the Paper will be evaluated on the demonstrated ability to select relevant tools from the class and interpret them insightfully. Bring in multiple different factors from the class and link them together in your explanation – use multiple tools from the class.
You do not need to research information and will only receive credit for such research if it demonstrates the ability to adeptly select key information needed for the tools learned in this class.
*** This is not a research project and it is not a news report. It is an opportunity to show your ability to put Fin-164 lessons to practical use.
Do not hesitate to discuss topic, format or approach with me after class or offline.
Following are just a few potential topics:
• Why might intrinsic value differ from market value?
• How do Environmental, Social, and Governance (ESG) items impact intrinsic value
o This could involve a simple but thoughtful scenario analysis
o What kind of information could impact free cash flow estimates, scenario analyses or the WACC?
o What are the potential ESG risks of reducing the Cash Conversion Ratio? Think in terms of potentially tangible and intangible risks.
• Walk through the application of PV/FV in a specific real-world situation close to you. For instance, you can evaluate whether or not to buy a new machine for your fictitious company. Or, you could evaluate whether to buy that condo you have your eyes on. There is absolutely no need to compile a lengthy spreadsheet – simplify the situation merely to demonstrate key concepts from the class. Show that you can identify which information you need – you do not need to look up that information, you can make it up, the key is to show that you can determine which info you need.
• Pick a certain type of company – whether a new, fast growth innovator, or a mature, slow-growth status-quo model, or something else – and discuss which factors you believe would likely be most important to the company’s valuation, and why.
• Analyze a company using financial ratios and at least one of the cash flow valuation approaches. Explain any assumptions. Discuss the strengths and weakness of each approach. This should involve actual numbers and ratios. Show that you can identify which information you need – you do not need to look up that information, you can make it up, the key is to show that you can determine which info you need.
• Do a DuPont ROE analysis with explanation and interpretation.
Again – these are only potential topics. You can choose one, a derivation of one, or something else.
There is no need to look up information unless you would like to. If practical, you can make up the numbers – but not the equations…any questions whatsoever, just let me know.
Suggested format
For most situational business papers, it is often useful to use a three-section approach:
1) Problem or situation identification – a brief description of the situation;
2) Analysis – here is where you bring in the tools and frameworks we learned in this class;
3) Action plan – what you draw from the analysis to make your recommendation or conclusion.
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