FIN 3321 (Moore)Comprehensive Business Valuation Project Guidelines

Equity Valuation Project Requirements

Overview:
The purpose of this project is for student teams to prepare a
comprehensive business analysis and equity valuation report. The
report will be judged against the quality of proprietary valuations
reports prepared in the professional investment community. Hence,
format, understandability, clarity, quality and depth of analysis, breadth
of coverage, professionalism of the report will be considered in the
grade determination.

Candidate Firms:
First and foremost, students should select firms and industries they find
of interest. Selected firms should be widely held firms. This increases
the likelihood information will be available to perform the analysis and
valuation. The firms must have a market capitalization of at least $500
million (price x number of shares). Dell Corp. is not an acceptable firm
as much of the analysis has been provided in the text. The same holds
for Wal-Mart as we frequently use it for in-class demonstration
purposes.

Analysis and Report Content and Format:

A.Finished Report Guidelines
1. Length of Report–Target around 80-100 pages, 12pt Font,
1.5 space
2. Final report must be bound, single-sided print, publication
quality
B. Contents and recommended order:
1. Cover Sheet
2. Executive Summary (3 pages)
3. Industry Overview and Analysis (Five-Factor Model)
4. Firm Competitive Advantage Analysis (Historical, Current,
Future)
5. Accounting Analysis of Firm and Industry (Key Policies, Quality)
6. Financial Statement Ratio-Based Analysis
• (Industry & Firm: Trends and Comparables)
7. Forecast Financial Statements and Analysis
8. Cost of Capital Estimates (WACC, Ke , Kd )
• Direct Estimates (CAPM)
• Implied Cost of Capital (DCF, Residual Income, AEG, LR
ROE/RI
9. Equity Valuations
• Method of Comparables (Ratio Based) (e.g. P/E; M/B; P/S; PEG,
etc)
• Discounted Dividends, DCF, CAPM, Residual Income, AEG, LR
ROE/RI
• Sensitivity analysis (in body of paper)
10. Credit Risk Analysis and Z-Scores with discussion

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FIN 3321 (Moore)Comprehensive Business Valuation Project Guidelines
11. Analyst Recommendation with detailed analysis/justification
12. Appendix
• Charts (labeled)
• Financial Statements (actual and forecast); Detailed
Ratios; Detailed valuation model results; Regression
Results, etc.
13. References

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