Teacher Evaluation
VALUATION AND FINANCIAL MODELING TEACHER: LANNTM
GROUP ASSIGNMENT 02
CONTENTS
ITEMS PAGE
I) II)
EXECUTIVE SUMMARY ……………………………………….. OVERVIEW OF THE COMPANY
2
1) Business characteristics ……………………………………………… 3 2) Firm characteristics ………………………………………………….. 4 III) FREE CASH FLOWS ESTIMATION AND FIRM VALUATION 1) Assumption …………………………………………………………… 8 2) Growth model ………………………………………………………… 17 3) Firm value …………………………………………………………….. 19 4) Sensitivity analysis …………………………………………………… 25 IV) CONCLUSION
1) Evaluate the underlying Assumptions …………………………………… 27 2) Conclusion for the appropriateness of estimation …………………………27 V) REFERENCE ………………………………………………………… 32
GROUP 4
Page 1
GROUP ASSIGNMENT 02 _FB0602
I)
EXECUTIVE SUMMARY
Now, in the field of information technology, security and software, Microsoft is the world 's leading company, a pioneer in the development of this field. After the glorious era of Bill Gates, along with the turbulent market and fierce competition, Microsoft losing its monopoly position. However, as a tree with strong root to hold in to the land, Microsoft still like a tiger, full of power, always make every opponent shy around the tremendous power and potential of the company. In this Assignment, the eyes of market domination, we can easily find out what the advantages or disadvantages of Microsoft, as well as calculating the value of Microsoft through the cash flows of company. The following report illustrate the financial calculation ratios and evaluate by perform sensitivity analysis of Firm value to the Revenue growth rate, Interest rate on debt, Dividend payout ratio, Cash flow growth rate, WACC. In the first part, we provide information Microsoft Corporation and the overview about the whole software industry which affects significantly to Microsoft is also mentioned. The main contents of report include the statement and explanation the process of choosing the growth model for the calculation which based on our
GROUP ASSIGNMENT 02
CONTENTS
ITEMS PAGE
I) II)
EXECUTIVE SUMMARY ……………………………………….. OVERVIEW OF THE COMPANY
2
1) Business characteristics ……………………………………………… 3 2) Firm characteristics ………………………………………………….. 4 III) FREE CASH FLOWS ESTIMATION AND FIRM VALUATION 1) Assumption …………………………………………………………… 8 2) Growth model ………………………………………………………… 17 3) Firm value …………………………………………………………….. 19 4) Sensitivity analysis …………………………………………………… 25 IV) CONCLUSION
1) Evaluate the underlying Assumptions …………………………………… 27 2) Conclusion for the appropriateness of estimation …………………………27 V) REFERENCE ………………………………………………………… 32
GROUP 4
Page 1
GROUP ASSIGNMENT 02 _FB0602
I)
EXECUTIVE SUMMARY
Now, in the field of information technology, security and software, Microsoft is the world 's leading company, a pioneer in the development of this field. After the glorious era of Bill Gates, along with the turbulent market and fierce competition, Microsoft losing its monopoly position. However, as a tree with strong root to hold in to the land, Microsoft still like a tiger, full of power, always make every opponent shy around the tremendous power and potential of the company. In this Assignment, the eyes of market domination, we can easily find out what the advantages or disadvantages of Microsoft, as well as calculating the value of Microsoft through the cash flows of company. The following report illustrate the financial calculation ratios and evaluate by perform sensitivity analysis of Firm value to the Revenue growth rate, Interest rate on debt, Dividend payout ratio, Cash flow growth rate, WACC. In the first part, we provide information Microsoft Corporation and the overview about the whole software industry which affects significantly to Microsoft is also mentioned. The main contents of report include the statement and explanation the process of choosing the growth model for the calculation which based on our
Bibliography: REFERENCE Investopedia. (2011). Compound Annual Growth Rate. Retrieved 11 2012, from investopedia: http://www.investopedia.com/terms/c/cagr.asp#axzz2BzmndGkb Microsoft, c. (2012, 11 10). Morning Star. Retrieved from MSFT: http://quote.morningstar.com/stock/s.aspx?t=MSFT®ion=USA&culture=en-us USgovernment. (2012, nov). Data center. Retrieved Nov 2012, from US department of tresury: http://www.treasury.gov/resource-center/data-chartcenter/Pages/index.aspx GROUP 4 Page 33