Value Investment Theory

This is the measurement of the levels of investor confidence which influences the value of a firm in the

Sensitivity Analysis The sensitivity analysis focuses on examining how Chipotle’s valuation changes when some key inputs vary. Two of the most important inputs of the valuation are the weighted average cost of capital (WACC) and the perpetuity growth rate. In this thesis, it is assumed that Chipotle would have a WACC of 6.65% and a perpetuity growth rate of 2.84%, which would result in a share price of $443.90 for Chipotle.

Organisational values can be described as a “belief that a specific mode of conduct is preferable to an opposite or contrary mode of conduct” (Rokeach, 1973). Some organisations describe them as their ‘guiding beacons’ whilst others describe them as part of their philosophy. As Diageo explains ‘Our values are not just words on a page – they are in our DNA. They underpin everything we do and are reflected in the day-to-day behaviour of the company.’ –

View value and Risk Driver, describe what these objective covers. The value and risk driver provide an informative basis for the achievement of control objectives and therefore for the realization and support of the risk management. Value drives can be interpreted as examples for upcoming business benefits through an adequate control coverage, where as the risk driver can be seen as examples for avoiding or handling risks.

However, the “steadily rising price of stocks” on the Wall Street stock market attracted more investors (Give Me Liberty, Eric Foner, pg 786). “Many assumed that

After an analysis of both Metro Inc., and Loblaws Companies Limited, we have come to the conclusion that Metro poses the better investment opportunity. Metro, Inc., is one of the leading retailers and distributors of food and pharmaceutical products in Quebec and Ontario. It currently pays a quarterly dividend of $0.1625 per share, equating to $0.65 per share on an annualized basis. Its dividend yield is only 1.26%, but Metro is consistent with its payout as it hasn’t fallen below 1.20% in the past five years. Although it’s yield is lower than Loblaws, Metro has raised its annual dividend payment for 22 consecutive years.

Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.

Mergers and Acquisitions and Shareholder Wealth: The theory of finance states that maximization of shareholder wealth should be the goal of every business organization. It is not clear, however, whether maximization of shareholder wealth is the main motivation behind Mergers and acquisitions. This has generated a lot of research interest the area. Unfortunately decades of intensive research have not been able to conclusively establish the impact of Mergers and acquisitions on shareholder wealth.

Efficiency of financial markets is one of the fundamental issues in finance. The central idea of market efficiency is that market prices of securities represent true value of securities. All relevant information is immediately reflected in the prices causing abnormal profit making impossible in the market. The efficient market hypothesis further implies that prices will move randomly that makes prediction of prices extremely difficult. Efficient market hypothesis requires that investors will be rational and have homogenous expectation.

Growth and Value Creation at Sunflower Nutraceuticals Sunflower Nutraceuticals (SNC) is a nutraceuticals distributor based in Miami, Florida. Prior to 2012, SNC had flat annual sales growth with total revenues of $10 million and had been experiencing financing issues due to its thin margins and high working capital intensity. Miami Dade Merchant’s Bank (MDM) was SNC’s previous financier, but refused to increase SNC’s line of credit of $3.2 million, which was limiting SNC’s ability to grow because of the working capital constraints. In 2012, SNC decided to accept an alternative financing option from Averell & Tuttle (AT), an investment bank. AT provided SNC with a line of credit of $3.7 million at a 10% interest rate for a 10% equity stake.

Question 2: To do a resource-based analysis of any organization, it needs to go through different steps, first identify the three categories of the resources , the tangible ,intangible, and the human resources , second identify the capacity of the organization to put its resources for a desired end and in good use, third to decide on suitable strategy for the organization we need to do SWOT analysis to determine the organization strength and weakness compared to the competitors, third what are the key successful factors of the organization that can be determine by identifying the customers of the organization and their needs, and what the organization will do to survive the competition ( Hall&Keynes,2015) also audit analysis to Ford resources , and value chain analysis to Ford activities . In the next section, there will a brief explanation about the steps mentioned above , followed by an application to each step to, Ford motor which was incorporated in Delawae in 1919, it is a global automotive industry leader in Dearborn and Michigan, distributed vehicles across six continents the core business of Ford , designing and manufacturing cars, marketing , financing and servicing a full line of Fords cars, trucks, SUVs, and electrified cars, and Lincoln luxury car (Ford annual report,2015). Resource-based view (RBV) is an essential theory for strategic managers , considering the organization resources the assets , capabilities organization

In the first chapter we can see the valuation in term of the Price-Earnings ratios from 1881 to 2000. The book then lists down 12 factors that helped the

Low valuation ratios of these two companies indicated that their stock price might not be

Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.

REFLECTION PAPER IN INVESTMENTS AND INVESTMENT PORTFOLIO As they say, "Money isn't everything, but happiness alone can't keep out the rain. " It is often said that money is not the most important thing in the world. Despite of this, we still need to understand the true value of money. Money, in and of itself, is not very spectacular.