FIN 4328 (Moore) MNC Financial Management and Risk Analysis Project Guidelines
MNC Business and Risk Analysis Project Requirements
Overview:
The purpose of this project is for student teams to prepare a comprehensive
international business, risk and financial management analysis of a multinational
corporation (MNC). The report will be judged against the quality of proprietary
valuations reports prepared in the professional investment community. Hence,
format, understandability, clarity, quality and depth of analysis, breadth of
coverage, professionalism of the report will be considered in the grade
determination.
Candidate Firms:
First and foremost, students should select firms and industries they find of
interest. Selected firms should be widely held firms. This increases the likelihood
information will be available to perform the analysis and valuation. The firms
must have a market capitalization of at least $500 million (price x number of
shares). The candidate firms must be listed (registered) in the United States.
Your chief concern should be whether adequate disclosure is available for your
firm. Candidate firms must have at least 30% of their revenues generated from
foreign operations, must operate in at least 5 countries and three continents. The
candidate firm must not be in the financial services industry. Rather, choose a
manufacturer, retailer or distributor with foreign subsidiaries.
Your group must submit the names of 3 firms you are considering for analysis. I
will let you know which is acceptable. Please Note: You need to look at the 10-K
reports of these firms to be sure they provide sufficient disclosure to successfully
complete the assignment.
At a very minimum, your firm needs to disclose segment information that is
broken down on geographic lines (preferably by country but you can work with
major geographic segments). Specific geographic segment information to look
for includes Revenues, Operating Profits, Net Income, cumulative translation
gains and/or losses, gains/losses on hedging activities.
Again, these are
absolutely necessary components.
Your candidate firm must disclose this
information. I can recall students choosing a large multinational firm in a
previous semester that didn’t segment information by product line (this doesn’t
facilitate a report such as an international risk exposure analysis).
There will also be a list of firms from previous semesters that were analyzed by
students taking this course. You may come into the office to look at such
submitted work. You may not, however, do a report on these firms.
Groups will begin balanced in size (4 or 5 people, determined by students).
If through the process of attrition, a group drops below the 3 person level,
remaining members will be allocated to other groups.
-1Summer 2006
FIN 4328 (Moore) MNC Financial Management and Risk Analysis Project Guidelines
Analysis and Report Content and Format:
A.
Finished Report Guidelines
1. Length of Report – Target around the 50 page level
a. Note that 50 pages is not a requirement, but rather a historical
average of what students have submitted in the past.
b. The total page content includes graphs, tables, and appendices.
c. Finally, consider the amount of writing each person is responsible
for during a full semester.
i. 5 person groups (10 pages per person)
ii. 4 person groups (12.5 pages per person
iii. 3 person groups (17 pages per person)
iv. This is not a large body of work over the course of a
semester.
2. Final report must be bound, single-sided print, publication quality.
3. Use Tahoma 12-pt font with 1.5 line-spacing
B. Contents and recommended order:
1. Cover Sheet
2. Executive Summary (2-3 pages)
3. Company Overview
4. Industry (or Industries) Overview and Analysis
5. Country Risk Analysis and Assessment (Chapter 6 in Text)
6. Firm Competitive Advantage Analysis (Historical, Current, Future)
7. International Risk Analysis for Firm (by country and product/industry)
8. Accounting Analysis of Firm and Industry (Disclosure Quality and Detail)
9. Financial Statement Analysis
10. Currency Risk Exposure (5 years historical)
11. Interest Rate Risk Exposure (5 years historical)
12. Level of international risk and market diversification
13. Equity Valuation Information
- Estimate domestic cost of equity capital (direct estimation)
- Estimate the international cost of capital (direct estimation)
- Estimate the implied domestic cost of capital
- Estimate the implied international cost of capital
14. Analyze and Evaluate Firm’s International Risk Management actions
15. Forecast of 1 and 2 year out exposure (currency)
16. Recommendations for Risk Management program given forecasts
17. Overall Conclusions and Firm Assessment
18. Appendix
 Charts (labeled)
 Financial Statements (actual and forecast)
 Computations and Supporting Detail
19. References
-2-
Summer 2006