Students
AFIN838 – Business Valuation
2015 – S1 Day
General Information
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| Unit convenor and teaching staff |
Unit convenor and teaching staff
Unit Convenor
James McCulloch
Contact via james.mcculloch@mq.edu.au
Consultation during tutorials or via email
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| Credit points |
Credit points
4
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| Prerequisites |
Prerequisites
ACCG611 or ACST603 or AFIN858
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| Corequisites |
Corequisites
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| Co-badged status |
Co-badged status
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| Unit description |
Unit description
This unit examines the many techniques commonly employed in assessing the value of whole businesses and individual parts of businesses, how to select an appropriate technique for a particular valuation task, and how to apply the technique in practice.
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Important Academic Dates
Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates
Learning Outcomes
On successful completion of this unit, you will be able to:
- Write a report valuing the equity of a mid-capitalization company listed on the Australian Securities Exchange
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Apply valuation techniques to real world valuation problems.
- Explain the principles and theory behind each valuation technique
General Assessment Information
It is the responsibility of students to view their marks for each within session assessment on iLearn within 20 days of posting. If there are any discrepancies, students must contact the unit convenor immediately. Failure to do so will mean that queries received after the release of final results regarding assessment tasks (not including the final exam mark) will not be addressed.
Assessment Tasks
| Name | Weighting | Due |
|---|---|---|
| Diagnostic Quiz | 5% | Week 4 |
| Presentation | 10% | Weeks 4, 6 & 8 |
| Report | 30% | Week 10 |
| Final Examination | 55% | University Examination Period |
Diagnostic Quiz
Due: Week 4
Weighting: 5%
Online iLearn Quiz to assess student progress in the course. Multiple choice using short calculations (approx. 1 hour duration). The online test will be released in week 3 and must be completed by week 4. Exact times and dates of the test will be advised in class and by iLearn message (student email).
Extensions.
No extensions will be granted. Students who have not submitted the quiz prior to the deadline will be awarded a mark of 0 for the quiz, except for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
- Explain the principles and theory behind each valuation technique
Presentation
Due: Weeks 4, 6 & 8
Weighting: 10%
Important - Every student must participate in the group presentations so that individual student contribution to the group presentations can be identified.
Group Presentations are in the form of a slide presentation to be delivered to the class. The presentation should be no more than 5 slides or 10 minutes in duration and can include information sourced from the internet.
Group Presentation in Week 4.
A presentation on the mid-capitalization stock selected for the Group Business Valuation Report. This presentation is not analytical but should include public information available on internet about the selected stock.
Group Presentation in Week 6.
A preliminary analysis of the stock selected for valuation. The preliminary analysis should briefly examine the industry of each stock, a brief review of financial market news for each stock, a brief review of past financial statements of each stock and a statement of the future business strategy for each stock. The report should also include a calculation of the Weighted Average Cost of Capital (WACC) of the stock.
Group Presentation in Week 8
(This report may be longer in duration but should not exceed 15 minutes).
A detailed analysis of the stock selected for valuation. The detailed analysis should examine:
1. The economic environment of the company’s industry.
2. An Analysis of the company’s industry using Porter’s 5 Forces.
3. An assessment of the company’s industry/business strategy.
4. A free cash flow (FCFF & FCFE) valuation of the company.
Extensions
No extensions will be granted. Groups who have not submitted the task prior to the deadline will be awarded a mark of 0 for the task, except for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Apply valuation techniques to real world valuation problems.
- Explain the principles and theory behind each valuation technique
Report
Due: Week 10
Weighting: 30%
Important - The report should contain an appendix that details the contribution of each student so that individual contributions to the report can be identified.
Students groups will write a report valuing a mid-capitalization company listed on the Australian Securities Exchange (ASX). The style of the report (examples provided) will be a detailed valuation report for a commercial client. The assignment will be marked on presentation and technical veracity. Students will be required to identify their individual contribution to the group assignment.
Submission
The group assignment is worth 30% and must be submitted electronically. Submission of the group assignment will been in semester academic week 10. Students will be advised in class of the format of the group assignment and the exact date and time of the group assignment submission deadline.
Late Report Submission
No extensions will be granted. Late reports will be accepted up to 72 hours after the submission deadline. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 20%penalty). This penalty does not apply for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
- Write a report valuing the equity of a mid-capitalization company listed on the Australian Securities Exchange
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Apply valuation techniques to real world valuation problems.
- Explain the principles and theory behind each valuation technique
Final Examination
Due: University Examination Period
Weighting: 55%
Important: To be eligible to pass this unit, a pass is required in the final examination.
A 3 hour final examination for this unit will be held during the University Examination period. The AFIN838 examination will be an open book examination. Students will be permitted to take the text-book (Damodaran) and prepared notes (4 pages) into the examination. The examination will consist of multiple choice questions and written questions requiring longer, more complex and calculated answers
On successful completion you will be able to:
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Explain the principles and theory behind each valuation technique
Delivery and Resources
Classes
- There are 13 weekly sessions of 3 hours each consisting of 1 X 2 hour lecture and 1 x 1 hour tutorial
- See timetable for classes on the University web site at: http://www.timetables.mq.edu.au/
- All students are to attend all classes (including tutorials) except in cases of illness or unexpected events of a serious nature (eg family bereavement).
Required Textbook
"Damodaran on Valuation" by Aswath Damodaran.
