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COMPREHENSIVE CASE
Costco (Ticker: COST), Target (Ticker: TGT), and Walmart (Ticker: WMT) are
competitors in Discount/Variety Stores industry within the Services sector of the
economy. Because of their similarities and direct competition with each other,
they provide an excellent foundation for a Comprehensive Case to bring together
all of the principles we will learn in class this semester.
Comprehensive Case Assignment:
Throughout the semester, in order to bring the lecture material to life, we will be
conducting a "Comprehensive Case". The assignment will consist of numerous
parts that will be due at various points throughout the semester (see syllabus).
Part 1 - Accessing the Financial Information
Part 2 - Analyzing the Financial Information
Part 3 - Forecasting the Financial Information
Part 4 - Modeling and Arriving at Values
Part 5 - Drawing Conclusions and Taking a Position
The Purpose of the Comprehensive Case Assignment:
The purpose of the Comprehensive Case is to bring the Course Learning
Outcomes to life. Thus, it will focus on the following:
Using financial information to conduct analysis and arrive at conclusions
relating to a company's current and future performance and financial
condition.
Using financial models and forecasts of financial statement information to
arrive at conclusions regarding the company's valuation or net worth and
compare it to capital markets.
Integrating the analysis and valuation tools in order to construct, justify,
and defend (both orally and in writing) recommendation on business
issues. (In other words, taking a position).
The assignment details for each "Part" of the Comprehensive Case assignment
are outlined hereafter.
FIN312/ACTG312
COMPREHENSIVE CASE
PART 1 - Accessing the Financial Information
Costco (Ticker: COST), Target (Ticker: TGT), and Walmart (Ticker: WMT) are
competitors in Discount/Variety Stores industry within the Services sector of the
economy. Because of their similarities and direct competition with each other,
they provide an excellent foundation for a Comprehensive Case to bring together
all of the principles we will learn in class this semester.
Assignment:
Posted on Blackboard is a Comprehensive Case Template. The objective of the
assignment is to populate the Comprehensive Case Template with the most
recent two years financials for Costco, Target, and Walmart.
Download and save the template.
Log in to SEC Edgar to Access the latest Financial Statements for Costco,
Target, and Walmart.
a. www.sec.gov/edgar/searchedgar/companysearch.html
b. Enter the Ticker
c. Click on Interactive Data next to the most recent 10-K filing
Using this information, populate the Income Statement and Balance Sheet
on the Comprehensive Case Template with the information from SEC
Edgar.
Turn in your Populated Template
We will utilize this case template to illustrate and compare these two
organizations throughout the semester. It will also become the foundation from
which we will do forecasting and valuation for Costco Wholesale during class.
Thus, perusing the rest of the 10K filings on SEC Edgar in a bit more detail may
prove useful to your overall understanding and quality of learning from this
semester-long comprehensive case exercise.
FIN312/ACTG312
COMPREHENSIVE CASE
PART 2 - Analyzing the Financial Information
Costco (Ticker: COST), Target (Ticker: TGT), and Walmart (Ticker: WMT) are
competitors in Discount/Variety Stores industry within the Services sector of the
economy. Because of their similarities and direct competition with each other,
they provide an excellent foundation for a Comprehensive Case to bring together
all of the principles we will learn in class this semester.
Context:
So far, we have reviewed the 10K statements for Costco, Target, and Walmart on
SEC Edgar, using that information to populate the Comprehensive Case Template
which has been posted on Blackboard. The template provides an overview of the
Balance Sheet and Income Statement from the last two years for each company.
Assignment:
Using the information from the Comprehensive Case Template as well as your
understanding of the principles covered in the text and lectures, prepare a 2 page
written case addressing the following by comparing Costco (as your primary
company) to their competitors Target and Walmart:
Module
3
4
5
6
7
Overall
Assignment
Do Profitability analysis for the company. How do they compare to others in their industry?
Do Credit Risk Analysis for the company. What rating would you give them?
Calculate the EPS and Diluted EPS. How do they compare to others in their industry?
Determine how effective the firm is in collecting receivables, turning inventory, & turning PPE.
