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25743 Advanced Corporate Valuation

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2019 is available in the Archives.

UTS: Business: Finance
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

Requisite(s): (25705c Financial Modelling and Analysis AND 25765c Corporate Finance AND (48 credit points of completed study in spk(s): C04018 Master of Business Administration OR 48 credit points of completed study in spk(s): C04048 Master of Finance OR 48 credit points of completed study in spk(s): C04038 Master of Financial Analysis OR 48 credit points of completed study in spk(s): C04258 Master of Finance (Extension)))
The lower case 'c' after the subject code indicates that the subject is a corequisite. See definitions for details.

Description

This subject develops students' abilities to conduct corporate valuation for investment purposes. This advanced subject introduces the techniques used to measure the worth of a company and its investments. Students assume the role of financial analysts and learn the mechanics of market valuation by performing industry and financial analysis, identifying accounting deficiencies, forecasting financial statements, and ultimately valuing companies. Each analyst is expected to prepare a final project evaluating a company of their choice from the multiple perspectives introduced in class.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:
1. analyse the latest developments in corporate financial analysis including management and industry analysis to develop skills necessary to assess a variety of financial information for investment purposes
2. apply accounting information to assess company's profitability, identify the company’s prospects in the corporate life cycle, and establish the quality of its reported earnings
3. measure the parameters used to estimate the cost of equity and capital for individual firms, estimate current and expected future free cash flows, and execute different discounted-cash-flow methodologies to value the equity in the firm
4. justify the valuation of firms based on how comparable firms are priced by the market, and address the key issue of how to control for cross-sectional differences in risk, growth potential, and cash flows

Course intended learning outcomes (CILOs)

This subject also contributes specifically to the following program learning objectives:

  • Research and critically analyse complex information for business decisions (1.1)
  • Demonstrate integrated solutions in decision making (2.2)
  • Be able to convey information clearly and fluently in high-quality written form appropriate for their audience (3.1)
  • Critically evaluate and apply sustainability principles to decisions in business contexts (4.2)
  • Apply high-level technical skills necessary for professional practice in the finance industry (5.1)

Contribution to the development of graduate attributes

This subject develops students' abilities to conduct advanced corporate valuation. The students will learn how to analyse corporate performance, forecast free cash flows, estimate the appropriate opportunity cost of capital, and identify opportunities and threats to value creation and their implication for equity valuation. Students will analyse complex contexts and explore the challenges of valuing high-growth companies, cyclical companies, and companies in financial distress. Students will also use multiples of comparable companies to supplement discounted cash flow valuation to value corporations. Successful completion of this subject will contribute to students’ acquiring the following graduate attributes: critical thinking and analytical skills, attitudes and values and business practice oriented skills.

This subject contributes to the development of the following graduate attributes:

  • Business knowledge and concepts
  • Critical thinking, creativity and analytical skills
  • Communication and interpersonal skills
  • Attitudes and values
  • Business practice oriented skills

This subject assures the following program learning objectives for the Master of Finance:

  • Be able to access and critically analyse relevant information for business decisions (1.1)
  • Demonstrate integrated solutions in decision making (2.2)
  • Be able to convey information clearly and fluently, in high quality written form appropriate for their audience (3.1)
  • Critically evaluate and apply sustainability principles to decisions in business contexts (4.2)
  • Apply high level technical skills necessary for professional practice in the finance industry (5.1)

This subject also assures the following program learning objectives for the Master of Financial Analysis:

  • Demonstrate integrated solutions in decision making (2.2)
  • Critically evaluate and apply sustainability principles to decisions in business contexts (4.2)
  • Apply high level technical skills necessary for professional practice in the finance industry (5.1)

Teaching and learning strategies

The subject will be taught using a combination of lectures and real-life valuation examples. The classes will be supplemented with extensive electronic learning materials and resources. The UTS web-based communication tool

Canvas will be used to share information and facilitate interaction between staff and students. Students will also use computer software such as spreadsheets and word processors to complete assigned tasks, and will use online interactive tools to assess their learning progress throughout the semester.

Students are expected to prepare for classes by accessing relevant links to online material, and by completing assigned readings on Canvas. Students should be prepared to discuss the material and tutorial questions during class. There will be opportunities to go through examples and questions, and students are encouraged to bring their laptops to class, in order to participate in financial modelling activities using spreadsheet tools.

There will be regular in-class live quizzes in which students will participate with interactive online applications. Using Canvas, students can self-assess their learning and get feedback on their progress. Participation and the scores for each quiz will be recorded, and will form part of students’ assessment grades for the subject.

Students are required to collaborate in groups on real world scenarios where firms are valued using the concepts taught in-class and online. Students will also work together on a group assignment to produce a recommendation report.

Students are responsible for keeping up-to-date with all announcements and information, and are encouraged to use Canvas discussions for sharing ideas, and for improving their understanding of concepts and topics.

A summary will be made available on Canvas at the end of each seminar for students to review subject material, especially if they have missed some classes.

Content (topics)

  • Analysis of the industry, firms/competitors and corporate strategy.
  • Cross sectional and time series analysis of financial information, leading to the development of ratio analysis.
  • How to use correctly relative valuation multiples and detect when they are being misused.
  • Forecasting and equity valuation using financial statement information.
  • Dealing with uncertainty in corporate valuation: scenario analysis and Monte Carlo simulations

Assessment

Assessment task 1: Assignment (Group)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

This addresses program learning objectives(s):

1.1 and 3.1

Weight: 30%
Length:

Maximum 15 pages

Assessment task 2: Quizzes (Individual)

Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

Weight: 20%

Assessment task 3: Final Exam (Individual)

Intent:

This subject contributes specifically to the following program learning objectives for the courses C04048 Master of Finance and C04038 Master of Financial Analysis:

  • demonstrate integrated solutions in decision making (2.2)
  • critically evaluate and apply sustainability principles to decisions in business contexts (4.2)
  • apply technical skills and professional skills necessary for professional practice in the financial services industry (5.1)

This subject also contributes specifically to the following program learning objectives for the course C04048 Master of Finance:

  • access and critically analyse relevant information for business decisions (1.1)
  • convey information clearly and fluently, in high quality written form appropriate for their audience (3.1)
Objective(s):

This addresses subject learning objective(s):

1, 2, 3 and 4

This addresses program learning objectives(s):

1.1, 2.2, 3.1, 4.2 and 5.1

Weight: 50%
Length:

2 hours and 10 minutes reading time.

Minimum requirements

Students must achieve at least 50% of the subject’s total marks.

Required texts

All textbook material will be provided on UTS online in pdf format.

Other resources

Lecture Overheads
Lecture overheads will be available on UTS online.

Other References
• Faculty of Business (2010), Guide to Writing Assignments (available through UTSOnline
or at http://www.business.uts.edu.au/resources/guide.html)