESTATE ADVISORS PVT. LTD.

Doc. Ref. 2013:01

CapLand Real Estate Advisors Pvt Ltd

Target Audience:
Importance: High
Outcome Required: Response & Direction
Introduction of the company: The firm of CapLand Real Estate Advisors Pvt Ltd has been actively involved in providing services to the public in the field of real estate valuation. Their headquarters are located in the city of Queensland, Australia but they operate and provide their services throughout the country. It is a specialized company that combines the expertise of a commercial real estate agency, a development management platform and a real estate consulting team. Together with so many specialties they offer a ...

Question 1:

Wendy Borg and Jason Kushdog were two entrepreneurs who came together to form Trendsetters Inc. trendsetter Inc. was a startup aimed at providing new warehousing and distribution solutions to clothing retailers. They however had a major challenge of capital as they only had six weeks of operations before they could run out of the initial seed capital they had invested. This prompted them to seek for alternative sources of capital, venture capital being one of the most lucrative one.
Neither of them had knowledge in how venture capitals work since Wendy had her background in supply chain management and ...

1. Valuation Technique Used

Two valuation approaches are utilized for analysis,

a. Base Case “As-Is” valuation of ATC’s cashflows and
b. After acquisition valuation of the ATC’s cashflows
This provides a before and after picture of ATC thus making the crafting of ATC’s valuation easier. These valuation techniques is recommended by EF Moody (2012) for conducting investment appraisals, specifically the procedure of comparing the value of a company’s operations with the value of the company after enjoying the benefits and improvements due to a merger or acquisition. The discounted cash flow approach leading to the calculation of the company’s net present value ...

Question one

In following the LBO, the assets of Seagate’s will be $128.1 million shares of the stock of Veritas. The management believed that Seagate’s value should be ascribed to its operating assets value. Because the market was attributing high value to the stake of Veritas, the market made it appear as if Seagate was asset holding firm (Andrade et al., 2001 p. 13). Going concern model may be used in evaluating the operating expenses of a company. This model assumes that the business will continue operating for an undefined amount of time (Pignataro, 2013 p. 73). Another model ...

1. Valuation ratio analysis
I have analyzed the health of Northwest Savings Bank (Ticker Symbol: NWBI), hereafter referred to as Northwest, with several relevant valuation ratio. These ratios are useful to determine whether its stock is currently undervalued or overvalued. These presents a kind of measure as to whether the stock is a potential buy or otherwise. We have also made comparisons between Northwest and its competitors, which includes PNC Bank (Ticker Symbol PNC) and Erie Bank (a division of CNB Bank, Ticker Symbol CCNE. Table 1.1 gives an overview of the financial data that we will be using for the ...

The company has financed its operations using the initial investment, limited partnership, and five different private equity offerings. The initial investment was $2,000 put into the company by Jim Hornthal, its founder. The company also entered into a limited partnership that enabled it to raise $387,000 from wealthy individuals. It then raised money by issuing preferred shares (Series A shares) in a private equity offering. These funds were used to finance the Non-broadcast Program Development. Series A shares raised $98,000.
The firm’s Television Programming development phase was financed through 13 different private equity offerings. This ...

Stock Valuation of Northwest Savings Bank

Many people think that investing is merely the act of buying something on low and selling it in high, which makes the investment seem very easy. But it is truly a difficult task as one needs to understand if making an investment is worth the price paid for the security and determine if the investment is expensive or cheap.
Investment is a very crucial task and should be done with great care. Making investment seems easy, but earning a good return on investment is difficult. Therefore, investment should be done after analyzing the company or stock or any instrument on which ...

