Theory and practice of business valuation: using financial statements, modeling cash flows, present value, using multiples.
Number of Credits: 3
This class meets in-person for two 75-minute class periods from 1:00pm to 2:15pm every Tuesday and Thursday. Students need to work a minimum of four hours out of class each week over approximately 15 weeks.
ECON/FINANCE 300, FINANCE 700, or member of Business Exchange program.
Instruction Mode: In-Person Instruction.
Required Course Materials
Corporate Valuation: Theory, Evidence & Practice (2nd Edition) Holthausen and Zmijewski. Publisher:
Cambridge Business Publishers. ISBN: 978-1-61853-324-1
Course Learning Outcomes
At the end of this course:
- Students will be able to apply several valuation models. These can be used to select stocks, make investment recommendations, infer market expectations, evaluate events such as mergers, acquisitions, spin-offs, evaluate business strategies and models, value private businesses, and assess credit worthiness.
- Students will be able to analyze financial statements and other sources of information in order to assess earnings quality and financial risk, and make better forecasts of accounting data used in valuation models.
- Students will be able to conduct industry and competitive strategy analysis to understand the economic forces and help forecast future accounting numbers and cash flows.
- Students will be able to present and defend trade and investment recommendations based on overall analysis.
- Build valuation models using spreadsheets.
All cases must be obtained by each student individually. You can use this link to access the course pack:
1) Anandam Manufacturing Company: Analysis of Financial Statements. Vinay Goyal and Subrata Kumar Mitra. Ivey Publishing. 2016.
2) Monsanto Company. Marc Lipson and Rick Green. Darden School of Business. 2010. This case has a spreadsheet supplement.
3) Mercury Athletic: Valuing the Opportunity. Timothy A. Luehrman and Joel L. Heilprin. HBS Brief Cases. 2011. This case has a spreadsheet supplement.
4) Valuation of AirThread Connections. Erik Stafford and Joel L. Heilprin. HBS Brief Cases. 2011.
This case has a spreadsheet supplement.
Guidelines for Case Write-Ups
There will be four assigned cases, and all are to be turned in. You will work in teams of up to four students. All members of a team will ordinarily receive the same grade, but I will ask every member of the team to do a peer evaluation of other group members, and I reserve the right to use that or other information to give less or more marks to an individual team member.
For each case you will be provided with a list of questions designed to help guide and focus your analysis. The questions are not intended to be a complete list of the relevant issues in the case and, therefore, should not be used to define the limits of your analysis. The following are some general guidelines in preparing your write-ups.
Determine the major problems and/or opportunities in the case. Critically evaluate the information provided in the case. Having identified the relevant issues, list the alternative courses of action. If needed, consult general texts and references pertinent to the problem. If business conditions, the legal environment, or other events at the date of the case affect the solution, find the appropriate facts. Critically evaluate the data and issues provided in the case. Confine your analysis to facts known at the time of the case.
All teams must prepare a typed case report of at most 10 pages of text (double spaced, font size 12 pt.) excluding the cover sheet and at most 8 pages of exhibits, tables and figures. Reports should outline the main issues, address the assigned case questions, and suggest specific recommendations supported by a thorough analysis. The report must clearly state the assumptions and the justifications for making these assumptions, and specify any additional data needed to arrive at conclusions. The case reports will be graded based on both form and content. Copies of your case analysis should be uploaded to Canvas as word documents before the due date stated on Canvas.
No late submissions will be allowed!
Your numerical course grade is equal to the weighted average of live lecture attendance score (5%),homework score (15%), case assignment score (30%), exam 1 score (25%), and exam 2 (final exam) score (25%). As per Wisconsin School of Business rules, the average GPA for the class will be no higher than 3.3.