FIN 9005 QUB Accounting Finance for Managers Corporate Finance Discussion

FIN 9005 QUB Accounting Finance for Managers Corporate Finance Discussion
FIN9005: Corporate Finance
Assignment
Dr. Lisa Sheenan
l.sheenan@qub.ac.uk
IBM
✓ IBM’s share price has fallen by almost 20% since
February 2020
✓ Yahoo finance
2
Recommendation
✓ You should make a recommendation on how IBM
could increase shareholder value by its Corporate
Finance decisions
✓ It should be based on one of the following:
✓ Corporate Governance
✓ Capital Structure
✓ Dividends or Repurchases
✓ We will cover Corporate Governance 20th October, Capital
Structure 3rd November and Dividends or Repurchases 10th
November
3
Structure
✓ Choose what topic your recommendation focuses on
✓ Discuss important and recent academic literature on
this topic
✓ Describe your recommendation in detail
✓ Calculate Discounted Cash Flow of the company now
✓ Calculate Discounted Cash Flow after your
recommendation
✓ Discuss any risks involved with your recommendation
4
Assessment Criteria: Template
Poor
Good
Very Good
0-50
50-60
60-70
Excellent Outstanding
70-80
80-100
Literature Review of the Topic
Originality of your Recommendation
Discounted Cash Flow Methodology
5
Literature Review: Knowledge of
Course Content
✓ You should demonstrate that you understand the topics
considered in class
✓ There should also be evidence of understanding and
appraisal of required readings
✓ Lecture notes and required readings are available for
all topics from Canvas
6
Literature Review: Recent Journal
Articles
✓ To find journal articles for your project you can use
Google Scholar for keyword searches
✓ You can browse the recent issues of well respected
journals at:
✓ Journal of Finance
✓ Journal of Financial Economics
✓ Review of Financial Studies
✓ Journal of Corporate Finance
7
Originality of Your
Recommendation
✓ You should include original ideas in your analysis
✓ An unoriginal idea may be ‘IBM should reduce its
CEO’s cash salary by £1m, but increase the number of
share options he receives by 0.5m’
✓ A more original idea may be ‘IBM should reward its
CEO with a £1m cash bonus for every 0.1% reduction
in its WACC’ as this type of scheme is not very
common
✓ You will have to try to find a balance between
originality and what is practical
8
Discounted Cash Flow Methodology
✓ In your analysis you should employ quantitative
valuation techniques to estimate the impact of your
recommendations
✓ You should conduct a DCF valuation of the company
as it is now
✓ Then estimate what would change if the company
followed your recommendation
✓ The data and assumptions used in any calculations
should be clearly explained
9
Discounted Cash Flow Methodology
✓Estimate the impact of your recommendation
on:
✓Growth – will company increase profits?
✓Beta – will the risk of the company change?
✓Cash – will company pay out or bring in cash to
balance sheet?
✓Debt – will debt change?
✓Number of shares – will company issue or buyback
shares?
10
Discounted Cash Flow Methodology
✓Most other variables should not change:
✓Last year’s Free Cash Flow to Firm
✓Risk-Free Rate
✓Expected Market Return
✓IBM’s corporate tax rate was quite low last
year, but you can just continue to use this rate
11
DCF Baseline Calculation (Week 7)
✓ Deadline:
Friday Week 7
06/11/20
✓ Your DCF calculations for the company, as it is now,
should be submitted using the form that will be
provided in Week 6
✓ This is just to help you make progress with your
assignment
✓ There will be no marks given, but you will receive
feedback on whether your initial valuation of the
company is correct
✓ Then go on to think about how to change the company
12
Full Assignment (Week 10)
✓ Deadline:
Friday Week 10
27/11/20
✓ Assignment should be submitted using the form
that will be provided in Week 9
✓ Only plain text can be included
✓ Prepare your work offline, then paste into the form
✓ Keep a copy of your work in case of submission
problems
13
Marking
✓Usually about the top 25% of students will
receive a Distinction
✓The next 50% will receive a Pass with
Commendation
✓The final 25% will receive a Pass (or Fail)
14
✓ You should make a recommendation on how IBM could increase shareholder value by its
Corporate Finance decisions
✓ It should be based on one of the following:
✓ Corporate Governance
✓ Capital Structure
✓ Dividends or Repurchases
✓ We will cover Corporate Governance 20th October, Capital Structure 3rd November
and Dividends or Repurchases 10th November
就 IBM 如何通过公司财务决策增加股东价值提出建议
基于以下内容之一:
公司治理
资本结构
股息或回购
我们将讨论公司治理 10 月 20 日,资本结构 11 月 3 日和股息或回购 11 月 10 日
✓ Choose what topic your recommendation focuses on
✓ Discuss important and recent academic literature on this topic
✓ Describe your recommendation in detail
✓ Calculate Discounted Cash Flow of the company now
✓ Calculate Discounted Cash Flow after your recommendation
✓ Discuss any risks involved with your recommendation
选择研究主题
讨论有关此主题的重要和近期学术文献 (下载文献)
详细描述你的建议
立即计算公司的折现现金流量
根据您的建议计算折现现金流
讨论与您的建议相关的任何风险
✓ You should demonstrate that you understand the topics considered in class
✓ There should also be evidence of understanding and appraisal of required readings
✓ Lecture notes and required readings are available for all topics from Canvas
你应该证明你理解课堂上讨论的主题
网课归纳(概念)
此外,还应提供对所需阅读资料的理解和评估的证据 (参考文献综述)
Canvas 提供所有主题的课堂讲稿和必读阅读资料
增加参考文献 自己找 谷歌学术
一个参考文献观点 一个个人观点
✓ In your analysis you should employ quantitative valuation techniques to estimate the
impact of your recommendations
✓ You should conduct a DCF valuation of the company as it is now
✓ Then estimate what would change if the company followed your recommendation
✓ The data and assumptions used in any calculations should be clearly explained
在你的分析中,你应该使用定量评估技术(具体数据)来估计你的建议的影响
你应该对公司进行 DCF 估价
然后估计一下如果公司采纳了你的建议会有什么变化
任何计算中使用的数据和假设都应明确解释(计算过程)
✓ Estimate the impact of your recommendation on:
✓ Growth – will company increase profits?
✓ Beta – will the risk of the company change?
✓ Cash – will company pay out or bring in cash to balance sheet?
✓ Debt – will debt change?
✓ Number of shares – will company issue or buyback shares?

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