The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
Financial accounting & analysis nmims latest solved assignmentssmumbahelp
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
Call us at : 08263069601
Financial accounting & analysis nmims latest solved assignmentssmumbahelp
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
help.mbaassignments@gmail.com
or
Call us at : 08263069601
Civic Media Networks - Ecosystems for inclusive smart citiesArmand Bogaarts
Help build inclusive smart cities with a social ecosystem based on a local civic media network that provides feedback to all local stakeholders including donors (CSR, corporate philanthropy, crowdfunding), members, staff and volunteers.
Sale and Leaseback. Unlocking Value. Christian Gomez RudekChristian Rudek
Sale and Leaseback. Unlocking value for shareholders through Sale and Leaseback strategies. Analysis of the effects of the application of this strategy in the Spanish Hotel industry.
Making Long Term FM Decisions - Integrative Case Title An.docxsmile790243
Making Long Term FM Decisions - Integrative Case
Title: Analyzing Long Term Financial Decision Making in the Firm (Learning Demonstration 3)
Initial Steps to Completion:
1. Organize your team, choose a leader, and accept accountability for being the lead analyst for one or more parts of this list of tasks.
2. Complete your draft assigned task(s) and post in a common area for review by your team members.
3. Review, comment on, and suggest changes to draft completed tasks by the team.
4. Discuss and resolve differences and come to a consensus on the best responses.
5. Organize your analysis, conclusions, and recommendations
Course Deliverable: Write a report responding to the tasks assigned to your team. Clearly organize your report and effectively communicate the team’s analysis, conclusions and recommendations (if appropriate) associated with each task. Provide the details supporting your analysis as attachments. You should be completing tasks along the way – do not wait until the end of the course to complete your tasks.
Introduction: As a special analytical group set up by ACME Iron by the firm’s Controller, you have been tasked to respond to the following issues raised in a meeting with the CFO.
You and your team must look over several prospective financial strategies to aid in the successful growth of ACME Iron.
You are to work over an 8 to 12 week period on several projects, detail your work as you proceed on these projects, and assemble the report for the CFO to make to the board on the items listed while you work in a team environment. Management will be looking at the team over this period on how well they self-organize and analyze the research areas which will include:
Capital investment analysis
CAPM – Capital Asset Pricing Model determination for the company
WACC – Weighted Average Cost of Capital computations
EVA – Economic Value Analysis
MVA – Market Value Added
Capital structure of the company
Dividend policy
Stock repurchase and option pricing strategy
Bankruptcy risk analysis
Decision Tree Creation
Real option analysis of projects
The CFO wants to test your team out on a simple project in the first task before you get into preparing items for his board presentation in subsequent tasks and projects. He wants to see how well you perform tasks as a team as well as how accurate and thoughtful you are in your work. Details are important to him as well as good organization/presentation and communication.
Financial Statements for use on Tasks
ACME Iron
Balance Sheet
Assets
Current assets:
2014
2015
change
Cash
500,000
600,000
100,000
Investments
1,000,000
1,025,000
25,000
Inventories
110,000,000
117,000,000
7,000,000
Accounts receivable
11,750,000
12,500,000
750,000
Pre-paid expenses
2,500,000
2,600,000
100,000
Other
0
0
...
