...CA (email: ansimon@calpoly.edu) Asher Curtis David Eccles School of Business The University of Utah Salt Lake City, UT (email: asher.curtis@business.utah.edu) This draft: September, 2010. Forthcoming, Journal of Business Finance and Accounting. ABSTRACT: We examine how analysts’ conflicting incentives to be either accurate or optimistic affect their choice to generate stock recommendations with rigorous valuation models or growth-based heuristics. Consistent with prior research the average analyst recommendation is negatively associated with rigorous valuation models and positively associated with growth-based heuristics, we document that these associations are weakest for the most accurate analysts and strongest for the least accurate analysts. We also find evidence consistent with consistency between recommendations and valuation models underlying the positive future returns from trading on the most accurate analysts’ recommendations. Our results are consistent with reputation incentives to be accurate mitigating the use of optimistic growthbased models in generating stock recommendations. Keywords: Forecast Accuracy; Fundamental Valuation; Stock Recommendations; Analyst Reputation. † Andreas Simon and Asher Curtis are, respectively, from the Orfalea College of Business California Polytechnic State University and David Eccles School of Business, The University of Utah. This paper is related to work done by Andreas Simon in his Ph.D. dissertation at the University...
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...Ethan Berman at RiskMetrics Group (A) I. COMPANY PROFILE Corporate Strategy The company’s strategy was to build long lasting relationship with their client and offer high-quality service. RiskMetrics primary customer was companies and business which requires an efficient and low-cost execution of risk analysis. Their business model was based on short-term software leasing. The company leased clients a CD containing a risk management application priced at $30000 annually per user and was password protected, after that clients paid by the month for the new password. Organizational Structure Since RiskMetrics Group was a new company, that formerly was a subsidiary of J.P Morgan, Berman used FLAT organizational structure. There were pro’s and con’s by using this kind of organizational structure: Competitive Advantage One of the major competitive advantage of RMG is its payment method. They use leasing payment method to attract costumer and make the costumer financial burden lighter. II. TIME LINE Early 90’s The RiskMetrics Group started as an in-house division of J.P. Morgan, the institutional investment bank. Dennis Weatherstone, chair of Morgan in the early 1990s, wanted a simple, concise daily report that measured the company’s proprietary risk at the end of each day. Why? Because the needs for accurate and clear measure of exposure to market volatilities. In the wake of such financial disasters such as Orange County, Barings, Daiwa and Showa Shell, banks...
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...Christian Falkemark Thesis Adviser: Thomas Polesie Master Thesis, 10 points Abstract Master Thesis in Business Administration School of Economics and Commercial Law Gothenburg University Autumn 2006 Authors: Hiba Larsson and Christian Falkemark Thesis Adviser: Thomas Polesie Title: BMW – A Company Analysis Thesis Language: English Background: The automotive industry is distinguished by a highly competitive market. Thus, the actors on the market struggle with increasing cost of production, development and mature markets. With the aim to increase profit margins and reduce costs, Volkswagen, GM and Ford are some companies, which use the same components in different car models and car brands. These companies have in other words succeeded in synergising research and development effects within the company despite car model and business area. By a contrast, BMW, an individual actor, has yearly shown strong financial results and has retained its market shares. This becomes of interest to study more profoundly, in order to find the factors behind a successful company and a strong brand. Purpose: The purpose of this thesis is to analyse the development of BMW during the past five years. Not only are the financial statements taken into consideration. In addition, a comparison to competitors and the market situation is also made. Delimitation and assumptions: This thesis is delimited to an analysis of BMW between the years 2001-2005. The thesis is based on the assumption that BMW is the most...
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...1. Introduction The Oroton group is a public listed retail company in Australia. The purpose of the report is to analysis the company’s performance during the past five years. This report will analyze financial analysis by using several key ratios. Prospective analysis will be based on these ratios to assume the company’s position in the future. Valuations of the company can be determined by fore valuation models. Sensitive analysis can be tested according to optimistic and pessimistic view. Some recommendations will be present by using these analysis. 1. Reformatted Financial Statements and Financial Analysis 2.1 Ratio analysis ROE The company’s return on equity (ROE) measures a company’s performance. In general, the return on equity of Oroton group shows a decrease tendency from 0.84 in 2011 to 0.06 in 2015, whereas these numbers increased gradually to 0.22 in 2014. However, in 2013, the ROE of Oroton group has decreased rapidly to 0.17. It means that Oroton group shows an unfavourable position during the 5 years. ROE can be affected by three contributors, including return on net operating assets (RNOA), financial leverage (FLEV) and difference between lending and borrowing rates (Spread). RNOA can be determined by profit margin and asset turnover, and it is to measure a company’s capacity to gain profits. The group of Orton group indicates a decline tendency on PM and a stable status on ATO from 2011 to 2015, because the things, which are the changes in marketing...