I. Capital Structure Choices

Table 16 TI’s Statement of Current and Long-term Liabilities

Accounts Payable

Accrued Expenses

Deferred Revenues

Other Current Liabilities

Total Current Liabilities

Total Long Term Debt

Table 17 TI’s Statement of Shareholder’s Equity
Shareholder's Equity

Deferred Income Tax

Minority Interest

Other Long Term Liabilities

Total Long Term Liabilities

Total Liabilities

Common Shares Outstanding

Preferred Stock

Common Stock, Net

Additional Paid-in Capital

Retained Earnings

Treasury Stock

Other Shareholder's Equity

Shareholder's Equity

Total Liabilities & Shareholder's Equity

Figure 6 TI’s Debt and Equity Structure, 2007 to 2011

A. Capital Resources
Texas Instrument’s liquidity comes ...

Summary

Facebook is an internet based social-networking created in 2004 by Mark Zuckerberg as a sophomore at Harvard. From its humble beginnings, the company has recorded such phenomenal growth to become the second most visited website after Google. Facebook is visited by about 600billion users who spend 700billion minutes a month uploading 3 billion photos, 2 billion videos and 30billion new stories, posts and albums every month (Griffin 289).
The valuation of Facebook has been equally spectacular. The company was valued at 100million in 2005, this valuation increased exponentially to 15billion two years later. By mid 2010, the company was quoted ...

Q1) What strategic path should Jim Harris choose? What are the major issues influencing your opinion?

After analyzing the case study, it can be concluded that the best strategy for Harris would be to go for strategic growth through acquisitions. One of the major reasons supporting this view is that the other two options available to Harris while may prove to be safer, the fact is that Harris will profit in future only if he continues with the business following acquisitions. One of the major hurdles in the growth of Optitech has been the growing number of competitors. Since Optitech sits on huge valuation and revenues, it would benefit immensely by way to acquisitions.

Q2) Discuss the process and methods used to value a privately held company.

There ...

Air threads measure of value can be evaluated by the following methods; discounted cash flow this refers to the existing estimate of Air Thread Company using its future opportunities of investment. Comparable transactions method can also apply in the likelihood of occurrence of an akin transaction that may have occurred in a condition that is similar to an existing one. Multiple methods may also be incorporated to ascertain the value of Air thread in comparison to another firm that may be comparable to it, for example, the American cable communications company itself. The market valuation also applies which refers ...

Inventory is stated at the lower of the cost or the market value. The U.S. subsidiary uses the last-in, first-out (LIFO) principle while the value of the rest of the inventory is estimated using the first-in, first-out basis (FIFO). The total inventory under FIFO was found to be $ 8,844 million. The LIFO valuation was $7,866 which was ($978) lower. FIFO method assumes that the inventory units that were first to get to the stores are the ones that will be sold first. The implication is that the old stocks move fast. On the other hand, the LIFO ...

Part 2

The return will be computed using the yield to maturity formula. YTM captures all the relevant information in the valuation.
1)

Corporate bond

YTM = C+(F-P)/n(F+P/2
C is the coupon payment = 10.125% *1000 = 101.25
F is the face value = 1,000
P is the price = 879.625
N is the periods to maturity = 25
YTM = 101.25+(1,000-879.625)/25(1000+879.625)/2 = 11.6%

Government Bond

YTM = C+(F-P)/n(F+P/2
C is the coupon payment = 6.825% *1000 = 68.25
F is the face value = 1,000
P is the price = 975.42
N is the periods to maturity = 25
YTM = 68.25+(1, ...

Each company has its own marketing strategies to ensure that its products and services are purchased by a wide variety of customers. A company has to come up with a good marketing mix in order to generate a high amount of revenue. This means that the marketing department of that company has to search for adequate information regarding the factors that affect its services. One of the variables that may affect the marketing mix may include physical evidence and the people. In addition to this, the service process is also important in determining the marketing mix of a company (Martin 2011).

There are a ...

Stock Analysis: Macy’s

About the report
The report comprehensively discusses the discounted cash flow model and related assumptions used for calculating the intrinsic value of Macy’s stock. Since the objective of this report is to frame a prudent investment recommendation, we will also discuss the industry reports to forecast the future potential of the stock.

About the company

Founded in the year 1830, Macy’s is the largest department stores in the United States. The company has relied on multiple acquisitions over the years and has now united a conglomerate of regional brands under its flagship brands of Macy’s and Bloomingdale. Being one ...

