SOLUTION: Company Valuation Assignment
Added on 2021-01-01
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COMPANY VALUATION projectMASTERS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Overview of financial performance of five year....................................................................32. Peer group comparison.......................................................................................................63. Analysing the present issues with their impact of future earnings.....................................84. Estimating ROE of company for past 5 years with DuPont ROE approach....................11Comparison of financial performance from Dupont approach.............................................12PART 2..........................................................................................................................................122.a.........................................................................................................................................122.b.........................................................................................................................................133. Evaluation of value or price of organization....................................................................143.a Is Intrinsic value is differing from current share price?.................................................143.b Presenting that dividend discount model is appropriate or not......................................143.c Investment decision on basis of above evaluation of stock price...................................16CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17
INTRODUCTIONCompany valuation is replicated as process of identifying economic value of a specificbusiness or organization. It could be also used for determining fair value of business entity fornumerous variety of reasons which consist of sale value and to establish partner ownership alongwith proceeding of divorce. The present report will discuss about overall valuation of FlightCeneter travel group limited of past 5 years with context of public announcement as well. In thesimilar aspect, it will perform peer to peer comparison and analysis as micro and macro level.This report will state return on equity with DuPont analysis with appropriate demonstration.Further, it will be conducting regression for estimating beta and to adjust it for mitigating issueof stability. With context of beta, it will estimate return through CAPM as cost of equity inmodel of stock valuation. It will evaluate comparison from intrinsic and actual share price withcontext of dividend discount model.Overview of financial performance of five yearProfitability ratio analysis YearFormula20142015201620172018Gross Profit22072363262525442793Net profit206,918256,553244,556230,773264,213Sales revenue2,207,4502,363,0902,611,8972,647,3642,921,440Earnings beforeinterest and tax oroperating profit429403407300466Capital employed10981270134614291550Average total assets24102599289530983300
GP ratioGrossprofit /sales *100100.0%100.0%100.0%100.0%95.6%NP ratioNetprofit /sales *1009.38%10.88%9.33%9.08%9.04%Return on capitalemployedEBIT /capitalemployed39.07%31.73%30.24%20.99%30.06%Return on assetsNetincome /averagetotalassets8.59%9.89%8.46%7.46%8.00%Interpretation: The above table is replicating analysis of profitability ratio of FlightCenter group Limited with context of return on capital employed and asset, gross and netprofit ratio. From year 2014 to 2017 it does not have various fluctuations as in 2015 itdecreased by 1.5% and further till 2017 it started decreasing by approx. 0.4% which is badindicator for long term perspective and might impact in short term as well. In the similarcontext, it is giving similar impact on net profit ratio as organization must keepappropriate watch on its operating and non operating expenses for evaluating profitability.By considering return on capital employed and asset is also decreasing from year to yearwith small proportion. Hence, it could be evaluated that its profitability is decreasing from2014 to 2017 so organization must take various steps for increasing it growth on basis ofprofitability.Liquidity ratio analysis Year20142015201620172018Current assets 1,887,5492,152,7002,263,2332,337,8012,435,145Current liabilities 1,261,2211,452,5001,566,7241,634,8961,683,788
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