LAHORE BUSINESS SCHOOL

CORPORATE VALUATION
(FINAL PROJECT)
SUBMISSION DATE: FRIDAY, APRIL 30, 2021

INSTRUCTOR: GUL RUKH NIAZI COURSE: FINANCIAL MANAGEMENT

FINAL PROJECT:

The project provides students the opportunity to apply what they have learnt in this course to
a context that is of most interest to them. Students are also encouraged to enrich their projects
by reaching out the analyzed firms
• The project should be worked on in groups. Students are expected to form groups
involving three members by the end of second week. Students, who do not join a
group by the given deadline, will be arbitrarily allocated to a group.
• Each group is required to choose a company from manufacturing sector to for
analysis purpose.
• Each group is required to get the company approved from the instructor before
commencing the project.
• Each group is required to submit a project report. Although the group has complete
discretion over the contents and format of the project, a good project is expected to be
efficiently written, well-structured and clear and is not longer than 15 pages. The
project should apply the materials covered in this course to the topic and firm being
investigated. Moreover, the project report should contain implications and
recommendations for managerial practice.

INSTRUCTIONS:
Students will be allowed to select any listed company and do the complete firm evaluation.
Forecast selected firm’s income statement and balance sheets (for ten years). Use the
following assumptions:
i. Sales grow, the ratios of expenses to sales, depreciation to fixed assets, cash to sales,
accounts receivable to sales and inventories to sales will be the forecasted as per
growth.
ii. Forecast the parts of the income statement and balance sheet that are necessary for
calculating free cash flow.
iii. Calculate free cash flow for each projected year. Also calculate the growth rates of
free cash flow each year to ensure that there is constant growth (that is, the same as
the constant growth rate in sales) by the end of the forecast period.
iv. Calculate operating profitability (OP = NOPAT/Sales), do you think that the
company will have a positive Market Value Added (MVA = Market value of
company − Book value of company = Value of operations − Operating capital)?
 LAHORE BUSINESS SCHOOL

v. Calculate the value of operations and MVA. (Hint: First calculate the horizon value at
the end of the forecast period, which is equal to the value of operations at the end of
the forecast period.).
vi. Calculate Market Value of Firm = VOP (Value of operations) + VONOP (Value of
non-operations).
vii. Calculate market value of equity (MVE).
viii. Calculate the price per share of common equity.

Guidelines for final report:

• Make a group of 3-5 members.

• Choose a service firm and explain the accounting process adopted by your selected
organization.
• Get approval from the course instructor before working on project.
• Project report must contain following sections: (maximum 15 pages)
• Format:
• Times New Roman, Font Size12, line spacing 1.5, all justified header footer 0.5 each
• Headings Bold Font Size 14.