1. Group case analysis 25%
2. Group company analysis and valuation 25%
3. Group industry analysis and valuation 30%
4. Class participation 20%
5. Take-home Final Exam 20%; each of the above reduced by 5 percentage points
Grading is strictly on a curve. The mean grade will be approximately 3.5-3.6 on a 4.0 scale.
Group presentations. You will be assigned to a different five-person group for each of the above
three group assignments. I will try to balance those groups by program so that groups do not consist
entirely of accounting students or entirely of MBAs. We will pass out a list of the three sets of groups
on the third day of class.
1. Presentation: Group case analysis. Please prepare a PowerPoint presentation and, if necessary,
supporting spreadsheets. Your presentation should be between 30-60 minutes, depending on the
complexity. Please feel free to contact me prior to making your presentation. I will be glad to
provide you considerable information on each case. The objective is not to determine whether you
can prepare a case presentation on your own; it is for you to learn how to teach technical material
to other professionals. You need not prepare a written report for this project. However, you should
have PowerPoint handouts for your classmates. If you e-mail me a copy prior to 8:00 a.m. the day
of your presentation, I will have copies made for you.
2. Write-up: Group firm analysis and valuation. State Farm bank and technology analysts will
speak with our class. Five groups will be assigned a bank to analyze and value; five will be
assigned a technology company to analyze and value. You should prepare a 5-10 page write-up of
your company, plus Excel spreadsheets to support your valuation. Your report is due one week
before each analyst’s visit. I will grade and return your paper before each analyst’s visit. The
analyst will comment on each report in class but his or her comments will not influence your
3. Presentation: Group industry analysis and valuation. Please select an industry and then
analyze and value two-four companies within that industry. If the firms are complex, two are
adequate; if the firms are relatively simple, you may wish to analyze three or four of them.
You should prepare a 10-15 page write-up of your industry, plus Excel spreadsheets to support
your valuations. You should also prepare a PowerPoint for your presentation. Each presentation
should last 30-40 minutes. I have attached as an appendix a list of possible industries and
companies for this project. You need not select from this list but if you choose to do so, please e-
mail me your selection as soon as possible. Those industries are on a first-come first-served basis.
Selected Web sites
SEC Edgar Database
www.pwcglobal.com may provide the most usable downloads of SEC Edgar information. On that
Web page select “EDGARSCAN” from the Pull-down menu titled “Online Solutions” in the center of
the page. Select “EDGARSCAN” on each of the next two pages and then enter the name of a
company, such as General Motors corp. Select a filing, such as 10-K 2000-12-31.
To download an Excel file containing one of the three principal financial statements, under Item 8,
select “Excel Spreadsheet” to the right of the statement you wish to download. To download an entire
10-K, under “Fetch the entire filing as,” select “rich text.”
Money Management Databases
You can obtain the investment holdings for individual money management firms by using any
Edgar database, including www.pwcglobal.com. Simply type in the name of the money
management firm and then select Form 13-F, which is a listing of the stocks owned as of the end
of a quarter, together with the number of shares owned of each company. The total value of all
stocks owned at the end of that quarter will be listed at the top or bottom of Form 13-F.
You can also obtain detailed information on each money manger by viewing the manager’s Form
ADV, available at:
Nelson’s Directories provides information about money management firms at:
And at the following free registration site:
Numerous Web sites provide a wide range of financial information. Two of the most relevant
for this course are:
TheStreet.com at: http://www.thestreet.com/
Yahoo! Finance at: http://www.thestreet.com/
Yahoo! Finance also provides industry information at: http://biz.yahoo.com/p/sum_conameu.html
Note: You will receive detailed assignments approximately every other week.
Session 1, Monday, January 14
Case: Palm, Inc. (Sandretto; class handout)
Janet O’Brien, CPA (Sandretto; class handout).
Read: Presenting Technical Material (class handout)
Session 2, Wednesday, January 16
Case: The Korean Stock Exchange, HBS 199-033
Read: Chapter 1, A Framework for Business Analysis and Valuation Using Financial
Statements, Palapu, Healy, and Bernard
Holiday, Martin Luther King, Jr. Day, Monday, January 21
Session 3, Wednesday, January 23
Case: Sears, Roebuck and Co. Vs. Wal-Mart Stores, Inc., HBS 101-011
Read: Chapter 2, Strategy Analysis, Palapu, Healy, and Bernard
Session 4, Monday, January 28
Case: Standard International, HBS 100-064
Packet 1 from the Center for Financial Research & Analysis (class handout)
Read: Measuring Interim Period Performance 100-002
Chapter 3, Overview of Accounting Analysis, Palapu, Healy, and Bernard
Session 5, Wednesday, January 30
Case: Olympic Financial Ltd., HBS 197-081
Packet 2 from the Center for Financial Research & Analysis (class handout)
Read: Chapter 4, Asset Analysis, Palapu, Healy, and Bernard
Session 6, Monday, February 4
Case: Enron Corp. (Sandretto; class handout)
Read: Chapter 5, Liability and Equity Analysis, Palapu, Healy, and Bernard.
