FNCE 623 Accounting Walmart Case Study

Description

2 attachmentsSlide 1 of 2attachment_1attachment_1attachment_2attachment_2

Unformatted Attachment Preview

Individual Assignment FNCE 623 Section 30
In this individual assignment we will start by looking at Tesla, the electric car manufacturer.
Tesla raised eyebrows in 2017 as its market valuation (price of all shares) exceeded that of its
much larger rivals, traditional car manufacturers General Motors (GM) and Ford (see the article
below). Tesla produced 76 thousand cars in 2016, compared to GM’s 10 million and Ford’s 6.6
million. That means that Tesla’s production volume was a mere 0.76% of GM’s.
Yet the market valuation of $51 billion exceeded GM’s $50.9 billion. It looks like the acquisition
of Solar City, although a drag on Tesla’s finances, didn’t hold its share price down for long.
When looking at the profits Tesla and GM generate, even more questions arise. Tesla has
accumulated $1.9 billion over the last three years, while GM had a net profit of $23 billion over
the same period. Looking at the problem from a cash flow perspective, Tesla’s value shouldn’t
be anywhere close to $51 billion; it should actually be negative. However, using the cash flow
valuation method isn’t the best way to approach this problem, as the losses were accompanied
by strong expansion in the electric car market, and the valuation is a reflection of investor belief
in the bright future of the company. And at the same time they don’t have the same optimism
for the futures of GM and Ford; their valuations are much lower than their profits would
suggest. To see why, just compare GM’s profits and valuation ‐ $23.9 billion in profits over 3
years and a value of $50.9 billion. That would suggest that GM is able to make as much money
as it is worth in just over six years, or close to seven, if discounting is used. The only way to
explain it is that investors are expecting profits to fall very quickly.
Your task for this individual assignment is to find a similar case to Tesla, where there is a clear
disparity between profits and market valuation. The company can be one that is publicly
traded, or one that has recently been acquired for a price not explained by its profits.
Background article:
Financial Times (2017, April 11th). Tesla steals GM’s crown as most valuable US carmaker,
Available at: https://www.ft.com/content/fa2f3bce‐1e33‐11e7‐b7d3‐163f5a7f229c?mhq5j=e1
Required:
Your written report should be approximately 2 pages, double‐spaced, 12 pt font, 1‐inch margins
+ references (APA style).
You MUST select the case you are profiling and post a short discussion forum post with the
company name. You MAY NOT pick a company that anyone else has already said they are
picking. This is on a first‐come, first‐serve basis so if there is a particular company that you
want to profile you should get your post up ASAP.
Your profile should include:
‐
‐
‐
‐
‐
A description of the company you are profiling
A description of the industry or other information you have used to determine the disparity
Information on what happened in the stock market related to valuation
Any subsequent information on how the market reacted, current valuation etc.
Any detailed calculations should be in an appendix, with reference to them in the main
body of the report.
Your individual assignment is due June 8th at 11:59 pm.
Marking Rubric
Critical
Elements
Not Evident (0%)
Description of
company profile
Does not explain
key features of
company
relevant to the
project
Description of
industry
Does not explain
key features of
the industry
relevant to the
project
Stock market
valuation
Does not explain
key features of
the stock market
valuation to the
project
Subsequent
information
Does not explain
subsequent
information
Needs
Improvement
(50%)
Explains key
features of the
company, but
the explanation
is convoluted,
omits essential
information, or
contains
inaccuracies.
Explains key
features of the
industry, but
the explanation
is convoluted,
omits essential
information, or
contains
inaccuracies.
Explains key
features of the
stock market
valuation, but
the explanation
is convoluted,
omits essential
information, or
contains
inaccuracies.
Explains some
subsequent
information
relevant to the
Proficient (80%) Exemplary
(100%)
Value
Explains key
features of the
company in a
concise and
understandable
form.
Explains key
features of the
company in a
concise and
understandable
form, and ties in
relevant course
content.
5
Explains key
features of the
industry in a
concise and
understandable
form.
Explains key
features of the
industry in a
concise and
understandable
form, and ties in
relevant course
content.
5
Explains key
features of the
stock market
valuation
industry in a
concise and
understandable
form and is
supported by
some
calculations.
Explains
subsequent
information
relevant to the
Explains key
features of the
industry in a
concise and
understandable
form, and is
supported by
clear and
concise
calculations.
10
Explains
subsequent
information
relevant to the
5
relevant to the
project
Conclusions
Report does not
reach a
conclusion.
Communication
Main idea unclear
and insufficiently
supported by
detail. Weak
attempts to use a
consistent system
for basic
organization.
Struggles to cite
sources. Few
references.
Citations
Total
project, but the
explanation is
convoluted,
omits essential
information, or
contains
inaccuracies.
Report reaches
a conclusion but
it is not well
supported by
the analytical
work.
Main idea is
clear. Need to
improve logical
order of written
work or
improve
relevance of
evidence.
Errors in either
in‐text citations
or end
referencing.
project in a
concise and
understandable
form.
project in a
concise and
understandable
form, and is
supported by
course concepts.
Report reaches
a conclusion
which is
consistent with
and tied to the
analytical work.
Report reaches
an insightful
conclusion
which is
consistent with
and tied to the
analytical work
and.
Written at a
professional
level. Flow and
logic are clear.
Easy to read.
Main idea is
clear.
Appropriate use
of headings.
The sentence
and paragraph
structure is
appropriate.
Cited correctly.
Demonstrates
an attempt to
use credible or
relevant
sources to
support ideas.
Work is
appropriately
cited.
Demonstrates
skillful use of
high‐quality,
credible,
relevant sources
to develop ideas
that are
appropriate for
the discipline
and genre for
communication.
2
10
3
/ 40
1. Meta
2. Rolex
3. Ford motor
4. Netflix
5. Zoom
6. Jhon Keells Holdings- Sri lanka
7. Taiwan Semiconductor Manufacturing Company, Limited.
8. LUCID MOTORS
9. VMware
10. Westjet
11. Sun Pharmaceutical Industry Ltd
12. Microsoft
13. Toyota
14. Coca cola
15. Twitter
16. Air Canada
17. Nike
18. Adidas
19. Walt Disney
20. Amazon
21. Facebook
22. Apple
23. Goggle
24. Shell Canada

Purchase answer to see full
attachment

Explanation & Answer:
2 pages

Tags:
walmart

accounting

finance

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.