Key metrics focused on

The key metrics used by Jefferson include the quality of the company’s earnings, balance sheet, cash-flows and operating efficiency. With that, Jefferson uses the metrics to rate the company in view of its performance. On the other hand, GMI focuses on the related party transactions, over boarding of the audit committee members and the non-exec directors as well as severance vesting and the asset-liability valuation. In addition, the GMI considers restatements and internal controls as key metrics in their rating. With the metrics, GMI rates the company’s risk in view of the appropriateness of the noted issues.

Recommendation on buy/hold/sell

...

Executive Summary

The objective of this assignment is the environmental analysis of Coca-Cola Company. This analysis consists of matching the internal environment strengths with external environment opportunities. This means that the strategic actions of the Company are analyzed to confirm that the Company utilizes its SWOT analysis results. The strategies that the Company is using given the fierce and stiff competition in the market could be analyzed by making the use of Porter’s Generic Strategies. These strategies that the Company uses to tackle the challenges and utilize opportunities in the environment will determine the quality decision of management for strategic ...

Lack of information has come to be seen as a fundamental cause of market failure. Resale markets, housing markets and markets for corporate securities suffer to some extent from the problem that market participants have better information security than others about the value of the good are traded. The market of lemons is a situation where bad goods always drive out good ones from the market. This is done in the same manner, which bad money drives out the good. This means there is no price at which trades will take place. In the lemon market there is possibility that one ...

Financial Analysis: Starbucks Corporation

Introduction:
Our analysis of a company listed on US Stock Exchange is based on Starbucks Corporation, the concerned industry is of Speacility Eateries.
Starbucks Corporation is a leading marketer and retailer of coffee, having its outlets in 60 countries around the world. The stock of the company is listed on NASDAQ Stock Exchange with the tick symbol of ‘’SBUX’’. Apart from selling coffee, the company is also involved in tea, beverages and variety of fresh food items. Today, Starbucks is a leading and most recognized coffee brand in the world. The most popular brand of Starbucks, K- Cup sources 72% ...

Question 1

Mercury is indeed an appropriate acquisition target for AGI because of several reasons. First, the acquisition of Mercury could actually financially improve both companies. Acquiring Mercury would double the revenue of AGI. In spite of the fact that the financial performance of Mercury has been relatively disappointing, the company did however experience a 20% top line growth in the year 2006.
Unfortunately, the two companies have been exhibiting disappointing profitability. This can be attributed to their prices concessions to the industry’s big retailers and also to a women’s line that was quite unsuccessful.
Therefore, the profitability of ...

- What is/are the main issue(s) in the case?
The main issue in this case is the difference between the implied values attributable to the Cypress business vs. the actual market value. This means the share price of Cypress Semiconductor is mispriced which gives an opportunity of arbitrage. The stub valuation poses an opportunity to any speculative investor to get some potential high returns in short term.
As Cypress holds both its own stock as well as SunPower stock, it creates a portfolio of stock for Cypress which is less risky as one company is meant to ...

All businesses are evaluated based on their performance. In the previous years, incomes or profits were used to estimate their performance. The Generally Accepted Accounting Principles (GAAP) and the International Accounting Standards (IAS) define profits as cash and non-cash net revenues regardless of whether they have been paid for, or not. This presents a drawback because some non-cash incomes like gain on disposal of assets and decrease in the provision for doubtful and bad receivables are not realistic. In an attempt to solve this, application of cash flows to evaluate the performance of a business emerged.
Cash flow method has ...

Dat

Analyst Report: NordStorm
About the company and overview
Founded in the year 1901, Nordstorm is a fashion retailer and one of the top rated operators in the departmental store industry. The company has successfully enhanced its brand equity by developing differentiated curated products, increasing storing count and targeting niche customer base. Most recently, the company is in news for investing in omni-channel capabilities as part of which, a heavy expenditure is made on store improvement, expansion and improvement of IT infrastructure.

Competitive Advantage

a) Investment in technology
Nordstrom thrives of providing fabulous shopping experience to its customers and this has remained ...

How does Torrington fit with the Timken Company?