2014 Balance SheetThe Walt Disney Company (DIS) - ServicesPeriod E.docxeugeniadean34240
2014 Balance SheetThe Walt Disney Company (DIS) - ServicesPeriod Ending3-Oct-1527-Sep-1428-Sep-13AssetsCurrent AssetsCash And Cash Equivalents4,269,000 3,421,000 3,931,000 Short Term Investments- - - Net Receivables8,786,000 8,319,000 7,452,000 Inventory1,571,000 1,574,000 1,487,000 Other Current Assets2,132,000 1,855,000 1,239,000 Total Current Assets16,758,000 15,169,000 14,109,000 Long Term Investments2,643,000 2,696,000 2,849,000 Property Plant and Equipment25,179,000 23,332,000 22,380,000 Goodwill27,826,000 27,881,000 27,324,000 Intangible Assets7,172,000 7,434,000 7,370,000 Accumulated Amortization- - - Other Assets8,604,000 7,629,000 7,209,000 Deferred Long Term Asset Charges- - - Total Assets88,182,000 84,141,000 81,241,000 LiabilitiesCurrent LiabilitiesAccounts Payable7,844,000 7,595,000 6,803,000 Short/Current Long Term Debt4,563,000 2,164,000 1,512,000 Other Current Liabilities3,927,000 3,533,000 3,389,000 Total Current Liabilities16,334,000 13,292,000 11,704,000 Long Term Debt12,773,000 12,631,000 12,776,000 Other Liabilities6,369,000 5,942,000 4,561,000 Deferred Long Term Liability Charges4,051,000 4,098,000 4,050,000 Minority Interest4,130,000 3,220,000 2,721,000 Negative Goodwill- - - Total Liabilities43,657,000 39,183,000 35,812,000 Stockholders' EquityMisc Stocks Options Warrants- - - Redeemable Preferred Stock- - - Preferred Stock- - - Common Stock35,122,000 34,301,000 33,440,000 Retained Earnings59,028,000 53,734,000 47,758,000 Treasury Stock-47,204,000-41,109,000-34,582,000Capital Surplus- - - Other Stockholder Equity-2,421,000-1,968,000-1,187,000Total Stockholder Equity44,525,000 44,958,000 45,429,000 Net Tangible Assets9,527,000 9,643,000 10,735,000Reference:Yahoo! Inc. (2015, December 20). Yahoo! Finance. Retrieved from http://finance.yahoo.com/http://finance.yahoo.com/q/bs?s=DIS+Balance+Sheet&annual
2014 Cash FlowThe Walt Disney Company (DIS) - ServicesPeriod Ending3-Oct-1527-Sep-1428-Sep-13Net Income8,382,000 7,501,000 6,136,000 Operating Activities, Cash Flows Provided By or Used InDepreciation2,354,000 2,288,000 2,192,000 Adjustments To Net Income-426,000-240,000521,000 Changes In Accounts Receivables-211,000-480,000-374,000Changes In Liabilities305,000 440,000 456,000 Changes In Inventories1,000 -81,00051,000 Changes In Other Operating Activities34,000 -151,000-30,000Total Cash Flow From Operating Activities10,909,000 9,780,000 9,452,000 Investing Activities, Cash Flows Provided By or Used InCapital Expenditures-4,265,000-3,311,000-2,796,000Investments166,000 395,000 479,000 Other Cash flows from Investing Activities-146,000-429,000-2,359,000Total Cash Flows From Investing Activities-4,245,000-3,345,000-4,676,000Financing Activities, Cash Flows Provided By or Used InDividends Paid-3,063,000-1,508,000-1,324,000Sale Purchase of Stock-4,754,000-5,515,000-2,995,000Net Borrowings2,705,000 633,000 379,000 .
2. Table of Contents
1. About the Company.............................................................................................................. 3
2. Valuation of the Company .....................................................................................................4
3. Conclusion and Recommendation.......................................................................................... 7
4. Limitations............................................................................................................................ 8
3. 1. About the Company
Oberoi Realty was incorporated as Kingston Properties Private Limited on May 8, 1998
under the Companies Act, 1956 in Mumbai. The name of the company was changed to
Oberoi Realty Private Limited on October 23, 2009. The company was converted into a
public limited company on December 14, 2009 and consequently, the name was changed
to Oberoi Realty Limited.
The company is a real estate development company operating in Mumbai, focused on
premium developments. The company has established a strong brand and a successful
track record in the real estate industry by developing innovative projects through its
emphasis on contemporary architecture, strong project execution and quality construction.
While its focus is on residential projects, it has a diversified portfolio of projects covering
key segments of the real estate market, which target the upper end of the respective income
or market segment. It develops residential, office space, retail, hospitality and social
infrastructure projects in mixed-use and single-segment developments.
The company uses a knowledge-based approach from internal and external sources in
making land acquisition, development and lease/sales decisions. It also utilizes an
outsourcing model that emphasizes quality design and construction. It works with several
reputed international architects and domestic architects and contractors. The company
believes that this outsourcing model provides us with the scalability required to undertake
large developments.