Mini-lecture: Pension footnotes
Session 7, Wednesday, February 6
Case: IBM (B), HBS (Case analysis, group 6) 100-033
GM Retirement Plans (Sandretto; class handout) (Case analysis, group 9)
Read: Retiree Benefits, HBS 197-021
Session8, Monday, February 11
Case: IBM (C), HBS (Case analysis, group 2) 100-034
Bethlehem Steel Corp. (Sandretto; class handout)
Read: Accounting for Income taxes 100-035
Session 9, Wednesday, February 13
Case: Microsoft’s Financial Reporting Strategy, HBS 100-027
Pre-paid Legal Services, Inc., 2001 (Sandretto; class handout) (Case analysis, group 10)
Read: Chapter 6, Revenue Analysis, Palapu, Healy, and Bernard
Session 10, Monday, February 18
Case: Amazon.com Cash Flow Projections (Sandretto; class handout)
Amazon.com Valuation Exercise, HBS (Case analysis, group 4) 800-441
Read: Accounting Choices and EVA, HBS (Business Horizons) BH007
Session 11, Wednesday, February 20
Case: Hicorp, Inc., HBS (Case analysis, group 3) 198-014
Cisco Systems, Inc., In-process R&D (Sandretto, class handout)
Read: Chapter 8, Equity Accounting Analysis, Palapu, Healy, and Bernard
Mini-lecture: Employee stock option footnotes. Handouts on direct charges to owners’ equity.
Session 12, Monday, February 25
Case: Cisco Systems, Inc. Non-qualified Employee Stock Options
(Sandretto; class handout) (Case analysis, group 5)
EBay, Inc. (Sandretto; class handout)
Read: FASB and Employee Stock Options, HBS 196-137
Chapter 7, Expense Analysis, Palapu, Healy, and Bernard
Session 13, Wednesday, February 27
Case: Banc One Corporation (A) 195-207
Read: Chapter 9, Financial Analysis, Palapu, Healy, and Bernard
Session 14, Monday, March 4
Case: Mr. Dave Tips, Vice President, Equities Securities Division, CSFB-Holt (pending
Read: Chapter 10, Prospective Analysis: Forecasting, Palapu, Healy, and Bernard
Session 15, Wednesday, March 6
Case: Merck & Company: Evaluating a Drug Licensing Opportunity, HBS 201-023
Read: Free Cash Flow Valuation Methods, HBS 201-094
Chapter 11, Prospective Analysis: Value Theory, Palapu, Healy, and Bernard
Preliminary write-ups due; banking sector (see attached schedule)
Session 16, Monday, March 11
Visitor: Ms. Michelle Marsh, Senior Investment analyst, banking, State Farm Insurance
Companies (MBA, Illinois, 1996).
