代做IB3960 Financial Statement Analysis and Security Valuation Exam Paper Summer 2021调试数据库编程

Module Code	IB3960
Module Title	Financial Statement Analysis and Security Valuation
Exam Paper Code	IB3960_C
Exam Paper Title	IB3960_Financial Statement Analysis and Security Valuation_Exam Paper Summer  2021
Duration	1.5 hours
Exam Paper Type	24-hour window - Open Book

Question 1

You recently graduated from Warwick Business School and joined UBA as a sell-side analyst. Your first assignment is to value Exco Plc. After working on the information available for Exco Plc, you produced the following summary forecasts for Exco Plc for the next three years (all figures in £ million):

	2021	2022	2023
Sales	3000	4000	4800
Operating profit before tax and interest	300	400	600
Interest	( 100)	(120)	(150)
Profit after interest	200	280	450
Tax @ 30%	(60)	(84)	(135)
Net income	140	196	315
Net operating assets at beginning of year	1600	2000	2400

The analyst expects net operating assets to grow at 5% per annum after 2023 (i.e., net operating assets at the beginning of 2024 are expected to be £2520 million and so on) and asset turnover and operating profit margin after tax to remain at their 2023 level in all following years. Assume that the company has a weighted average cost of capital of 10% for all future years.

Your head of equity research is not very impressed with your summary forecasts. She needs more detailed forecasts.

She asked you to write an internal report to show the following, in addition to the summary forecasts above.

a)   Operating profit margin after tax, asset turnover (using net operating assets at beginning of year), return on net operating assets, abnormal operating profit and free cash flow for 2021, 2022, and 2023.   [15 marks]

b)  Estimation of the economic value of Exco Plc’s operating activities at the beginning of 2021 using free cash flow model.   [15 marks]

c)  Brief explanation of why a firm have negative free cash flow.      [10 marks]

d)  Brief explanation of how to apply reverse engineering process to understand market implied growth rate.  [10 marks]

e)  Discussion of why a firm should have high P/E and P/B and the role of return on equity in explaining these two multiples.  [25 marks]

f)   A summary of your role as a sell-side analyst in the capital market.   [25 marks] (Total: 100 Marks)