Outline

Overview

This unit applies all aspects of finance theory to the general problem of valuing companies and other financial assets. This requires a synthesis of the fundamental concepts of present value, cost of capital, security valuation, asset pricing models, optimal capital structures, derivative pricing and some related accounting concepts. The unit aims to reach a level of practical application that allows students to understand both the theoretical frameworks and institutional conventions of real-world corporate valuations. Basic valuation concepts from accounting are reconciled with the finance theory on which firm value ultimately stands. Students are asked to make extensive use of Excel or similar software in valuation exercises.

Details

Academic unit	Finance
Unit code	FINC6021
Unit name	Corporate Valuation
Session, year ?	Semester 1, 2021
Attendance mode	Normal day
Location	Remote
Credit points	6

Enrolment rules

Prohibitions ?	None
Prerequisites ?	FINC5001
Corequisites ?	None
Available to study abroad and exchange students	Yes

Teaching staff and contact details

Coordinator	Jing Yu, jing.yu@sydney.edu.au

Type	Description	Weight	Due	Length
Final exam (Record+)	Final exam Written exam	50%	Formal exam period	2 hours
Outcomes assessed:
In-semester test (Record+)	Mid-semester exam Written exam	25%	Week 07 Due date: 22 Apr 2021 at 14:00	1 hour
Outcomes assessed:
Assignment	Assignment Report and presentation	25%	Week 10	4 pages including cover page Font 12
Outcomes assessed:
= hurdle task ? = Type B final exam ? = Type B in-semester exam ?

Mid-semester exam: The exam will cover all material relating to weeks 1-5 inclusive. This assessment will provide students with an opportunity to review initial principles. You are assumed to know the material covered in the pre-requisite subject, FINC5001. This knowledge is likely to be required in all assessment tasks. In particular, you are expected to be competent in discounted cash flow analysis and to understand basic capital budgeting and capital structure theory. You will be required to analyse valuations using techniques introduced in the unit.
Assignment: The task will involve the analysis and valuation of an Exchange-listed Company from a given industry. The assignment will be completed in three parts. Work will be assessed based on the application of the tools and methods learnt in the subject. Further details will be posted on Canvas.
Final exam: The final exam will assess the material discussed between weeks 6-13. It is a closed book exam and consists of a combination of theoretical and practical exercises. It will assess a student's theoretical understanding of the models covered in the unit and the ability to think critically about the models and solve problems related to financial valuation. The final exam is listed as a HURDLE TASK. This means you must undertake the assessment and achieve a mark above a minimum standard. Students who fail to achieve this minimum standard in this assessment, even when their aggregate mark for the entire unit is above 50%, will be given a Fail grade for the unit. As a result the student's academic transcript will show a fail grade and the actual mark achieved if between 0-49 and a fail grade and a capped moderated mark of 49 for all other marks. The hurdle mark for this assessment will be advised on Canvas.

Detailed information for each assessment can be found on Canvas.

Assessment criteria

The University awards common result grades, set out in the Coursework Policy 2014 (Schedule 1).

As a general guide, a high distinction indicates work of an exceptional standard, a distinction a very high standard, a credit a good standard, and a pass an acceptable standard.

Result name	Mark range	Description
High distinction	85 - 100	Awarded when you demonstrate the learning outcomes for the unit at an exceptional standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Distinction	75 - 84	Awarded when you demonstrate the learning outcomes for the unit at a very high standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Credit	65 - 74	Awarded when you demonstrate the learning outcomes for the unit at a good standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Pass	50 - 64	Awarded when you demonstrate the learning outcomes for the unit at an acceptable standard, as defined by grade descriptors or exemplars outlined by your faculty or school.
Fail	0 - 49	When you don’t meet the learning outcomes of the unit to a satisfactory standard.

For more information see sydney.edu.au/students/guide-to-grades.

Late submission

In accordance with University policy, these penalties apply when written work is submitted after 11:59pm on the due date:

Deduction of 5% of the maximum mark for each calendar day after the due date.
After ten calendar days late, a mark of zero will be awarded.

This unit has an exception to the standard University policy or supplementary information has been provided by the unit coordinator. This information is displayed below:

Without special considerations, assignment submissions later than the deadline will attract late penalties. Every day post the deadline incurs a 5% mark reduction. For example, suppose the actual mark on the assessment is 20 and the submission is late by two days. Then the final mark on this assessment will be 20*(1-2*5%) = 18.

Special consideration

If you experience short-term circumstances beyond your control, such as illness, injury or misadventure or if you have essential commitments which impact your preparation or performance in an assessment, you may be eligible for special consideration or special arrangements.

Academic integrity

The Current Student website provides information on academic honesty, academic dishonesty, and the resources available to all students.

The University expects students and staff to act ethically and honestly and will treat all allegations of academic dishonesty or plagiarism seriously.

We use similarity detection software to detect potential instances of plagiarism or other forms of academic dishonesty. If such matches indicate evidence of plagiarism or other forms of dishonesty, your teacher is required to report your work for further investigation.

