Teacher Evaluation

Only available on StudyMode
  • Download(s) : 74
  • Published : January 15, 2013
Open Document
Text Preview
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 assumptions, the calculation Microsoft corporation value using DCF model and performance sensitivity analysis through five variables which have been prior mentioned. The objective and reasonable number of ratios always need base on the objective and reasonable assumptions, the final main content we evaluate our assumptions and conclude on the appropriateness of the estimation.

GROUP 4

Page 2

GROUP ASSIGNMENT 02 _FB0602

II)

OVERVIEW OF THE COMPANY

1) BUSINESS CHARACTERISTICS The technology sector includes those market companies involved in the production or delivery of technological goods and services. Generally, this sector is focused on what is considered advanced technology or "high-tech," that is, computers and peripherals, semiconductors, software, IT services, telecommunications, home entertainment and biotechnology, to name a few. The technology sector is considered a leading sector for growth based on investment. Thus tech stocks typically pay less in dividends than more traditional companies. Instead tech companies tend to seek to attract investors interested in profiting from the increase in share price rather than from dividends, while re-investing profits that might go toward dividends toward the further growth of the company. This, though, has begun to change as more established high-tech companies have started to offer dividends. With the growth of the importance of technology in society, the technology sector has become a bellwether of the overall stock market and economy. The technology industry is an important contributor to the United States economy, which are more than 100,000 software and information technology services – with over 99% are small or medium-sized firms. In 2012, half of 175 billion $US – which are software sector revenues of total 100 top companies – are the revenue of three largest firms: IBM, Microsoft and Oracle. In addition, according to the Fortune, in 2012, only Microsoft reaches the highest revenue –...
tracking img