FINA 30513S: Class Room Discussion Exercises
Week 4
Agenda
1)
2)
Application side of Valuation
Weighted Average Cost of Capital
I) To perform stock valuation questions, the following combination of
formulas are used (perpetuity)
1)
2) or
Where,
Po = Curre
Key Liquidity and Solvency Ratios
Net Working Capital (NWC) =
Current Assets Current Liabilities
Current Ratio =
Current Assets/Current Liabilities
Quick Ratio
(Current Assets Inventory)/Current Liabilities
=
Days Inventory Held =
Inventory/ (Avg Daily CG
Important Points to consider
Stock Market News and Investors
Behaviour
Mispricing
Insider Information
Efficient Market Hypothesis
Practice Test 2 Discussion
Stock prices move up and down every minute due to
fluctuations in supply and demand. If more peopl
FINA 30513S: Week 5
Credit Analysis and Distress Prediction
1. Financial analysts typically measure financial leverage as the ratio of debt to equity. However,
there is less agreement on how to measure debt, or even equity. How would you treat the followi
Chapter 9; Equity Security Analysis
FINA 305 13S: Lecture Notes
Agenda
1) Approaches to Fund Management and Security Analysis
a) Active and Passive management
b) Quantitative vs. traditional fundamental analysis
c) Formal vs. informal valuation
2) The Pro
Int is 10%
Int
Principal
Market price
Int 14%
181.81818182
1818.1818182
1308.3659803
Int is 10%
175.4385964912 103.56988168
1692.8285626347
1035.6652949
2000
Int
Principal
181.8182
1818.182
1868.2671591259 The present bond sells at $ 1868.26 Market price
All Equity means (value of organisations equity and assets will be the same)
Second Situation
Operating Profits
Depreciation
(St.Line)
Year 1
Year 2
Year 3
$ 40 Million
$ 50 Million
$ 60 Million
Equity $ 60 million
No taxes
Cost of Equity 10 per cent
Year
FINA 305 13S: Tutorial Session 1 of Week 4
Chapter 8: Prospective Analysis: Valuation Implementation
1) Calculate the equity value of Ninth Cloud Company under the given situations:
2) The risk-free rate equals four percent and the expected return on the
All Equity means (value of organisations equity and assets will be the same)
Second Situation
Operating Profits
Depreciation
(St.Line)
Year 1
Year 2
Year 3
$ 40 Million
$ 50 Million
$ 60 Million
Equity $ 60 million
No taxes
Cost of Equity 10 per cent
Year
FINA3051S:WekTutorialsn2
1)
Manufactured Earnings is a darling of Wall Street analysts. Its current market price is
$15 per share, and its book value is $5 per share. Analysts forecast that the firms book
value will grow by 10 percent per year indefinitel
a. What would be the forecast for earnings per share in FY2005 be for each model?
Fiscal Year
2000
2001
2002
2003
2004
EPS
$1.41
$1.48
$1.80
$2.08
$2.41
b. Actual earnings per share for Wal-Mart in FY2005 were $2.68. Given this information, what would be
Week 3: Practicing Qestions
1) From the given information, calculate
a) Interest Coverage ratio (earnings basis) in 2010, 2009, 2008 and 2007
Sales
(Revenue)
Cost of sales
NOP
Tax rate
Interest rate
Depreciation
Amortisation
EAIT
Debt
30 Jun
2010
NZ$
5,17
FINA 305 13S: Tutorial Session Week 1 Objective: Understanding the Role of Financial Intermediaries in the Capital Markets Questions to answer 1) Define Capital Markets Capital markets are where those with a surplus in capital (savings) and those with a d
FINA 305 13S: Tutorial Session 1 of Week 2
1) Asset Impairment will impact the following a) b) c) d) e) Current asset and non-current debt Non-Current Asset and Liabilities Current Liabilities and Equity Non-Current Asset and Equity and min(book value &ma
FINA 305 13S: Tutorial Session Week 1 Objective: Understanding the Role of Financial Intermediaries in the Capital Markets Questions to answer 1) Define Capital Markets 2) Who are the financial intermediaries? Mention four types of Financial Intermediarie
FINA 305 13S: Tutorial Questions Session 2 Week 2
1) The Business analyst is examining how efficiently the business firm is
using its resources. Which ratio should he consider?
a) b) c) d)
Operating ratios Asset turnover ratio Liquidity ratios and All of
Case 7
As the Sports Exports Company exports footballs to the Uni ted K ingdom, i t receives
B rit ish pounds. The check (denominated in pounds) for last month's exports just
a rrived. Jim Logan (owner of the Sports Exports Company) normally deposits the