ISBN: 978-0471751212
The text is available from the Macquarie University Co-op Bookshop. You can also check the 2nd hand bookshop or search online.
Technology Used and Required
Students will require a calculator (scientific or financial) capable of handling exponents. Simple financial functions (as found on financial calculators) will not be required. If the calculator is to be used in exams then it must NOT be capable of storing text or formulae OR it must easily be demonstrated that all memory has been cleared.
Students must be familiar with spreadsheet technology (eg MS Excel or equivalent)
Unit Web Page
Course material is available on the learning management system at http://iLearn.mq.edu.au
You are strongly encouraged to regularly visit the website and use it as a resource centre to assist with your learning. All lecture material and examples, homework questions and answers, administration issues, and supplementary readings will be available on this site as the course progresses.
If you are unable to access the website because you are not aware of or have forgotten your username and password, please contact the IT helpdesk. All information can be found at http://informatics.mq.edu.au/help/
With regards to assistance in using iLearn please visit the following link. http://www.mq.edu.au/iLearn/student_info/index.htm
You can follow the tabs on the left, i.e., “Getting Started” and “Access iLearn”
Please remember to log out when you have finished using iLearn. Failure to do so could result in unauthorised access to your iLearn account.
Teaching and Learning Activities
Contact sessions are three hours. The first two hours will introduce new material in a lecture format. The final hour will be a tutorial to review completed material, assignments and to answer more detailed student questions. There will be a short break before the tutorial session.
Students are required to prepare for each lecture by reading the material set from the required textbook, and to complete the homework assignment to be discussed in tutorial.
Students are encouraged to ask questions, initiate discussions, and provide input from relevant personal experience.
Changes Since the Last Offering of this Unit
This unit was last offered in 2014 semester 1 (last semester). There have been No changes to this unit.
Policies and Procedures
Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:
Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html
Assessment Policy http://mq.edu.au/policy/docs/assessment/policy.html
Grading Policy http://mq.edu.au/policy/docs/grading/policy.html
Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html
Grievance Management Policy http://mq.edu.au/policy/docs/grievance_management/policy.html
Disruption to Studies Policy http://www.mq.edu.au/policy/docs/disruption_studies/policy.html The Disruption to Studies Policy is effective from March 3 2014 and replaces the Special Consideration Policy.
In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.
Student Code of Conduct
Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/
Results
Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.
Supplementary Exams
Further information about supplementary exams, including dates, is available here:
http://www.businessandeconomics.mq.edu.au/current_students/undergraduate/how_do_i/special_consideration
Student Support
Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/
Learning Skills
Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.
Student Services and Support
Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.
Student Enquiries
For all student enquiries, visit Student Connect at ask.mq.edu.au
IT Help
For help with University computer systems and technology, visit http://informatics.mq.edu.au/help/.
When using the University's IT, you must adhere to the Acceptable Use Policy. The policy applies to all who connect to the MQ network including students.
Graduate Capabilities
PG - Discipline Knowledge and Skills
Our postgraduates will be able to demonstrate a significantly enhanced depth and breadth of knowledge, scholarly understanding, and specific subject content knowledge in their chosen fields.
This graduate capability is supported by:
Learning outcomes
- Write a report valuing the equity of a mid-capitalization company listed on the Australian Securities Exchange
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Apply valuation techniques to real world valuation problems.
- Explain the principles and theory behind each valuation technique
Assessment tasks
- Diagnostic Quiz
- Presentation
- Report
- Final Examination
PG - Research and Problem Solving Capability
Our postgraduates will be capable of systematic enquiry; able to use research skills to create new knowledge that can be applied to real world issues, or contribute to a field of study or practice to enhance society. They will be capable of creative questioning, problem finding and problem solving.
This graduate capability is supported by:
Learning outcomes
- Write a report valuing the equity of a mid-capitalization company listed on the Australian Securities Exchange
- Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
- Apply valuation techniques to real world valuation problems.
Assessment tasks
- Presentation
- Report
- Final Examination
PG - Effective Communication
Our postgraduates will be able to communicate effectively and convey their views to different social, cultural, and professional audiences. They will be able to use a variety of technologically supported media to communicate with empathy using a range of written, spoken or visual formats.
This graduate capability is supported by:
Learning outcomes
- Write a report valuing the equity of a mid-capitalization company listed on the Australian Securities Exchange
- Explain the principles and theory behind each valuation technique
Assessment tasks
- Presentation
- Report
- Final Examination
Research and Practice
This focus of this unit is to teach students to value a company. This involves research to discover all available accounting, financial and economic information about a target company. Students must then synthesize this information into a valuation of the target company. This is practically achieved by the preparation and submission of a group business valuation report on a mid-capitalization stock listed on the Australian Securities Exchange (ASX). The report is in the format of an extended broker research report (examples provided) that is prepared for sophisticated (institutional) investors. The valuation report uses Discounted Cash Flow (DCF) techniques to value the target company.
In order to prepare the report, students will perform the following tasks:
1. An analysis economic environment of the company’s industry.
2. An analysis of the company’s industry using Porter’s 5 Forces.
3. An assessment of the company’s future business strategy.
4. An historical analysis of the company’s financial statements
5. A free cash flow (FCFF & FCFE) valuation of the company.
All of these tasks require Research to discover the relevant valuation information; and Practice to evaluate the information and synthesize it for inclusion in the valuation report.