Determine how effectively the organization is utilizing interest free financing like accounts
payable.
What are the implications of each? What recommendations would you give to management
relating to each?
As the template sets up most of the analysis, the focus of your written case
should be the answers to the questions for each. Outlined below is a rubric
indicating how the written cases will be graded.
Basic = 1 Point, Developed = 2 Points, Mastery = 3 Points. Points will be summed up
and divided out of points possible to arrive at the grade.
FIN312/ACTG312
COMPREHENSIVE CASE
Assignment Element
Basic (1)
Developed (2)
Mastery (3)
APPLICATION Quality of
OF TOOLS
Analysis (applying
the Forecast and
Valuation
Models)
Attempts to apply the financial model,
forecast, and various valuation models but
with deficiencies and a lack of understanding
and attention to detail.
Applies the financial model, forecast, and
various valuation models successfully though
with assumptions or information not fully
sourced or properly applied.
Applies the financial model, forecast, and
various valuation models successfully arriving
at an accurate and compelling information to
be used in arriving at conclusions.
WRITTEN
CASE
Professional
Style, Mechanics,
and Rigor
Work has not been edited for spelling and
grammar mistakes; many typographical
errors.
Uses language that is difficult to follow, with
colloquial word choice or awkward
constructions.
Not organized into a cohesive document with
clear sections, paragraphs, sentences and
structure.
Uses language with few usage or typographical
errors. Uses language that effectively
communicates meaning to readers, with few
errors. Observable structure in terms of
sections, paragraphs and sentences.
Language is deployed in fluent and complex
grammatical constructions, with hardly any
typographical errors.
Uses graceful language that skillfully
communicates meaning to readers with clarity
and fluency.
Structure masterfully applied to ensure proper
flow and sequential presentation of
information to the reader.
WRITTEN
CASE
Quality and
Organization of
Analysis and
Conclusions
Attempts to draw conclusions from the
application of the tools but with deficiencies
and a lack of understanding and attention to
detail. May not answer all posed questions.
Communicates conclusions by accurately
answering all case questions through analysis
results and conclusions.
Uses a thorough and clear system of
organization of sources, evidence, and
arguments that makes the paper’s analysis
and conclusions compelling from beginning to
end.
WRITTEN
CASE
Support for
Conclusions
Demonstrates an attempt to support
conclusions and answers.
Demonstrates consistent use of credible,
relevant support for conclusions and answers.
Demonstrates skillful use of high-quality,
credible, relevant support for conclusions and
answers.
FIN312/ACTG312
COMPREHENSIVE CASE
PART 3 - Forecasting the Financial Information
Context:
So far, we have reviewed the 10K statements for Costco, Target, and Walmart on
SEC Edgar, using that information to populate the Comprehensive Case Template
which has been posted on Blackboard. The template provided an overview of the
Balance Sheet and Income Statement from the last two years for each company.
Additionally, we have written cases analyzing their profitability, credit risk,
earnings per share, asset management, and related metrics.
Assignment:
In order to start to determine valuation, we must take this historical financial
information and use it as the foundation from which we create a financial
forecast. For simplicity, we will focus on just Costco Wholesale for this section.
Here are the steps involved in the assignment:
Obtain the Forecast for the Company
o Using the Bloomberg Terminals, obtain the Financial Forecast.
Look up the company ticker in the Equity section of
Bloomberg
Go to the Key Stats (1) Tab
Go to the Highlights (11) Tab
This provides a financial forecast that can be used as a
foundation or starting position.
Populate the Parsimonious Forecast tab of the Comprehensive Case
Template
o Using the Bloomberg Forecast, populate the Sales Growth Estimates
section of the Parsimonious Forecast tab.
o Populate the Dividends Paid in the Previous Two Years.
o Using the analysis you conducted previously, populate the Estimate
Factors for Net Sales, NOPAT, NOA, and Dividends.
Make any other fine tunings or adjustments you believe to be prudent
based upon the analysis you have conducted on the company so far.
Turn in the Parsimonious Forecast and print out from the Bloomberg
Forecast.