Weekly schedule

WK	Topic	Learning activity
Week 01	Introduction to Valuation; Forecasting and Valuing Cash Flows	Lecture and tutorial (2 hr)
Week 02	Project Risk Analysis	Lecture and tutorial (3 hr)
Week 03	Estimating a Firm's Cost of Capital	Lecture and tutorial (3 hr)
Week 04	Estimating Required Rates of Return for Projects	Lecture and tutorial (3 hr)
Week 05	Forecasting Financial Performance	Lecture and tutorial (3 hr)
Week 06	Earnings Dilution, Incentive Compensation, and Project Selection	Lecture and tutorial (3 hr)
Week 07	Mid Semester Exam	Lecture (3 hr)
Week 08	Relative Valuation Using Market Comparables	Lecture and tutorial (3 hr)
Week 09	Enterprise Valuation	Lecture and tutorial (3 hr)
Week 10	Valuation in a Private Equity Setting	Lecture and tutorial (3 hr)
Week 11	Using Futures and Options to Value Real Investments	Lecture and tutorial (3 hr)
Week 12	Managerial Flexibility and Project Valuation: Real Options	Lecture and tutorial (3 hr)
Week 13	Strategic Options: Evaluating Strategic Opportunities	Lecture and tutorial (3 hr)

Attendance and class requirements

Lecture recordings: Two lectures will be recorded and will be available on Canvas for student use. The first lecture each week and the lecture of the unit coordinator will be recorded each week. Please note the Business School does not own the system and cannot guarantee that the system will operate or that every class will be recorded. Students should ensure they attend and participate in all classes.

Study commitment

Typically, there is a minimum expectation of 1.5-2 hours of student effort per week per credit point for units of study offered over a full semester. For a 6 credit point unit, this equates to roughly 120-150 hours of student effort in total.

Required readings

Sheridan Titman, John D. Martin (2020). Valuation: The Art and Science of Corporate Investment Decisions, (3rd ed), Pearson. [ISBN 9780133479522]

Learning outcomes

Learning outcomes are what students know, understand and are able to do on completion of a unit of study. They are aligned with the University’s graduate qualities and are assessed as part of the curriculum.

Outcomes
Graduate qualities

At the completion of this unit, you should be able to:

LO1. demonstrate an understanding of the various approaches to valuation analysis
LO2. solve practical financial problems using a range of valuation techniques
LO3. understand and create pro-forma financial statements for a variety of business structures
LO4. estimate a firm's cost of capital
LO5. generate an estimate of firm value and an appropriate recommendation based on an assessment of relevant quantitative and qualitative information
LO6. analyse critically the models covered in the unit and be able to discuss their appropriateness under various scenarios
LO7. interpret the financial implications of quantitative based results
LO8. ascertain the relevance of information sources for different valuation models
LO9. test the reasonableness of financial valuation results
LO10. solve for value estimates using a range of developed methods
LO11. use the functionality of Microsoft excel to create pro-formas financial statements, undertake cost of capital calculations, and perform scenario based analyses
LO12. identify firm structural issues and be able to assess the value of changes in investment and operational policies
LO13. effectively communicate valuation results through a range of quantitative and qualitative outputs
LO14. express key assumptions and forecasts for which valuation hinges on.

Graduate qualities

The graduate qualities are the qualities and skills that all University of Sydney graduates must demonstrate on successful completion of an award course. As a future Sydney graduate, the set of qualities have been designed to equip you for the contemporary world.

GQ1	Depth of disciplinary expertise Deep disciplinary expertise is the ability to integrate and rigorously apply knowledge, understanding and skills of a recognised discipline defined by scholarly activity, as well as familiarity with evolving practice of the discipline.
GQ2	Critical thinking and problem solving Critical thinking and problem solving are the questioning of ideas, evidence and assumptions in order to propose and evaluate hypotheses or alternative arguments before formulating a conclusion or a solution to an identified problem.
GQ3	Oral and written communication Effective communication, in both oral and written form, is the clear exchange of meaning in a manner that is appropriate to audience and context.
GQ4	Information and digital literacy Information and digital literacy is the ability to locate, interpret, evaluate, manage, adapt, integrate, create and convey information using appropriate resources, tools and strategies.
GQ5	Inventiveness Generating novel ideas and solutions.
GQ6	Cultural competence Cultural Competence is the ability to actively, ethically, respectfully, and successfully engage across and between cultures. In the Australian context, this includes and celebrates Aboriginal and Torres Strait Islander cultures, knowledge systems, and a mature understanding of contemporary issues.
GQ7	Interdisciplinary effectiveness Interdisciplinary effectiveness is the integration and synthesis of multiple viewpoints and practices, working effectively across disciplinary boundaries.
GQ8	Integrated professional, ethical, and personal identity An integrated professional, ethical and personal identity is understanding the interaction between one’s personal and professional selves in an ethical context.
GQ9	Influence Engaging others in a process, idea or vision.

Outcome map

Learning outcomes	Graduate qualities
Learning outcomes

Closing the loop

No changes have been made since this unit was last offered.

Additional information

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Academic appeals process, special consideration, rules and guidelines, advice and support
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Scholarships, interest free loans, bursaries, money management
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Learning Centre, faculty and school programs, Library, online resources
Health and support
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Disclaimer

The University reserves the right to amend units of study or no longer offer certain units, including where there are low enrolment numbers.

To help you understand common terms that we use at the University, we offer an online glossary.

Current students

Overview

Details

Enrolment rules

Teaching staff and contact details

Assessment

Assessment criteria

Late submission

Special consideration

Academic integrity

Weekly schedule

Attendance and class requirements

Study commitment

Required readings

Learning outcomes

Graduate qualities

Outcome map

Closing the loop

Additional information

Disclaimer

On this page

Useful links

Media

Student links

About us

Connect

Current students

FINC6021: Corporate Valuation

Overview

Details

Enrolment rules

Teaching staff and contact details

Assessment

Assessment criteria

Late submission

Special consideration

Academic integrity

Weekly schedule

Attendance and class requirements

Study commitment

Required readings

Learning outcomes

Graduate qualities

Outcome map

Closing the loop

Additional information

Disclaimer

On this page

Useful links

Media

Student links

About us

Connect