Project Guidelines and Overview
Corporate financial managers must have a business-wide perspective to successfully navigate the corporate environment. The skills you will develop in this course will support you in your future business career and set the foundation for the concepts that will be covered in the next course, Multinational Corporate Finance. Your final project for FIN 330 will allow you to showcase your mastery of the varied skills a finance professional must obtain: It will require you to analyze a real-world corporation from a quantitative perspective while also investigating the challenges and decisions a manager must face.
To accomplish this, your final assessment will be broken up into two separate but related projects. The first, a corporate valuation report, will focus on a U.S. corporation of your choice. You will analyze the historical financials of your chosen corporation using the provided Excel template, and estimate the value of your corporation in a brief report.
The second final project is a risk management and ethical analysis that will focus on the same corporation, highlighting the management and leadership considerations and decisions required of top-level financial managers. In this written report, you will discuss ethics, corporate social responsibility, and the challenges related to attaining short-term and long-term goals.
Combined, these two projects will assess your knowledge regarding the quantitative and qualitative concepts of corporate finance and leadership.
The first final project is divided into two milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Two and Five. The final corporate valuation report is due in Module Seven, and the final risk management and ethical analysis is due in Module Eight.
In this assignment, you will demonstrate your mastery of the following course outcomes:
- Estimate the value of corporations based on quantitative and qualitative analysis of financial history, industry trends, and projections of future performance
- Analyze the relationships between capital structure, risk, and cost of capital for informing financial decisions that can optimize the value of corporations
- Analyze challenges financial managers face regarding short-term and long-term planning for informing decision making
Prompt
Your corporate valuation report should analyze your chosen corporation and estimate its overall value.
Specifically, the following critical elements must be addressed:
I. Overview: This section of your report will be devoted to providing a thorough overview of the background of the corporation you selected and setting the foundation for your later discussion of the challenges financial managers face. Specifically, you must address the following:
A. Describe the market to which your corporation belongs, identifying the products or services your corporation sells and the share of the market it has.
B. Describe the customer base of your corporation and the top competitors for this customer base. Be sure to consider what motivates the customers and the challenges the organization faces in retaining the customer base.
C. Describe the key inputs (and sources of those inputs) used to create the products or services, as well as the key resources for corporate operation (such as staff, facilities, technologies, etc.) and the extent to which attaining all these resources presents a challenge to the particular organization.
D. Analyze key market trends and issues within the industry for potential risks to the organization.
II. Financial History: The next section of your report should focus on the financial history and capital structure of your organization.
A. Quantitatively analyze three years' worth of the corporation's finances using the provided Excel template. You will submit this template along with your report, and may embed pieces of the Excel template into your report to show key financial highlights in the following critical element.
B. Summarize the financial highlights you determined from the analysis in the Excel template, explaining the significance of the key ratios for the overall financial health of the organization.
III. Capital Structure: In the third section of your report, discuss the capital structure of the corporation.
A. Outline the most recent year's debt, equity, and total capital using the provided template to show the overall capital structure of the corporation.
B. Articulate the corporation's dividend policy and what impact it has on the investors.
C. Analyze the relationship between capital structure, cost of capital, and risk, using examples from your chosen organization.
D. Explain how the relationship between capital structure, cost of capital, and risk can help inform decision making and maximize corporate value.
IV. Valuation: The final section of your report will focus on calculating current value, outlining assumptions, and estimating the future value of the corporation through forecasting the cash flows. Specifically, respond to the following:
A. Calculate the current market value of equity for your corporation, using the three-year history and provided Excel template, and explain what it means for the corporation.
B. Outline any assumptions you have made in calculating the current value and estimating the future value of the corporation, explaining why you made them and why they are important. (Hint: Assumptions can include growth rates, margins, trends, etc.)
C. Estimate the current value of your corporation by forecasting the cash flows over 10 years using the provided Excel template, and explain your findings. Calculate EVA, NPV, IRR and MIRR using discount rates of 5% (low risk), 10% (medium risk), and 18% (high risk).
Milestones
Milestone One: Overview and Financial History
In Module Two, you will submit Milestone One, which provides you an opportunity to work on the overview and financial history sections of your Final Project I:
Corporate Valuation. As part of this assignment, you will also complete specific elements of the provided excel template.
Milestone Two: Capital Structure and Valuation
In Module Five, you will submit Milestone Two, which provides you an opportunity to work on the capital structure and valuation sections of your Final Project I:
Corporate Valuation. As part of this assignment, you will also complete specific elements of the provided excel template.
Final Submission: Corporate Valuation Report
In Module Seven, you will submit your Final Project I: Corporate Valuation Report. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course on your milestone assignments.