Since both Torrington and Timken company operates in similar business line and industry, the acquisition of Torrington will be a great fit into Timken as the latter’s management will be able to take advantage of the resources owned by Torrington. Moreover, as stated in the case details, both companies have only 5% overlap in product offering, but the customer list overlap by 80%. Therefore, a single company will be able to create better value for its customers.

What are the expected synergies?

Since Torrington and Timken operate in similar business lines of automotives and industrial bearings, the acquisition will result in some synergies ...

Ricardo and Sue were married in 2002 and separated in 2005. Tom’s gross income is $100,000 and Sue’s gross income is $120,000. Ricardo applied for spousal support, and his claim is granted.

$120,000 - $100,000 =
$20,000 is the difference in the gross incomes of Ricardo and Sue
x 3 = 4.5% to 2 x 3 = 6%
4.5% x $20, 000 = $900 per year to 6% x $20,000 = $1,200 per year
= range of $75 to $100 per month

What will be the Duration of the Support?

x .5 / 3 x 1 = range 1 ½ to 3 years
Ed and Tim ...

Introduction

The report presents discussion and analysis of compensation strategies of Nucor Corporation. The organizational structure significantly impacts the compensation system of an organization that affects its ability to attain strategic goals. If the compensation to executives is not aligned with the organizational culture then it may lead to adverse impact on the firm’s performance and lead to other consequences. Several studies indicate that the organizational culture has a significant impact on compensation as well as the firm’s performance. The firms offer different types of compensation to their executives that may affect the compensation structure. However, they are ...

Simmons Japan Limited should venture in this deal since it would be beneficial to them. When there is a merger between two companies, the competitive advantage of these companies is increased so is the niche to which the companies can sell their product to the public. SJL taking the venture will mean that they will be making themselves a dominant player in the market thus the winning company in the long run. Additionally, there will be a possibility of the company making more deals with other companies a similar environment to see it become a single monopoly in the ...

Introduction

Financial performance analysis is crucial for various stakeholders given the varying needs for performance information on various business aspects. In that respect, effective analysis entails evaluating performance over a period or comparing a company’s performance with industry peers. It also entails evaluating various performance areas using varying tools including financial ratios. In that view, the following is a report on Wyndham Worldwide Co. financial performance identifying the performance trend for the period beginning 2012 to 2014 and comparing its 2014 performance with that of the industry peers.

Analysis

Company Overview
Organization and history
Wyndham Worldwide Co. is a brand offering hospitality ...

Tools for Evaluating the Projects

Biz Systems Consultants Ltd is a firm that is set up by experienced persons. Now they are in consideration for the projects that have investment of 17, 00,000$ and three projects are mutually exclusive. In this report we will find out the ways and tools that can help the firm in accessing the feasibility of the project. There are different methods of accessing the feasibility of projects as well as many sources of finance but we will discuss here the three major sources of finance that are best suitable for the company (Bearse, 1993).
For the company Biz ...

My reference company is Apple Inc., which currently trades at 535.73 dollars a share. I think that the futures of 100 shares of Apple Inc. are currently worth 60,000 dollars. This means that Apple shares to be delivered to me in a year’s time are worth 600 dollars each. This is because Apple has a great potential and I expect that its shares will appreciate in the coming months. However, I do not expect the share price for Apple Inc. to appreciate by huge margins because I strongly believe that market projections have been undervaluing the company’s share price ...

What are strengths and weaknesses of whole foods?

Whole Foods Market inc. has various strengths that continuously stamp its authority as a market leader in retail of natural and organic food items. It also has weaknesses that have made it susceptible to competition and comparative disadvantage in the global market. The company, nevertheless, has taken to its stride to capitalize on its strengths and mitigate on its weaknesses in order to retain its competitive edge in the global market.

Strengths

The company has several strengths that explain why it has enjoyed the position of market leader for years in the food industry. The first strength is noted to be ...

13th, November, 2013

Analysis of Electronic Arts: Ratio Analyis and Effect of Alternative Accounting Methods on Ratios
Profitability Analysis:
The ratio analysis reveals that over the years, the profitability of the company is improving. In terms of net profit margins, the company has made an applausable leap from -25.8% to 2.6% over the years.(2009-2013 ) This year the net profit margin of the company has surpassed industry benchmark of 2%.
Analyzing the ratios relating to decomposition of profit figures provides us with a better picture relating to working of the company over the years. Both Gross Profit Margins and Operating ...

