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FNCE6012 Financial Modeling – G1

FNCE6012 Individual Assignment 1 (20% of Total Assessment Grade)

•   All assignments due are to be handed-in via softcopy (Excel workbook) submission. Late submission will be penalized.

•   Softcopy  of  assignments  are  to  be  dropped  into SMU  eLearn  Dropbox  using  the filename format as <Yourname>_A1.xlsx where A1 refers to Assignment 1 .

•    Excel  worksheets  must  include  documentation:  formulas  of  important  cells  and user instructions  (if any) .

•   The work should look professional. Design the Excel workbook from the perspective of Users not the developer.

• Individual Work Policy: This is an individual work, students are expected to produce solutions  strictly   on  your   own.  You  should   not  consult  or  discuss  the  assigned problems  with  others,  and  also  not  refer  to  each  other’s  work.  Violation  of  this policy will be deemed as cheating.

• Assignment due on 8th May.

TOPIC: Financial Projections and Firm Valuation

You are the Group CFO of a well-established listed Company in Singapore, Delfi Group.

Improper management of financial and cash flows  is often the cause of the collapse of a company, more so than any other factor. As the CFO of the Group, you want to ensure the company liquidity and financial positions are at its best so as to maximise shareholder values and to ensure optimal firm valuation. Therefore, to better  manage and anticipate future needs, one key task on hand is to project the Group’s next 5 years financial and cash flow positions.

Refer to the documents provided for details and reference:

•    Last 5 years (2019, 2020, 2021, 2022, 2023) Annual Reports

•    Last 10 years (2014 to 2023) financial statements in Excel

To-do:

1.   Analyse the Company’s annual reports to provide a short write-up of the company’s historical performance and future expectation. (max 1000 words)

2.   Project the next 5 years  Income Statement and  Balance Sheets. What would be the performance  ratios  for  the  next  five  years? Pls  ensure  that  all  assumptions  and methods are clearly indicated and justified by adding aremark column. (Hint: Not all projections are linear)

3.   Given the key Industries the Group is in, what are the concerns you have as a CFO that will  impact  the  Income  Statement  and  Balance  Sheets?  What  type  of  Sensitivity Analysis  will  you  do? Justify and explain  the variables used in your sensitivity analysis.

4.   Construct  at  least  two  Sensitivity  Analysis  mentioned  in  Q3  and  provide  a  short analysis of the results.

5.    The value of a firm can be inferred from its financial statement, by determining the net present value (NPV) of all its future Free Cash Flow (FCF). The cash flow of a firm is the stream of cash that will be generated by the firm from its revenue less all the necessary cost, interest, and tax expenses. FCF is based on this same cash flow and add back all non-cash expenses, changes in working capital and capital expenditures.

Estimate the Firm Valuation as of today using the FCF approach.