Assignment 2: Performance Management and Valuation Due Week 6, Sunday (18% of fi

Assignment 2: Performance Management and Valuation
Due Week 6, Sunday (18% of final grade)
The risk analysis work you did in the first assignment was a great start. It helped to paint a picture of
where NVIDIA (NASDAQ: NVDA) and Intel (NASDAQ: INTC) are in their corporate lifecycles, the threats
and opportunities each faces, and the defensibility of their economic moats – a metaphor that Buffett loves
to use.
In this assignment, you will continue your analysis by comparing key performance management metrics of
our two companies, identifying areas of relative strength and weakness, and suggesting ways that each
company could improve, thereby increasing its valuation. To do this, you will examine trends in order to
identify variances and comparisons to: (1) establish benchmarks, (2) identify best practices, and (3) look
for signs of superior performance. This analysis is critical in determining the value of each company, as
well as evaluating whether potential acquisition or merger opportunities exist which could create greater
value and synergies than those of operating the companies as separate entities.
Instructions
To prepare, reread the Morningstar Analyst’s Report and the most recent annual reports for both
companies with a particular focus on the Income Statement and Statement of Cash Flows.
A. Complete the Assignment 2 Worksheet to compare key performance metrics and ratios for both
companies in order to see how performance can be impacted by manipulating certain financial
levers. The guidance for this is found on pages 83-106 of The CFO Guidebook.
B. Summarize your Analysis and Recommendations by answering the following questions:
i. Performance Metrics:
a. Which company is a more efficient generator of income?
b. Which company is growing faster?
c. Using financial health ratios, which company is more profitable?
d. Which company has stronger valuation ratios?
e. Overall, which is the better run company and why?
ii. Merger Synergies:
a. If there was an acquisition, which company is the most likely acquirer? Why?
b. Would you recommend a merger or acquisition to increase the moat strength of the
combined companies? Why or why not?
• If you support a merger or acquisition, identify 3 performance metrics that could
be improved by a merger and explain how they would be improved. Guidance for
this is found on pages 107-117 of The CFO Guidebook.
531 – Assignment 2 (1214) Page 2 of 3
JWI 531: Financial Management II
Assignment 2
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University. This document is subject to change based on the needs of the class.
• If you do not support a merger or acquisition, explain your rationale and why the
value of each company is best preserved/increased by remaining separate. The
guidance for this is found on pages 117-123 of The CFO Guidebook.
Submission Requirements
A. Complete and submit the Assignment 2 Worksheet component of the Workbook, along with your
written work for Part B, through the assignment link in Blackboard.
B. Format your written responses for Analysis and Recommendation as follows:
• Typed, double-spaced, professional font (size 10-12), including headings and subheadings (to
identify main topics and subtopics), with one-inch margins on all sides.
• References must be included and provide appropriate information that enables the reader to
locate the original source.
o Application and analysis of course materials and resources is expected.
o At least one additional source beyond the course materials must be cited to support
your analysis and recommendations.
• Include a cover page containing the title of the assignment, your name, the professor’s name,
the course title, and the date.
• The maximum length is 4 pages, excluding your cover page, completed worksheets, and
reference list.