FIN312/ACTG312
COMPREHENSIVE CASE
PART 4 - Modeling and Arriving at Values
Context:
So far, we have reviewed the 10K statements for Costco, Target, and Walmart on
SEC Edgar, using that information to populate the Comprehensive Case Template
which has been posted on Blackboard. The template provided an overview of the
Balance Sheet and Income Statement from the last two years for each company.
Additionally, we have written cases analyzing their profitability, credit risk,
earnings per share, asset management, and related metrics.
Finally, we have prepared a forecast of the financial statements using the
information obtained on Bloomberg and the financial analysis we have previously
conducted.
Assignment:
Using the information from the Comprehensive Case Template, first Written Case,
Financial Forecast, as well as your understanding of the principles covered in the
text and lecture relating to valuation and forecasting, prepare a 1 page
(maximum) written case for each of the following modules which answers these
questions about your opinions on Costco Wholesale:
PART 4a
Modules Assignment
12
Use the Dividend Discount Model to estimate the value of a share of company stock.
How does it compare to the price in the market?
What do you believe to be the reasons for the difference?
What investment decision is suggested from your results?
PART 4b
Modules Assignment
13
Using the Discounted Cash Flow Model, estimate the value of a share of company stock.
How does it compare to the closing price of the stock on the stock exchange?
What do you believe to be the reasons for the difference?
What investment decision is suggested from your results?
FIN312/ACTG312
COMPREHENSIVE CASE
PART 4c
Modules Assignment
14
Using the ROPI Model, estimate the value of a share of company stock.
How does it compare to the closing price of the stock on the stock exchange?
What do you believe to be the reasons for the difference?
What investment decision is suggested from your results?
PART 4d
Modules Assignment
15
Using Market Multiples, estimate the value of a share of company stock using the NOA
Multiple, BV Multiple, NOPAT Multiple, NI Multiple
How do these figures compare to each other?
How does it compare to the closing price of the stock on the stock exchange?
What do you believe to be the reasons for the difference?
What investment decision is suggested from your results?
As the template sets up most of the analysis, the focus of your written case
should be the answers to the questions for each. Outlined below is a rubric
indicating how the written cases will be graded.
Basic = 1 Point, Developed = 2 Points, Mastery = 3 Points. Points will be summed up
and divided out of points possible to arrive at the grade.
Due Dates:
Each 1 page paper is due at the same time we review the Homework for that
Module in class (ie.usually the next class following the lecture on that module).
Refer to the syllabus for details on due dates.
FIN312/ACTG312
COMPREHENSIVE CASE
Assignment Element
Basic (1)
Developed (2)
Mastery (3)
APPLICATION Quality of
OF TOOLS
Analysis (applying
the Forecast and
Valuation
Models)
Attempts to apply the financial model,
forecast, and various valuation models but
with deficiencies and a lack of understanding
and attention to detail.
Applies the financial model, forecast, and
various valuation models successfully though
with assumptions or information not fully
sourced or properly applied.
Applies the financial model, forecast, and
various valuation models successfully arriving
at an accurate and compelling information to
be used in arriving at conclusions.
WRITTEN
CASE
Professional
Style, Mechanics,
and Rigor
Work has not been edited for spelling and
grammar mistakes; many typographical
errors.
Uses language that is difficult to follow, with
colloquial word choice or awkward
constructions.
Not organized into a cohesive document with
clear sections, paragraphs, sentences and
structure.
Uses language with few usage or typographical
errors. Uses language that effectively
communicates meaning to readers, with few
errors. Observable structure in terms of
sections, paragraphs and sentences.
Language is deployed in fluent and complex
grammatical constructions, with hardly any
typographical errors.
Uses graceful language that skillfully
communicates meaning to readers with clarity
and fluency.
Structure masterfully applied to ensure proper
flow and sequential presentation of
information to the reader.
WRITTEN
CASE
Quality and
Organization of
Analysis and
Conclusions
Attempts to draw conclusions from the
application of the tools but with deficiencies
and a lack of understanding and attention to
detail. May not answer all posed questions.
Communicates conclusions by accurately
answering all case questions through analysis
results and conclusions.