What is Net Present Value (NPV)

NPV = Total PV of CF – Initial cash outflow

Where total PV of cash flow is defined by

PV of CF = CF1 / (1+r)^1 + CF2 / (1+r)^2 + CF3 / (1+r)^3 + CF4 / (1+r)^4 + CF5 / (1+r)^5. CFn/ (1+r)^n
Net present value helps in comparing a dollar today with a dollar in the future. It can do so by discounting the future dollar by adjusting for inflation (Rouse, 2011). Companies use this method to see the financial viability of a project against its financial target.

Google’s Project

In the problem, the cash flow is indicated in the first row of the table ...

Coming Home Funeral services seems to be a company which has potential for growth and this is demonstrated in its financial figures. However this growth appears to be very conservative according to peer reviewed estimates which show that this is more likely to be 1.5 per cent than what the company’s directors are projecting. The revenue was flat for three years at 111,000 the rising moderately to 114,000 after the third year and to 117,446 after the sixth year. This shows that the sales figures are showing slow growth and this could be due to a number ...

Part I: a) Based on the above information, please calculate bond's price today.Bond Face value calculation formula

F=face value
C=Coupon Payment = F *contractual interest rate
N=number of payments
i= market interest rate
M= Value at maturity
P=Market price of the bond also known as the fair market value
F=200000 (face Value) ; C= 200,000*5%=50 ; N= 5; i= 4% ; M=200,000
So Bond’s Price today is = 10000((1-1.04^(-5))/ 0.04) + 200,000(1.04)^(-5) = $208,903 so the bond is undervalued. This makes it a great bond to but for any investor at face value.

Part I: b) What is the bond's price today if market rate is 6%?

F=200000 (face Value) ; C= 200,000*5%=50 ; N= 5; i= 6% ; ...

Abstract:

This report is intended to examine Ragan Inc’s current financial position and to identify any possible shortcomings and future threats. The report provides an analysis of the present stock price, dividend pay out ratio, Earnings per share, Price earning ratio and growth rate of the company and a comparison with industry averages. The method used to examine these indicators is stock valuation.

Company Brief:

Ragan Inc, formed by brother and sister Carrington and Genevieve Ragan, has been earning healthy profits for past nine years. The reason behind this was a unique technology being used by the company. The company is in the ...

Introduction

R. Allen Stanford, through the Stanford Financial Group, was involved in a financial scam in which investors lost an estimated $ 7.2 billion. This was through a massive ponzi scheme in which the Stanford financial Group offered investors a return on their investments which was higher than market rates. The investors were misled into believing that their investments were made conservatively.
Fraud was committed through the issue of certificates of deposit to investors through the Antiguan bank which was a subsidiary of the Stanford Financial Group. These certificates of deposit sold to investors were later discovered to be bogus.

Claims against Stanford’s auditors

Stanford’s auditors, BDO ...

1. Finally, using any logical method you can, calculate a valuation for Riley.
For Riley’s Supply, Asset Valuation method could be used for calculating the value for the business as limited information is available.

FMV/FA +OB+I=MV

468 +86 + 2718 = $3272

2. In ONE PARAGRAPH, identify/comment on the source of Riley’s cash flow problem using historical data as well as the new pro-forma data.
There could be quite a few sources of Riley’s cash flow problems. Over Investment in fixed assets could be one as it is a supply business and it might not need as much ...

How this scenario relates to an area of law taught in Introduction to Business Law

The tort of negligence is the area of law which this scenario relates to. LMS has threatened to seek legal action against Chuan & Associates to recover damages for the harm suffered because of the approval of financial statements which had material misstatements by the audit firm. Everything 4 Less Limited (E4L) acquisition was a decision based on the information contained in those financial statements and LMS suffered financial loss by relying on them. The statements had overstated the value of the company’s inventories, and this had increased the value of the company during the bid and subsequent acquisition.

The legally important facts in the scenario

...