JEM132 - Company Valuation
F,FM and B - elective
Masters - all
MEF - elective
Semester - summer
|Recommended courses:||JEB044 - Financial Accounting
JEB045 - Financial Management
|Course supervisors:|| Jiří Novák Ph.D., Boston Consulting Group Corporate Chair
|Teachers:|| Jiří Novák Ph.D., Boston Consulting Group Corporate Chair
|Assistants:|| Radovan Chalupka Ph.D.
Mgr. Aleš Čornanič
Mgr. Adrian Lupusor
Ing. Barbora Svárovská M.A.
Monday 12:30 p.m. - 1:50 p.m., room 314
Monday 2 p.m. - 3:20 p.m., room 314
Koller, T., M. Goedhart, T. E. Copeland, D. Wessels and McKinsey and Company. (2005). Valuation: Measuring and Managing the Value of Companies (John Wiley & Sons Inc., Hoboken, N.J.).
Penman, S. H. (2007). Financial Statement Analysis and Security Valuation (McGraw-Hill, London).
Damaodaran, A.(2001) The dark side of valuation, Prentice Hall.
Lundholm, R., T. O'Keefe and G. A. Feltham (2001), "Reconciling Value Estimates from the Discounted Cash Flow Model and the Residual Income Model", Contemporary Accounting Research, Vol. 18, No. 2, pp. 311.
|Description:||The course introduces students to financial analysis and company valuation. The exposition starts with the discussion of the conceptual points of departure that constitute a basis for financial analysis and valuation. Subsequently, students are guided through the process of the construction of the discounted cash flow valuation model. Practical considerations are discussed and students learn how to apply the conceptual framework in real life setting. Finally, students put their knowledge into practice as they are asked to use their model to value an existing company and interpret the results.
The course is designed for fourth or fifth year students. Students are recommended to take Financial Accounting course (JEB044) and Financial Management course (JEB045) before they take this course (JEB045).
|Content:||1) Introduction - overview of the course, discussion of the literature, specification of the requirements, company valuation framework
2) Valuation Models - primary exposition of the kev valuation models: comparable multiples, discounted dividend model, discounted cash flow model, residual income model
3) Financial Accounting - key accounting relationships used in valuation, accrual principle vs. cash flow, clean surplus relationship
4) Accounting Restatements - restatements of accounting figures, invested capital, net operating profit less adjusted taxes, free cash flow
5) Financial Analysis - construction of financial ratios, return on equity, return on invested capital, financial leverage & spread, asset turnover, operating profit margin
6) Forecasting - value drivers, forecasting of growth, forecasting of profitability
7) Cost of Debt - weighted average cost of capital, financial structure, cost of debt
8) Cost of Equity - estimating CAPM, determination of equity market risk premium, estimating beta, 3-factor model
9) Horizon - determining horizon growth and profitability, continuing value
10) Value Estimate - discounting, determining per share value, sensitivity analysis, buy-hold-sell recommendation
11) Qualitative Analysis - macroeconomic analysis, Porter's analysis,. SWOT analysis
12) Comparable Multiples - book-to-market ratio, earnings-to-price ratio, ebita-to-enterprise value ratio
|Course requirements:||Company Identification Exercise (10 pts) - use financial ratios to identify companies, performed in teams, discussed at seminar
Home Assignment – Case Study (30 pts) - analyze assigned case and answer related questions, performed in teams, discussed at seminar
Case Study Presentation (10 pts) - present the solution to the case study in a clear and concise manner
Final Examination (50 pts) - demonstrate your in-depth knowledge, individual
The exam dates are:
29 May 2013, 15:00, room 109
6 June 2013, 17:30, room 314
19 June 2013, 17:00, room 314
You are obliged to apply for the exam terms via SIS.
|Downloadable:||01 Introduction (cvl)
01s Valuation Models (pdf)
01s Valuation Models (xls)
02 Valuation Models I (cvl)
03 Valuation Models II (cvl)
04, 05 Profitability Analysis (cvl)
04s_05s_Profitability Analysis (xls)
06 Accounting Restatements (cvl)
07 Free Cash Flow (cvl)
07s Excel Tips
08 Context, Forecasting (cvl)
09 Horizon Forecast (cvl)
10 Comparable Multiples (cvl)
10s Comparable Multiples (pdf)
10s Comparable Multiples (xls)
10s Comparable Multiples – handout (pdf)
11 Discount Rate (cvl)
11s Discount Rate (pdf)
11s Discount Rate (xls)
11s Discount Rate – iteration example (xls)
Home Assignment Company Identification