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... 1. Executive Summary 3 2. Analysis Model 3 3. Company Overview 3 4. Industry Outlook 3 5. Company Evaluation 4 Free Cash Flow Estimation 4 Cost of Equity, Cost of Debt, WACC Calculation 5 Discounted Cash Flows and Company Evaluation 5 6. Sensitivity Analysis 6 7. Final Recommendations 6 8. Appendix 7 Appendix 1: Historical Free Cash Flow Analysis 7 Appendix 2: Historical Free Cash Flow Analysis 8 Appendix 3: Growth Estimations 9 Appendix 4: 2012 Operating Expense Growth Estimation 10 Appendix 5: Income Taxes 11 Appendix 6 11 Working Capital, Depreciation and Amortization, Capital Expenditure Estimation 11 Appendix 6 Part II: Estimations Summary 12 Appendix 7: Free Cash Flow Estimation Analysis (in mln. €) 13 Appendix 8: WACC Calculation 14 Appendix 9: Equity Evaluation 16 Appendix 10: Sensitivity Analysis 17 9. References 18 Executive Summary This report discusses the possible profitability of investment in shares of the Allianz Group SE. Our analysis, based on discounted cash flows and weighted average cost of capital, suggests that under the assumption of stable economic growth, no drastic escalation of the European sovereign debt crisis and industry shocks due to natural disaster like the hurricane Sandy, the current share price of the company is currently below its estimated value and thus a promising investment opportunity. If the company manages to keep its stable growth in the last quarter of the year, an investment...
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...Comparing the BCG Matrix with the McKinsey 7S model 1 Structure STRUCTURE ........................................................................................................................................ 2 INTRODUCTION ................................................................................................................................. 3 BOSTON CONSULTING GROUP (BCG) GROWTH MATRIX ................................................... 3 COMPOSITION AND FRAMEWORK ....................................................................................................... 3 APPLICATION ....................................................................................................................................... 3 EXAMPLE APPLICATION: JUWI ............................................................................................................ 3 WEAKNESSES AND STRENGTHS OF THE BCG MATRIX ....................................................................... 4 THE MCKINSEY 7S MODEL ............................................................................................................ 5 COMPOSITION AND FRAMEWORK ....................................................................................................... 5 APPLICATION ....................................................................................................................................... 7 EXAMPLE APPLICATION: JUWI ..............................................................
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...| Entrepreneurial Growth | | Fall Semester, 2013 Man 385.24 Unique #04780 | Professor John N. Doggett Class Days Monday and Wednesdays from 12:30 to 2:00 p.m. Class Room UTC 4.104 Office CBA 5.124k Office Hours Wednesdays, 5:30 to 6:30 p.m. or by appointment Phone 512-232-7671 E-Mail john.doggett@mccombs.utexas.edu Course Web Page via Canvas ------------------------------------------------- Teaching Assistants Grant Garlinghouse (grant.garlinghouse@mba14.mccombs.utexas.edu) Course Objectives I have taught this course since late in the last century. Today, as we approach a second global recession, helping people learn how to grow firms as astutely as possible will play a role in speeding the beginning of a new recovery. When companies like Cisco and HP abandon major market segments, it is even more important to think critically about how to grow a firm’s products. Given the chaotic period that we are entering, I have made several significant changes to this course. First, I have done away with the individual midterm. The “next” recovery will be a group effort. So will your midterm. Second, I have assigned three books. These are some of the best books out there on how to think about innovation, competition and how to grow a business. They will become “let me read that again” go-to books that you will use long after you graduate from UT. To compensate for the heavy reading load, I have eliminated...