Session 17, Wednesday, March 13
Read: FASB 141, Business Combinations (Case analysis, group 8)
FASB 142, Goodwill and Other Intangible Assets (Case analysis, group 7)
Final write-ups due; banking sector
Spring Vacation: Saturday, March 16-- Sunday, March 24, Spring Vacation ends
Session 18, Monday, March 25
Visitor: Mr. Jim Brace, Executive Vice President and Senior Vice President, KEHI
Case: Knowles Electronics Holdings, Inc. (Sandretto; class handout)
Read: Chapter 12, Prospective Analysis: Valuation Implementation, PBH
Note on Alternative Methods for Estimating Terminal Value, HBS 298-166
Session 19, Wednesday, March 27
Case: AOL Time Warner, Inc. Goodwill (Sandretto, class handout)
Conoco, Inc. Goodwill (Sandretto; class handout)
Strategic Brand Valuation: A Cross-functional Perspective BH031
Session 20, Monday, April 1
Visitor: Mr. Al King, Managing Director, Valuation Research corporation and former managing
Director, Institute of Management Accountants
Session 21, Wednesday, April 3
Case: Warnaco Group, Inc. (A), HBS (Case analysis, group 1) 101-068
Read: Valuing companies in Corporate Restructurings, HBS 201-073
Chapter 13, Equity Security Analysis, Palapu, Healy, and Bernard
Preliminary write-ups due; technology sector (see attached schedule)
Session 22, Monday, April 8
Visitor: Mr. Brad Commincioli, Investment Analyst, technology sector, State Farm Insurance
(EMBA, Illinois, 2002)
Read: The Earnings Game: Everyone Plays, Nobody Wins, HBR R0106c
Tread Lightly Through These Accounting Minefields, HBR R0107k
Session 23, Wednesday, April 10
Visitor: Jeffrey H. Margolis, Chief Executive Officer and founder, TriZetto Group (BS, Illinois,
1984, High Honors)
Read: Chapter 14, Credit Analysis and Distress Prediction, Palapu, Healy, and Bernard
Final write-ups due; technology sector
Session 24, Monday, April 15
Case: Xerox Corp. Leasing (Sandretto; class handout)
Patten Corp., 1994 (Sandretto, class handout)
Read: Chapter 15, Mergers and Acquisitions, Palapu, Healy, and Bernard
Session 25, Wednesday, April 17
Case: Ford Motor Co. 0% Financing, 2001 (Sandretto; class handout)
Polaroid Corp. (Sandretto; class handout)
Series of fraud cases (Sandretto; class handout)
Read: Chapter 16, Corporate Financing Policies, Palapu, Healy, and Bernard
Session 26, Monday, April 22
Read: Chapter 17, Management Communications, Palapu, Healy, and Bernard
Case: Progressive Insurance: Disclosure Strategy, HBS 102-012
Group Industry Analysis Presentation (1 group)
Session 27, Wednesday, April 24
Group Industry Analysis Presentations (3 groups)
Session 28, Monday, April 29
Group Industry Analysis Presentations (3 groups)
Session 29, Wednesday, May 1
Group Industry Analysis Presentations (3 groups)
Feel free to choose your own industry and firms
Some of the following categories include five or six firms. You need not include more than
two-four firms in your industry analysis. I listed companies that seemed interesting either because
of how they operate or because of their accounting practices.
The following is a useful link for finding other industries and firms within those industries:
AMR Corp. (American Airlines)
Delta Air Lines Inc.
Southwest Airlines Inc.
UAL Corp. (United Airlines)
U.S. Airways Group Inc.
2. Appliance Manufacturers
3. Auto industry
Ford Motor Co.
General Motors Corp.
Applera Corp-Celera Genomics Group
Cambridge Antibody Tech Group PLC
Millennium Pharmaceuticals Inc.
Vertex Pharmaceuticals Inc.
5. Health food grocery chains
Whole Foods Market Inc.
Wild Oats Markets Inc.
6. Insurance companies, life
John Hancock Financial Services, Inc.
Lincoln National Corp.
Principal Financial Group, Inc.
7. Insurance companies, property and casualty
American International Group, Inc.
Berkshire Hathaway, Inc.
Ohio Casualty Corp.
8. Investment banks/brokerage firms
Goldman Sachs & Company
Merrill Lynch & Co., Inc.
Morgan Stanley Dean Witter & Co.
9. Money center banks
Bank America Corp.
Bank One Corp.
JP Morgan Chase & Co.
10. Personal Computer Manufacturers
Dell Computer Corp.
Compaq Computer Corp.
Eli Lily & Co.
Johnson & Johnson Inc.
Merck & Co Inc.
12. Processed foods
Campbell Soup Co.
General Mills Inc.
Hershey Foods Corp
13. Restaurant chains
Bob Evans Farms, Inc.
Darden Restaurants, Inc. (Olive Garden and Red Lobster)
Krispy Kreme Doughnuts, Inc.
Panera Bread Company
Tricon Global Restaurants, Inc.
Wendy’s International, Inc.
14. Technology firms, weak financial condition
Lucent Technologies, Inc.
15. Technology firms, strong financial condition
Sun Microsystems, Inc.
Fifth Third Bancorp Group 10
SouthTrust Corp Group 9
SunTrust Banks Group 1
AmSouth Bancorp Group 2
First Union Corp Group 6
Oracle Corp. Group 5
EMC Corp. Group 8
Intel Corp. Group 4
Linear Technology Corp. Group 3
Applied Materials Group 7