Unit Guide

General Information

Unit convenor and teaching staff	Unit convenor and teaching staff Lecturer and Convener Terry Pan terry.pan@mq.edu.au Room 737, Building 4ER Refer to iLearn
Credit points	Credit points 4
Prerequisites	Prerequisites ACCG611 or AFIN613 or ACST603 or AFIN858
Corequisites	Corequisites
Co-badged status	Co-badged status
Unit description	Unit description This unit develops students' abilities to conduct equity valuation for investment purposes. This advanced module introduces the techniques used by equity financial analysts to measure the worth of a company and its investments. Students assume the role of a financial analyst and learn the mechanics of financial valuation by: performing industry and financial analysis, measuring accounting quality, estimating discount rates, forecasting cash flows, and ultimately issuing a buy/hold/sell recommendation on the firm based on the estimated target price.

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:

1. Working collectively in a group, write a report valuing the equity of a company listed on the Australian Securities Exchange and make corresponding investment recommendations.
2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

General Assessment Information

Assessment criteria for all assessment tasks will either be provided on the unit iLearn site. It is the responsibility of students to view their marks for each within session assessment on iLearn within 20 working 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	Hurdle	Due
First Online Quiz	5%	No	15/03/2019
Second Online Quiz	10%	No	30/04/2019
Valuation Report	30%	No	Week 12 (refer to iLearn)
Final Exam	55%	No	University Examination Week

First Online Quiz

Due: 15/03/2019
Weighting: 5%

Task Description:

The first online iLearn Quiz aims to assess student progress in the course. The online test must be completed by 5:00pm Friday 15th March 2019. More information concerning the test will be provided in class and on iLearn.

Type of Collaboration: Individual Submission: Online Format: 5 multiple choice questions Length: approximate duration: 15 minutes Inherent Task Requirements: Refer to ilearn Late Submission:

Extensions.

No extensions will be granted. Students 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:

2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Second Online Quiz

Due: 30/04/2019
Weighting: 10%

Task Description:

The second online iLearn Quiz aims to assess student progress in the course.The online test will open at 7:00pm on Tuesday 30 April 2019 and must be completed by 8:00pm of the same day. More information concerning the test will be provided in class and on iLearn.

Type of Collaboration: Individual Submission: Online Format: 10 multiple choice questions Length: Approximate duration: 30 minutes Inherent Task Requirements: Refer to ilearn Late Submission:

Extensions

On successful completion you will be able to:

2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Valuation Report

Due: Week 12 (refer to iLearn)
Weighting: 30%

Task Description:

Important - The assignment will comprise 5 questions. Each student in the team must select one question of the group report to show the individual contribution to the overall report. There will also be a final exam question based on the assignment to assess the individual performance. The cover sheet (or appendix) of the report should indicate clearly the contribution of each student.

Students groups will write a report valuing a company listed on the Australian Securities Exchange (ASX). The style of the report (examples will be provided on iLearn) will be a detailed valuation report for a commercial client. The assignment will be marked on the quality of the report and its technical veracity.

The group assignment is worth 30%.

Type of Collaboration: Group Submission: Must be submitted electronically via iLearn. Submission of the group assignment will be in semester academic week 12. 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. Format: Refer to iLearn Length: Refer to iLearn Inherent Task Requirements: Refer to iLearn Late Submission:

Late Report Submission

No extensions will be granted. 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. No submission will be accepted after solutions have been posted.

On successful completion you will be able to:

1. Working collectively in a group, write a report valuing the equity of a company listed on the Australian Securities Exchange and make corresponding investment recommendations.
2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Final Exam

Due: University Examination Week
Weighting: 55%

Task Description:

The examination will be a closed-book examination. Students will be permitted to take ONE A4 page of paper containing reference material printed on both sides. The material may be handwritten or typed. The page will not be returned at the end of the final examination.

Type of Collaboration: Individual Submission: Refer to iLearn Format: The examination may consist of multiple choice questions and written questions requiring longer, more complex and calculated answers. Length: 2 hours with 10 mins reading time Inherent Task Requirements: Refer to iLearn Late Submission: No extensions will be granted. Students 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 under Special Consideration Policy is made and approved
On successful completion you will be able to:

1. Working collectively in a group, write a report valuing the equity of a company listed on the Australian Securities Exchange and make corresponding investment recommendations.
2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Delivery and Resources

Required Text:	"Damodaran on Valuation" Second Edition by Aswath Damodaran. ISBN: 978-0471751212 The text is available from the Macquarie University Co-op Bookshop (https://www.coop.com.au/s/macquarie-university). You can also check the 2nd hand bookshop or search online. Macquarie University library has a few copied as well. Other relevant reading materials besides the textbook will be provided and accessible via iLearn.
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.
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)
Delivery Format and Other Details:	Classes There are 13 weekly sessions of 3 hours. See timetable for classes on the University web site at: http://www.timetables.mq.edu.au/ All students are to attend all classes except in cases of illness or unexpected events of a serious nature (eg family bereavement). Teaching and Learning Activities Contact sessions are three hours. There will be one short break during the session. Students are required to prepare for each lecture by reading the material set from the required textbook. Students are encouraged to ask questions, initiate discussions, and provide input from relevant personal experience.
Recommended Readings:
Other Course Materials:

Unit Schedule

Week	Seminar
1	Module 1- Introduction, Sources of Information, and Industry Analysis
2	Module 2- Financial Reporting and Analysis
3	Module 3- Market Valuation: Relative Valuation Techniques (PART 1)
4	Module 3- Market Valuation: Relative Valuation Techniques (PART 2)
5	Module 4- Advanced Estimation of Discount Rates
6	Module 4- Advanced Estimation of Discount Rates
7	Module 5- Quality of Financial Statement and Reliance on Accounting Numbers
RECESS
8	Module 6- Discounted Cash Flow (DCF) Valuation - Calculating Free Cash Flows (PART 1)
9	Module 6- Discounted Cash Flow (DCF) Valuation - Calculating Free Cash Flows (PART 2)
10	Module 7 - Forecasting Free Cash Flows
11	Module 8- Issues in Estimating Terminal Value
12	Module 9- A Practitioner's Approach to Valuing Firms: The Case of ValueCo Inc.
13	Revision Class

Learning and Teaching Activities

Module 1: Introduction, Sources of Information, and Industry Analysis

Overview of the subject; Analyses of Financial Statements; Understanding the Industry Corporate Strategy

Module 2- Financial Reporting and Analysis

Identify users of financial statements; Explain effects of different accounting policie; Calculate profitability, efficiency, leverage and capital market ratios; Analyse profitability using growth rates; Analyse asset utilisation and capitalisation; Calculate sustainable growth rates; Identify appropriate comparisons for ratio analysis

Module 3- Market Valuation: Relative Valuation Techniques

Introduce the principles and methods of conducting relative valuation

Advanced Estimation of Discount Rates

Introduce state-of-art approach to estimating discount rates of an individual business project/equity.

Module 5- Quality of Financial Statement and Reliance on Accounting Numbers

Understand the concept of “quality” accounting information; Develop the skills to know when and how to adjust current earnings for income not expected to persist; Use different methods to quantify the degree of earnings management; Evaluate market response to earnings management; Separate operating from non-operating expenses; Remove special items from EBIT/EBITDA

Module 6- Discounted Cash Flow (DCF) Valuation - Calculating Free Cash Flows

Introduce the idea of free cash and how to calculate it and then extend to free cash flow to equity

Module 7 - Forecasting Free Cash Flows

Estimation of growth rate of future cash flows

Module 8 - Issues in Estimating Terminal Value

Estimation of the terminal value: principles and approaches

Module 9- A Practitioner's Approach to Valuing Firms: The Case of ValueCo Inc.

A case study on valuing a particular firm: ValueCo Inc.

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central). Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Appeals Policy
Academic Integrity Policy
Academic Progression Policy
Assessment Policy
Fitness to Practice Procedure
Grade Appeal Policy
Complaint Management Procedure for Students and Members of the Public
Special Consideration Policy (Note: The Special Consideration Policy is effective from 4 December 2017 and replaces the Disruption to Studies Policy.)

Undergraduate students seeking more policy resources can visit the Student Policy Gateway (https://students.mq.edu.au/support/study/student-policy-gateway). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.

If you would like to see all the policies relevant to Learning and Teaching visit Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/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/study/getting-started/student-conduct

Results

Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) 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 or if you are a Global MBA student contact globalmba.support@mq.edu.au

Supplementary exams

Information regarding supplementary exams, including dates, is available at:

http://www.businessandeconomics.mq.edu.au/current_students/undergraduate/how_do_i/disruption_to_studies

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

If you are a Global MBA student contact globalmba.support@mq.edu.au

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/.

When using the University's IT, you must adhere to the Acceptable Use of IT Resources 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

1. Working collectively in a group, write a report valuing the equity of a company listed on the Australian Securities Exchange and make corresponding investment recommendations.
2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Assessment tasks

First Online Quiz
Second Online Quiz
Valuation Report
Final Exam

PG - Critical, Analytical and Integrative Thinking

Our postgraduates will be capable of utilising and reflecting on prior knowledge and experience, of applying higher level critical thinking skills, and of integrating and synthesising learning and knowledge from a range of sources and environments. A characteristic of this form of thinking is the generation of new, professionally oriented knowledge through personal or group-based critique of practice and theory.

This graduate capability is supported by:

Learning outcomes

2. Evaluate business valuation techniques to determine the most appropriate technique for the specific valuation task.
3. Apply valuation techniques to real world valuation problems.
4. Explain the principles and theory behind each valuation technique

Assessment tasks

First Online Quiz
Second Online Quiz
Final Exam

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 outcome

1. Working collectively in a group, write a report valuing the equity of a company listed on the Australian Securities Exchange and make corresponding investment recommendations.

Assessment task

Valuation Report

Changes from Previous Offering

None