Performance Analysis and Valuation of Company
1. Introduction
Company Profile, Major Businesses , Structure , Strategic Initiatives, Growth Strategy of the Company etc.( Focus on SWOT Analysis)
2. Trend Analysis
Financial highlights for last 10 years –Assets, Revenues, Cash Flow , Net Profit, Market Capitalization
Discussion on percentage growth rates in Assets, Revenues, Cash flow and Net Profit during the past 10 years.
3. Financial Ratio Analysis
Profitability Ratios
Leverage Ratios
Operational Efficiency or Asset Utilization ratios
Liquidity Ratios
Market Valuation Ratios
In case the company selected is a bank or financial institution, then focus on the following ratios.
Profitability Ratios
Efficiency Measures
Capital Adequacy Ratios
Asset Quality Ratios
4. Stock Wealth Analysis
In this section, you are expected to analyze the wealth created by the company in the stock market. The stock data has to be analyzed for the last five years. The following returns need to be calculated.
Cumulative monthly returns
Average Yearly returns /Excess returns over market index
Holding Period Yield
Excess Value created (Market Value-Book Value) for the recent five-year period. BV as per cent of MV for each period has to be calculated.
Use standard deviation to measure risk for the recent five-year period.
5. Valuation Model –Dividend Discount Model and Relative Valuation.
Estimation whether the stock is overvalued or undervalued.