Both descriptive and calculation type questions You will be expected to analyse

Both descriptive and calculation type questions you

This preview shows page 10 - 25 out of 88 pages.

Both descriptive and calculation type questions You will be expected to analyse and interpret the results of calculations No multiple choice Will cover all weeks (entire subject) You must score at least 50% in the final exam to pass the subject
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Assessment information Group assignment due week 11 (25%) Group work Analysing and an ASX-listed company Both hard copy and Turnitin submission are required plagiarism will be strictly dealt with
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Group Assignment 12 Case study (30 marks): 4-6 group members Groups will build an excel application (based on a provided excel template) and write an equity research report on a stock.
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Subject Information Financial statement analysis Critically evaluate financial statements as sources of information Extract useful information from financial statements Use analytical tools to evaluate a company’s financial performance & position Use financial statement information in credit & equity investment decisions
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Overview 14 Why are you here? Importance for degree? Employment opportunities? You’re thinking about building your investment portfolio?
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15
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16 Charlie Munger Warren Buffett Benjamin Graham
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Write a research report 17
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Or you really know about a lot of theories but never used them… 18 Boundary of firms Relational Contracting (within and between firms) Vertical Integration Governance structures Corporate strategy Financial accounting And, you know, mean-variance portfolio selection, DCF, WACC …
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Outline 19 UoS outline Schedule Assessments Introduction to financial strategy Facebook case study P/E ratio The 72 rule The equity premium Basics of research report
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Warren Buffett - The Book that Changed My Life 20 Let’s watch the video together. The book that changes Warren Buffet's life
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Is Facebook overpriced? (P/E approach) 21 P/E ratio indicates how market evaluates a company with respect to its current earning power. You may (roughly) interpret it as: for how many years the company can earn back its current price. P = market price per share E = earnings (net income or profit) per share
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Is Facebook overpriced? (2012) 22 Facebook’s P/E ratio in August, 2012 was 114 . Then, it needs 114 years to earn its current price (suppose current earning level will not change). Does that mean Facebook was overpriced? To answer this question, one important question is to figure out if Facebook can significantly lift its current earning power . Otherwise…
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Facebook vs. Google and Apple (2012) 23 Is Facebook more powerful than Google and Apple? By comparing to Google’s and Apple’s P/E ratios Google P/E = 20 Apple P/E=15 I would suggest that current P/E ratio for Facebook is still far too high.
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Price Target of Facebook? (2012) 24 We would like to work out the price level if Facebook has P/E ratio at the average value of those of Google and Apple ((20+15)/2 = 17.5). Current price of Facebook is $21 (as of August, 2012). If the P/E = 17.5, the price should be : 21 * 17.5 / 114 = $3 (per share).
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  • Spring '17
  • Balance Sheet, Generally Accepted Accounting Principles

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