Oberoi Realty currently follows a sale model for its residential projects and a lease model
for a portion of its office space and retail projects as it believes this provides the company
with stable cash flows. In hospitality projects, it currently follows an operating agreement
model, whereby the hotel is owned by the company and operated by a hotel chain.
The company currently has eight ongoing and 19 planned projects, which it expects to
provide a total saleable area of approximately 21,316,528 square feet.
4. 2. Valuation of the Company
To value the company we basically use two methods:
Discounted Cash Flow
Relative Valuation using Comparables
Discounted Cash Flow Method
Discounted Cash Flow is a method which is widely used in finding out the value of the real
estate company. It involves calculating the following steps:
Finding out the discounting rate which involves finding out the WACC.
Finding out the growth rate of the company vis-a-vis industry.
Finding out the future cash flows of the company
Finding the discount rate: To find the discount rate we need to calculate two things. We
need to calculate the WACC by finding the cost of equity and the cost of debt(after tax) and
using the formula:
Re= Cost of equity
Rd= Cost of debt
E= Equity
D= Debt
T= Marginal Tax rate
Since the company is a debt free company so we take the cost of debt(Rd) as 0. Now we need
to calculate the cost of equity.
The cost of equity is calculated using the CAPM model.
WACC= D/(D+E) * Rd * (1-T) + E/(D+E) * Re
5. Assumptions:
There are some assumptions which need to be taken. They are:
1) Risk free rate (Rf) = 9%
2) Market Premium (RPm) = 5.5%
The beta of the company was calculated by using the historic stock returns and the market
returns for a year and finding out the co variance of the company with the market. Using Ace
Equity we found out the beta of the firm to be 0.57.
Now this cost of equity becomes the WACC of the company by which acts as the discounting
factor for the company.
Finding out the growth rate of the company: To find the growth rate of the company we
took the value of the growth in the EBIT to be as the geometric mean of the growth rate of
the company. We took this to be the proxy for convenience reasons as the data for the growth
drivers mentioned were not available. We found out the growth rate in the high growth
period to be around 23.69%. We gave also taken the assumption that this high growth
lasts for around 10 years after which the growth stabilizes to 8% which has been taken
to be the expected growth of the economy after 10 years.
Finding the Future cash flows of the company:
The future cash flows are estimated to be growing at a rate of 23.69% for the next 10 years
and then tend to stabilize to 8% in the long term. Here is how we find the FCFF of the firm
and the final value of the firm:
Cost of Equity= 9+0.57*5.5=12.14%
Cost of Equity= Rf+ beta*RPm
7. Relative Valuation using Comparables Method
The list of the comparable firms is here as follows:
We can see the PE ratio of the company Oberoi Realty is greater than the industry PE which
means that the firm has been shown to be slightly over valued compared to the industry PE.
We also did the valuation of the company using the two stage model. Here are the results of
the same:
We calculate the value using the two stage formula of relative valuation we get the value to
be Rs. 258.86 which is almost comparable to the value which we calculate using the DCF
discounting method. Thus we can also see that the prices of the stocks are undervalued.
3. Conclusion and Recommendation
Based on the current market price of Oberoi Realty we see that the company is trading at Rs
171.75 which is well below our intrinsic value estimate of Rs. 280. The potential upside of
the stock is 50%. The recommendation is a strong buy and keeps with a target price of Rs.
280.
DESCRIPTION Mar-12
India Bulls 209.25
DFL 79.47
Godrej Property 33.68
DB Realty 32.8
Oberoi Realty 25.76
Industry P/E 16.11
Anant Raj Ltd. 14.46
Prestige Estate 14.06
Housing Dev & infra 13.33
Adjusted PE (x)
High Growth Stable growth
Payout 20.050% 20.050%
EPS 15.38
Two stage growth Model
High Growth Stable growth
Growth 23.69% 8%
ROE 18.94% 10.01%
Re 12.14%
44.46 214.4 258.86
8. 4. Limitations
The major limitations that we encountered were:
The availability of concrete data because of which a lot of assumption had to be taken
like in the growth rate we had to take growth rate of EBIT to be the proxy because the
data required was either not available or not significant enough.
We have not taken into account macro economic factors which may cause growth rate
to vary y-o-y.
The investor’s perception and the preferences has not been taken into account which
may have a significant effect on the growth of the sector as a whole.