For corporate finance, the students should pick a publicly traded company and obtain a copy of its financial statements for the past 3 years (i.e., the 10-K report).  This will usually be available on the company’s website under investor relations or on a government website—SEC EDGAR for US companies, perhaps another website for chinese companies.  They should also obtain information on the company’s stock price and on its current market capitalization (stock price times shares outstanding).

If they cannot think of a company, I suggest that they look at either Apple, Microsoft, or Nvidia, which they are probably familiar with.

They should prepare a discounted cash flow analysis and a comparable companies analysis, and explain the assumptions that they think investors are using (about cost of equity, discount rate and growth rate in earnings) to come up with the current stock price and market capitalization.  Then they should explain whether they think that these assumptions are reasonable, or if they think that the company is overvalued or undervalued by the market.

They should have an analysis in excel and a presentation in powerpoint, no more than 10 slides and no more than 10 minutes each.

If it is easier, we can have them all write about one company, perhaps Apple.

Corporate Finance Valuation Assignment

Team Structure

You may work individually or in teams of 2-3 students. All team members will receive the same grade, but larger teams will be held to higher standards:

· Individual work: Focus on solid technical analysis meeting all requirements

· Teams of 2: Expected to include sensitivity analysis and more polished presentation materials

· Teams of 3: Must include advanced elements like scenario analysis or Monte Carlo simulation

Team Requirements:

· Each team member must be able to present and answer questions about any part of the analysis

· Submit a brief role allocation summary with your deliverables

· All members must contribute meaningfully to both Excel modeling and presentation

Objective

You will conduct a comprehensive valuation analysis of Apple Inc. using professional financial analysis techniques. Your goal is to determine whether Apple's current stock price accurately reflects its intrinsic value. By having all students analyze the same company, we can focus class discussions on methodology and assumptions rather than company-specific differences, leading to deeper learning about valuation techniques.

Company Selection

All students will analyze Apple Inc. (AAPL)

Apple is selected because it is familiar to students, has clean and accessible financial statements, and allows for focused class discussions where everyone can compare methodologies using the same underlying data.

Required Analysis

1. Financial Data Collection

· Obtain 3 years of financial statements from the company's 10-K annual reports

· Find current market data: stock price, shares outstanding, and market capitalization

· Gather key financial metrics needed for your analysis

2. Valuation Methods

You must perform. both of the following analyses:

A. Discounted Cash Flow (DCF) Analysis

· Project future cash flows

· Determine appropriate discount rate (cost of equity)

· Calculate terminal value

· Arrive at intrinsic value per share

B. Comparable Companies Analysis

· Identify 3-5 technology companies with similar business models (suggestions: Microsoft, Google/Alphabet, Samsung, Sony)

· Compare valuation multiples (P/E, EV/EBITDA, EV/Sales, etc.)

· Determine implied valuation range for Apple

3. Critical Evaluation

· Identify the market's implied assumptions: What growth rates, discount rates, and margins is the market assuming to justify the current stock price?

· Assess these assumptions: Are they reasonable given the company's fundamentals, industry trends, and economic environment?

· Provide your investment recommendation: Is the stock overvalued, undervalued, or fairly valued? Support your conclusion.

Data Sources

For Students Outside China

· SEC EDGAR database: sec.gov/edgar

· Market data: Yahoo Finance, Google Finance, or Bloomberg

· Company investor relations pages

For Students in China (Alternative Sources)

· Financial statements: Company investor relations pages (Apple: investor.apple.com, Microsoft: microsoft.com/investor, NVIDIA: investor.nvidia.com)

· Market data and analysis:

o Wind Financial Terminal (万得金融终端)

o CSMAR Database (国泰安数据库)

o Tencent Finance (腾讯财经)

o Sina Finance (新浪财经)

o NetEase Finance (网易财经)

· International data (if accessible): Bloomberg Terminal (available at many Chinese universities)

· Academic databases: Many Chinese universities provide access to international financial databases like WRDS

All Students

· Shares outstanding: Found in latest annual reports or quarterly filings

· Industry comparables: Use financial databases or analyst reports available through your institution

Deliverables

1. Excel Analysis (Submit file)

· Clean, well-organized spreadsheet with:

o Historical financial data

o DCF model with assumptions clearly labeled

o Comparable company analysis

o Sensitivity analysis showing how changes in key assumptions affect valuation

2. PowerPoint Presentation

· Individual/Teams of 2: Maximum 10 slides

· Teams of 3: Maximum 12 slides

· All teams: Maximum 10 minutes presentation time

· Must include:

1. Company overview and investment thesis

2. Key financial trends (3-year analysis)

3. DCF assumptions and results

4. Comparable company analysis results

5. Market's implied assumptions

6. Your assessment of these assumptions

7. Final recommendation with supporting rationale

8. Teams of 2+: Additional sensitivity/scenario analysis slide(s)

Evaluation Criteria

· Accuracy of financial analysis (40%)

· Reasonableness of assumptions (25%)

· Quality of critical thinking and market assessment (20%)

· Presentation clarity and professionalism (15%)

Team-specific expectations:

· Individual: Competent execution of all requirements

· Teams of 2: Higher polish and inclusion of sensitivity analysis

· Teams of 3: Advanced analytical techniques and professional-grade deliverables

All teams: Each member must demonstrate understanding of the complete analysis during Q&A

Tips for Success

· Start early - gathering and organizing data takes time

· For students in China: If you cannot access certain international websites, use the alternative Chinese financial data sources listed above. The analysis methodology remains the same regardless of data source.

· Focus on Apple's key value drivers: iPhone sales cycles, Services growth, China market performance, and capital allocation strategy

· Since everyone is analyzing the same company, pay special attention to your assumptions and methodology - this is where you'll differentiate your analysis

· Practice your presentation to stay within the time limit

· Be prepared to defend your assumptions and conclusions, especially when they differ from classmates' approaches

Questions?

If you need help finding data sources, understanding financial concepts, or structuring your analysis, don't hesitate to ask for guidance during office hours or via email.