Paper, Order, or Assignment Requirements

Coursework Assignment Outline:

Assume that you and your colleagues are working in the corporate financial advisory services department of a large investment bank and your director (who has read extensively about shareholder value analysis) has asked you to prepare a shareholder value analysis and a short-term valuation report on your chosen company using the following basis for your valuation:

• Planning period is to be set at seven years
• A residual value based on constant cash flows from year seven onwards (infinite life) will be estimated at the end of this seven year period
• Beta factor to be obtained using current information held on DataStream or other sources
• FTSE All-share return to be taken as 8%
• Risk free rate to be taken as 3%
• The target capital structure to be set based on the company last financial year (preferably 2015)
• The gross cost of debt over the financing period is to be estimated at 5% per annum
• As for the other key value drivers (forecast sales growth rate, operating margins, tax rate, incremental working capital requirements and incremental fixed asset investment) you are required to decide these yourselves. The director have advised you to review the latest annual report and accounts of your chosen company and use the data therein and other financial journalistic analysis and intelligence that you consider appropriate to help you decide upon the growth levels of your chosen drivers.
Question:
Compare and contrast the three company valuation techniques: net asset value; price-earning multiples and discounted cash flow. Use any real life examples from your chosen company to support your analysis on each valuation method.
The chosen company that should be used for the example is Ryanair airlines