Company Valuation

Universidad del Norte

Course Description

  • Course Name

    Company Valuation

  • Host University

    Universidad del Norte

  • Location

    Barranquilla, Colombia

  • Area of Study

    Business Administration, International Business

  • Language Level

    Taught In English

    Hours & Credits

  • Credit Points

    3
  • Recommended U.S. Semester Credits
    0
  • Recommended U.S. Quarter Units
    0
  • Overview

    1. This course studies the different existing models to determine the value of a business unit. The course starts with an introduction about the different reasons for which it is necessary to develop an enterprise evaluation, and also presenting the difference between the price and the value of a company. After that we will develop a classification of the existing models to define the value of a company, making emphasis in the models used to evaluate ongoing enterprises as is the case of the disconnected future flows model. Later, the steps to make an enterprise evaluation will be developed, making emphasis in the models used to evaluate enterprises in the Free Cash Flow and the Added Economic Value and developing in depth the topics of weighted average capital cost and the residual value. Finally, simulations about how the different decisions made by an administrator affect the value of a company are developed.

    2.    Justification

    The professional in Business Administration needs tools to be able to accomplish the basic financial objective, which is the maximization of the company value and therefore the wealth of the owners. These tools are acquired during the development of the Enterprise Evaluation.
    3.    Competence to be developed

    Institutional Basic Competence: To evaluate the enterprise through the different valuation methods. 

    4.    Course general objective

    This course will be oriented to:

    Determine the value of an ongoing enterprise through the different methods of evaluation. 
     

    Competence Dimension    Learning Outcome
    Knowledge (knowing to know)    Understand the general aspects of Management based in Value and how to determine an enterprise value.

        Understand the theoretical models which are applicable to evaluate an enterprise. 
        Understand the procedure to be followed to determine an enterprise value through different methods.

    Abilities (knowing how)    •    Analyze the historical situation of an Enterprise and realize financial projections.
    •    Determine the free cash flow
    •    Calculate the capital cost of the enterprise
    •    Determine its residual value
        Value the Enterprise through the following methods:
    •    Adjusted present values
    •    Calculation of multiples
    •    Discounted free cash flow
    Attitudes (knowing to be)    Strengthen the analysis ability to evaluate an Enterprise through the different evaluation methods.

    7.1 Research Work

    1.    Choose an Enterprise, small, medium or large, of any economic sector and prepare its description. Presentation of the antecedents and its management performance.
    2.    Elaborate a financial diagnostic within a macro-economic scenario for a three-year period.
    3.    Problems and questions about operation, investment and financing decisions.
    4.    Preparation of the projected financial states including the investment and financing decisions. This must be developed on the Excel sheet.
    5.    Calculate the weighted average capital cost according to its capital structure.
    6.    Determination of the Enterprise value. Show all your work in your Excel book and be sure that the key financial assumptions are linked to the projected financial states. 
    7.    Risk analysis and preventions on investments.
    8.    Industry analysis
    9.    Peer analysis
    10.    Shareholders ‘analysis
    11.    Risk Analysis (credit risk, macro-economic risk, operational risk, liquidity risk)
    12.    Information sources

     

    1. Evaluation

     

    Learning Evidence

    Evaluation Period

    Percentage of total grade

    Work first advance

    Week 6

    25%

    Work second advance

    Week 11

    25%

    Quizzes and Workshops

    Throughout the semester

    20%

    Final Work

    Week 16

    30%