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 2025 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
The lower case 'c' after the subject code indicates that the subject is a corequisite. See definitions for details.
These requisites may not apply to students in certain courses.
There are course requisites for this subject. See access conditions.

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:

Communicate financial information and decisions clearly and persuasively in an appropriate form to stakeholders (2.1)
Collaborate effectively in teams and with finance stakeholders to deliver negotiated project outcomes (2.2)
Integrate advanced professional and technological skills and knowledge necessary for expert practice in finance (4.1)

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.

This subject contributes to the development of the following graduate attribute(s):

Intellectual rigour and innovative problem solving
Communication and collaboration
Social responsibility and cultural awareness
Professional and technical competence

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 learning management system 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 the learning management system. 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.

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 discussions for sharing ideas, and for improving their understanding of concepts and topics.

A summary will be made available on the learning management system 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): 2.1 and 2.2
Weight:	30%
Length:	Maximum of 8 pages for Part I and maximum of 8 pages for Part II.
Criteria:	The quality of the content as demonstrated by students’ ability to write clear reports. Students will be graded on their ability to demonstrate the efficient communication of financial and non-financial information clearly in an appropriate form to all stakeholders. The coherence and logical organisation of the analysis and video presentation. Student’s will be graded on their ability to interact with various stakeholders as measured by effective in team work and delivery of agreed outcomes.

Assessment task 2: Quiz (Individual)*

Objective(s):	This addresses subject learning objective(s): 1, 2, 3 and 4
Weight:	20%
Length:	The Online Quiz will consist of twenty (20) multiple choice questions. There will be 5 questions for each of the Topics. Some questions will require a calculation. Each question is worth 1 mark.
Criteria:	This quiz will cover the work undertaken in Modules 1 and 2 of this subject. Ratio analysis and other accounting techniques will be tested using quantitative and qualitative questions. An understanding of latest developments of management and industry analysis of corporations will be required *Note: Late submission of the assessment task will not be marked and awarded a mark of zero.

Assessment task 3: Final Exam (Individual)

Objective(s):	This addresses subject learning objective(s): 1, 2, 3 and 4 This addresses program learning objectives(s): 4.1
Weight:	50%
Length:	Two hours. Late submissions will not be accepted.
Criteria:	This exam will cover all the work undertaken in this subject. Relative and intrinsic valuation techniques will be tested using applied quantitative and qualitative questions. An understanding of writing reports that incorporate the latest developments of management and industry analysis of corporations will be required

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 Canvas
or at http://www.business.uts.edu.au/resources/guide.html)