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...DETERMINANTS OF CORPORATE PERFORMANCE OF MALAYSIAN COMPANIES Kamal Naser Cardiff Business School Cardiff University E-mail:Naser@cardiff.ac.uk Mohd Zulkifli Mokhtar Cardiff Business School Cardiff University E-mail:MokhtarMZ@cardiff.ac.uk Accepted for Presentation at the Fourth Asia Pacific Interdisciplinary Research in Accounting Conference 4 to 6 July 2004 Singapore 1 DETERMINANTS OF CORPORATE PERFORMANCE OF MALAYSIAN COMPANIES ABSTRACT This study sets out to identify factors that influence corporate financial performance in a sample of Malaysian companies during the period 1998 –2001. Different measures of corporate performance were employed in the current study. ISO registration appeared to be the most significant determinant of corporate performance in the sampled companies. In addition, the results reveal that ROA, EVA, ROS and Inventory are the most significant variables affecting ISO. The findings also revealed that ISO companies out perform non-ISO registered companies. Keywords: Corporate Performance; ISO 9000; Return on Assets; Economic Value Added; Return on Sales; Inventory. 2 DETERMINANTS OF CORPORATE PERFORMANCE OF MALAYSIAN COMPANIES INTRODUCTION The subject of corporate performance has received significant attention from scholars in the various areas of business and strategic management. It has also been the primary concern of business practitioners (managers and entrepreneurs) in all types of organizations since corporate performance...
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...Finding a company with Durable Competitive Advantage: Domino´s Pizza Group plc Value Investing. Autumn 2013 Author: Jero R. Marin. September 2013 Introduction Domino´s Pizza Group PLC (DPG) is the UK and Ireland's leading pizza delivery company and holds the master franchise to own, operate and franchise Domino's Pizza stores in these markets and also in Germany and Switzerland. It is a company based in UK and it is totally independent from the US Domino´s Pizza Corp with which it just holds an agreement to use the Domino´s brand name. With a Gross profit margin of 36.6%, a Sales compounded average growth rate in the last 5 years of 15.9%, and a Return on Equity of 48.6% it is worth a thoughtful analysis to determine Finding a company with Durable Competitive Advantage: Domino´s Pizza Group plc whether this company has really a sustainable competitive...
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...LVMH Submission: Public consu lt at ion on t he Gre en Pap er f rom the Commission on policy options for progress towards a European Contract Law for consumers and businesses January 2011 EU Registration number: 16094042309-21 2 LVMH Submission Public consultation on the Green Paper from the Commission on policy options for progress towards a European Contract Law for consumers and businesses Executive Summary The LVMH Group welcomes the opportunity general contract law are creating obstacles to to respond to the European Commission’s cross-border transactions as businesses face public consultation on “policy options for a considerable administrative burden to comply progress towards a European Contract Law for with diverging national legal systems. Moreover, consumers and businesses”. LVMH supports despite international private law rules regarding the Commission’s work in the area of contract choice of law and national mandatory rules in law and supports its aim of developing cross- consumer contracts, consumers are not familiar border commerce by increasing legal certainty with their rights when shopping online and for businesses and consumers. We believe hence lack trust in online transactions. further work on an optional 28th regime is an opportunity to enable businesses to operate with legal certainty across the 27 EU Member States while ensuring a high level of consumer protection across the...
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...is that they tend to be heavily regulated and the effects of regulatory requirements on value have to be considered. In this chapter, we begin by considering what makes financial service firms unique and ways of dealing with the differences. We then look at how best we can adapt discounted cash flow models to value financial service firms and look at three alternatives – a traditional dividend discount model, a cash flow to equity discount model and an excess return model. With each, we look at a variety of examples from the financial services arena. We move on to look at how relative valuation works with financial service firms and what multiples may work best with these firms. In the last part of the chapter, we examine a series of issues that, if not specific to, are accentuated in financial service firms ranging from the effect of changes in regulatory requirements on risk and value to how best to consider the quality of loan portfolios at banks. Categories of financial service firms Any firm that provides financial products and services to individuals or other firms can be categorized as a financial service firm. We would categorize financial service businesses into four groups from the perspective of how they make their money. A bank makes money on the spread between the interest it pays to those from whom it raises funds and the interest it charges those who borrow from it, and from other services it offers it depositors and its lenders. Insurance companies make their income...
