question archive FINA 4310 Ashish Ghimire Valuation Project Guidelines This project requires you to value a public company
FINA 4310 Ashish Ghimire Valuation Project Guidelines This project requires you to value a public company
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FINA 4310 Ashish Ghimire Valuation Project Guidelines This project requires you to value a public company. You will be working in a group of 4-5 students to perform a valuation of a firm or its equity using the discounted cash flow approach and the relative valuation approach. When selecting a company, please make sure that the company you choose has enough information for you to perform the valuation analysis. When putting together your valuation, pretend that you are management consultants or investment bankers and are presenting the valuation to a client (who has very limited knowledge about the firm and the financial jargon). You should support any statement or assertion that you make. I look forward to receiving a well-polished valuation report by the end of the semester. The final report should be attractive and informative at the same time. It should clearly lay out your conclusions and the reasoning and methods you used to reach them. Finally, you will need to cite all the sources that you use. A reference page is required (also include footnotes whenever relevant). Please make sure that you do not plagiarize any of your sources. As the semester progresses, you will submit the valuation project in parts. In the end, you will have to submit the entire project in a pdf format and a print format. You will have to include the following in your valuation report. 1. Cover Page: It should list the name of the company and the members of your group. 2. Executive Summary: It should list your results and conclusion along with your recommendation and price target. (no more than one page) 3. Table of Contents: Part 1 (5% of Final Grade): Firm Selection and Description 4. Description of the Company: The key to a good valuation is knowing the business of the firm you are valuing. In this section, describe the company, the company’s history, its’ product lines, recent acquisitions, plans for the future, etc. This section should provide a good idea about the company, its’ products, operations to the client. Show a breakdown of sales by different operating segments/product lines over the last 3 fiscal years. Please include only relevant materials. 5. Industry Analysis: Describe the industry, the growth of the industry, competitive pressures and threats, future prospects for the industry, etc. Through this section, the client should understand the firm’s industry in general and also the firm’s position within the context of the industry. Part 2 (5% of Final Grade): Estimating the Weighted Average Cost of Capital (WACC) For this section, most of the work can be done in excel. So, no need to include this section on your final report. Here are the things to do in this section: a) What is the market value of the firm’s equity? State all necessary inputs and sources. b) Use the CAPM to estimate the firm’s cost of equity. Explicitly state your inputs (the risk-free rate, return on the market or the market risk premium, and the firm’s beta). Briefly explain the reason or source of each. The firm’s beta has to come from three sources (two from your choice and one from your calculation based on the last 5 years of data). c) Estimate the firm’s before-tax cost of debt. d) Estimate a tax rate for the firm and justify your choice. e) What is the firm’s WACC? Part 3 (10% of Final Grade): Valuations 6. Valuations: In this section, you should estimate the value of the company using the discounted cash flow approach and the relative valuation approach. There is no one right way to do valuation, so clearly state your assumptions that you employ in your valuation. Perform any sensitivity analysis: How does the intrinsic value change when the key variables in your valuation changes? 7. Recommendation: Make a recommendation to buy, sell or hold based on your financial analysis. 8. References and Appendix: Provide all sources you used in your valuation report. Also, any detailed calculations not shown in the main report can be included in this section as appendices. Part 4 (10% of Final Grade): Final Report Submission and Presentation Submit your final report in a print and pdf format. Present your company’s valuation and submit peer evaluation forms. I hope you learn a lot of things from this valuation project. Remember that, the estimate is not important, it is the process that matters. Enjoy the process! Good Luck! Valuation Project Guidelines This project requires you to value a public company. You will be working in a group of 4-5 students to perform a valuation of a firm or its equity using the discounted cash flow approach and the relative valuation approach. When selecting a company, please make sure that the company you choose has enough information for you to perform the valuation analysis. When putting together your valuation, pretend that you are management consultants or investment bankers and are presenting the valuation to a client (who has very limited knowledge about the firm and the financial jargon). You should support any statement or assertion that you make. Also, you have to cite all the sources that you use. The Company is : Coca-Cola Part 1(Firm Selection and Description 4.Description of the Company: The key to a good valuation is knowing the business of the firm you are valuing. In this section, describe the company, the company's history, its' product lines, recent acquisitions, plans for the future, etc. This section should provide a good idea about the company, its' products, operations to the client. Show a breakdown of sales by different operating segments/product lines over the last 3 fiscal years. Please include only relevant materials.
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Coca-Cola is a renowned beverage company with over 500 brands that are all nonalcoholic. The company operates from Atlanta Georgia and has extended to more than 200 countries across the globe. Coca-Cola has grown immensely with its annual revenue estimated to be more than 50 million dollars. Coca-Cola's history spans back to the 11886 by John Pemberton who created the company trademark (Yao, 2017). In 1899 the company entered into its first agreement with a bottling company on syrup purchase. In 1941, the company increased in diversification efforts in the production and sale of soft drinks with the purchase of Fanta. In 1963 Coca-Cola acquired minute Maid a citrus brand producing juice products.
Coca-Cola offers a variety of products categorized as soft drinks. The first category consists of beverages such as Fanta, coke, minute mint juice, sprite, and Schweppes. These soft drinks are presented as tasty drinks offering cooling and refreshing moments for consumers (Panigrahi, 2020). The company offers Dasani and Smart water as drinking water brands that are free from mineral salts to deliver a clean and fresh taste to consumers. Coca-Cola zero sugar is a new brand that targets healthy consuming behavior by offering zero sugar coke. Other brands include diet coke, Appetisers, Ayataka, and Ades brand which aim at offering tasty feelings to consumers. The company also offers peace tea and Fuze tea drinks as its main brands
Over the years Coca-Cola has acquired 19 companies that have represented asset and portfolio diversification. The company’s largest acquisition occurred in 2018 when Costa Limited was acquired for a cost of $6 billion. The company largest sell-out occurred in 2018 when it sold Jab holdings. Through acquisitions, Coca-Cola has grown into the largest soft drinks company. The future of Coca-Cola is to acquire many firms in the beverage sector to diversify its operations and maximize its revenue.
