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Xavier Institute of Management, Bhubaneswar
Xavier University,
Executive MBA Program (2016-17)
Business Valuation
Finance Elective
Instructor: Prof. Santanu K Ganguli

Executive MBA (2016-17)


Course Objectives.
The objective of this course is mainly to learn enterprise and equity valuation methods from both a conceptual and practical framework. The coursecombines accounting and finance into a practical framework for valuing firms, debt and equity. The emphasis is on the practical application and integration of finance and accounting concepts to valuing companies. Pre-requisite is accounting and finance concept taught in earlier terms as core subjects. Students who hope to never see a financial statement again should not opt for this course. The course utilizes extensive and detailed readings, chapter exercises and valuation of companies
This course is designed for students with little or no practical work experience in valuing companies.

Learning Outcome : After the end of the course the students will be able to :
Ø Conceptualize – what value means in the context of an enterprise as a ‘going concern’.
Ø How to evaluate a company as a whole ( enterprise value), debt and equity component
Ø How to analyze financial statement from valuation standpoint, project balance sheet, income and cash flow statement for valuation.
Ø compute risk adjusted rate of return of various sources of fund
Ø Understand why ‘intrinsic value’ differs from price in capital market.
COURSE OUTLINE

Topic	Session Plan
Introducing the concept of Valuation of business as ‘going concern’. Valuation in a sense is ‘accounting for future’	Session 1
Enterprise Valuation Models (introduction) a) Dividend discount model b) Discounting Free cash Flow (FCF) model (DCF) c) Relative valuation Model	Session 2 and 3
Forecasting FCF from financial statement after factoring in industry and macro economicvariables , Horizon value and terminal value	Session 4
Cost of equity, cost of debt and WACC	Session 5
Calculation of beta for cost of equity, levered beta and unlevered beta, implication thereof for equity valuation	Session 6
Clubbing all,Valuation of a company hands on using DCF	Session 7
APV, FCF ( DCF) and Free cash flow to equity (FCFE)	Session 8
Accounting model of valuation, that is abnormal or supernormal earning model , concept of EVA.	Session 9
Summing up and Project presentation.	Session 10

Reading Materials– Suggested text – ‘ Valuation – Analyzing Global Investment Opportunities’ by S. Titman, J. D. Martin and V. R. Anshuman ( Pearson)
Reference : a ) Valuation by AshwathDamodaran
b) Analysis of Financial Statement and Business Valuation by Stephen Penman

Important Note: The course participants should appreciate that it is an elective course. The students are expected to read articles and related literature that will be suggested from time to time.

Instruction: There will be lot of practice problems to be discussed and solved inside the class. So, the course participants are requested to bring scientific calculators having log, exponential, ^ and square root functions. Some excel modelling will be demonstrated for which prior intimation will be given. But otherwise the participants are not allowed to use laptop computers, cell phone during class. There will be zero tolerance in respect of cheating and plagiarism.

Evaluation Component : 1) class participation 10%
2) Quiz 20%
3) Project 30%
4) End term 40%

Created By: Alora Kar on 07/14/2016 at 10:21 AM
Category: MBA(Exe.)16-T-III Doctype: Document