Uses a thorough and clear system of
organization of sources, evidence, and
arguments that makes the paper’s analysis
and conclusions compelling from beginning to
end.
WRITTEN
CASE
Support for
Conclusions
Demonstrates an attempt to support
conclusions and answers.
Demonstrates consistent use of credible,
relevant support for conclusions and answers.
Demonstrates skillful use of high-quality,
credible, relevant support for conclusions and
answers.
FIN312/ACTG312
COMPREHENSIVE CASE
PART 5 - Drawing Conclusions &
Taking a Position
Context:
So far, we have reviewed the 10K statements for Costco, Target, and Walmart on
SEC Edgar, using that information to populate the Comprehensive Case Template
which has been posted on Blackboard. The template provided an overview of the
Balance Sheet and Income Statement from the last two years for each company.
Additionally, we have written cases analyzing their profitability, credit risk,
earnings per share, asset management, and related metrics.
Furthermore, we have prepared a forecast of the financial statements using the
information obtained on Bloomberg and the financial analysis we have previously
conducted.
Finally, we have completed various financial models to arrive at valuations for
which we have prepared cases.
Assignment:
Using the information from the Comprehensive Case Template, first Written Case,
Financial Forecast, Modeling and Valuation, as well as your understanding of the
principles covered in the text and lecture, prepare a 2 page (maximum) written
case which answers these questions about your opinions on Costco Wholesale:
Modules Assignment
How did the results from the various valuation models compare to one another? What
11-15
do you believe were the reasons for the differences?
Given the current stock price for your company, are they overvalued or undervalued?
Why?
Which valuation model(s) did you use to arrive at this conclusion? Why?
What investment decision is suggested from your results? Buy or Sell? Convince us why!
Outlined below is a rubric indicating how the written cases will be graded.
Basic = 1 Point, Developed = 2 Points, Mastery = 3 Points. Points will be summed up
and divided out of points possible to arrive at the grade.
FIN312/ACTG312
COMPREHENSIVE CASE
Assignment Element
Basic (1)
Developed (2)
Mastery (3)
APPLICATION Quality of
OF TOOLS
Analysis (applying
the Forecast and
Valuation
Models)
Attempts to apply the financial model,
forecast, and various valuation models but
with deficiencies and a lack of understanding
and attention to detail.
Applies the financial model, forecast, and
various valuation models successfully though
with assumptions or information not fully
sourced or properly applied.
Applies the financial model, forecast, and
various valuation models successfully arriving
at an accurate and compelling information to
be used in arriving at conclusions.
WRITTEN
CASE
Professional
Style, Mechanics,
and Rigor
Work has not been edited for spelling and
grammar mistakes; many typographical
errors.
Uses language that is difficult to follow, with
colloquial word choice or awkward
constructions.
Not organized into a cohesive document with
clear sections, paragraphs, sentences and
structure.
Uses language with few usage or typographical
errors. Uses language that effectively
communicates meaning to readers, with few
errors. Observable structure in terms of
sections, paragraphs and sentences.
Language is deployed in fluent and complex
grammatical constructions, with hardly any
typographical errors.
Uses graceful language that skillfully
communicates meaning to readers with clarity
and fluency.
Structure masterfully applied to ensure proper
flow and sequential presentation of
information to the reader.
WRITTEN
CASE
Quality and
Organization of
Analysis and
Conclusions
Attempts to draw conclusions from the
application of the tools but with deficiencies
and a lack of understanding and attention to
detail. May not answer all posed questions.
Communicates conclusions by accurately
answering all case questions through analysis
results and conclusions.
Uses a thorough and clear system of
organization of sources, evidence, and
arguments that makes the paper’s analysis
and conclusions compelling from beginning to
end.
WRITTEN
CASE
Support for
Conclusions
Demonstrates an attempt to support
conclusions and answers.
Demonstrates consistent use of credible,
relevant support for conclusions and answers.
Demonstrates skillful use of high-quality,
credible, relevant support for conclusions and
answers.
FIN312/ACTG312
COMPREHENSIVE CASE
End