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...Where Theory Meets Practice Mcgraw-Hill Series in Advanced Topics in Finance and Accounting Course Objective This course is designed to allow students to develop a deep understanding of financial theories, techniques, and models applied to the study of corporate financial decisions. It covers aspects of corporate strategy, industry structure, and the functioning of capital markets. The course consists of three segments. In the first segment, students do a comprehensive analysis of the assigned cases and prepare a written report that includes identification of major issues, alternative approaches, analysis of each alternative, and a concluding part in which students take a clear cut position in how they would approach the problem as a decision maker and defending their position. The Case study is done by groups (three to four students per group). The text analysis should not exceed five pages. It should be typed and double-spaced. A lengthy summary of the case is unnecessary and redundant. The space constraint should discipline students to be concise at differentiating major issues from the less important ones. All the tables, graphs and related analysis, which are not counted in the 3-5 pages of text, should be attached to the text and carefully referred to. Any outside material should be footnoted or I will assume it is part of your opinion. .Active participation in discussion is one of the most important benefits of case analysis...
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...State the problem or question: The following question that associated with this lab was if the strength of the SPF in four different types of products would prevent or continue the growth of light sensitive yeast when tested. The yeast is essentially our skin and the growth of the yeast shows that the SPF of the product tested was effective. If the yeast growth was muted, then the SPF of the product did not protect our skin. Background information: Based on the information regarding depth of penetration of sun rays, we formed a lab that allowed us to test the depth of penetration while also finding the most effective SPF based product. We were testing for deep penetrating ray prevention by sunblock and surface penetration rays by sunblock. The strain of bacteria we used was a light sensitive one that would die upon contact with the sun, therefore if there were bacteria still growing under the SPF shield then it essentially worked. Hypothesis: My prediction for this experiment was that the Coppertone sun-block with an SPF of 30 would allow the largest yield of yeast to grow underneath the spray. I also predict that the tinted moisturizer with an SPF of 20 will have the least effect on yeast growth when tested; therefore the tinted moisturizer will not produce any yield from the light sensitive yeast. I also predict that the short UV rays will cause the most damage when compared to the longer UV rays. Materials: We were given four various ranges of SPF based products;...
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...os t S W12772 WAREHOUSING STRATEGY AT VOLKSWAGEN GROUP CANADA INC. (VGCA) op yo Adam Bortolussi wrote this case under the supervision of P. Fraser Johnson solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; email cases@ivey.uwo.ca. Copyright © 2012, Richard Ivey School of Business Foundation Version: 2012-03-05 tC It was Tuesday, January 18, 2011, and Kym Meisner, director of warehousing and logistics at Volkswagen Group Canada Inc. (VGCA), was reviewing a presentation by the sales and marketing team regarding the five-year growth plan for both the Volkswagen and Audi vehicle brands in Canada. In her 20 years working for VGCA, Kym had never seen such aggressive growth targets attributed to new car launches, product facelifts...
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...in 2013 3 Deloitte Report Chet Wood, Managing Partner of Deloitte LLP, Merger & Acquisition Services: • • About 70 percent of all health plan M&As fail to create meaningful shareholder value. CFOs and management can take a stronger role in M&A deal evaluation, especially on revenue growth. 4 Use of Financial Statements for Valuation “I am considering to buy a small packing company. They offered me RMB 15 million and gave me their last 2 years’ Income Statements and Balance Sheets. I think it’s overpriced. How much do you think I should pay?” How will you use I/S and B/S to assess the target firm’s fair value? 5 Warren Buffet Emphasized importance of looking at a firm’s Competitive advantage of products Long-term growth potential… for good investment 6 Sound Fundamental Analysis One does not buy a stock, one buys a business. When buying a business, know the business. Good firms can be bad buys (if overpriced). Price is what you pay, value is what you get. Value of firm = Value of Debt + Value of Equity TA = L + SE (BV) on B/S 7 TA – L = SE SE (BV) vs. Market value of equity 8 Stock Price What is intrinsic value? Is the price overvalued? P/E=41: What earnings growth rate investors predicted? 9 Learning Objective of the Course I. Valuation based on Financial Statements Predict firm value and challenge the market! II. Financial Statement Analysis Assess a firm’s future performance & analyze how a firm creates value Creative, forward-looking & value-focused...
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