Competencies In this project, you will demonstrate your mastery of the following

Competencies
In this project, you will demonstrate your mastery of the following competencies:
Apply tools and techniques for reporting financial statement valuation and projections
Determine organizational health using economic, industry, and financial analyses
Communicate business analyses and valuation reports to inform business decisions
Overview
Accounting professionals are often asked to provide financial statement analysis for a variety of reasons and audiences. Internally, such evaluations of a company’s health and value may be used to inform decisions regarding redeployment of assets or improved operational performance. Externally, they may be used in making credit or investment decisions.
You will have the opportunity to evaluate the overall health of the company and its future prospects. Keep in mind when preparing valuation reports, you will more than likely be working on a team. You will need to gather the necessary information that has been assigned to you and report your findings to the rest of the team to determine whether to invest in the company or not at this time.
Directions
Complete the following in the same files—Project Workbook Template and Business Valuation Template—that include your original work from all the milestones.
Note: You may choose to complete an assignment using a desktop program instead of SNHU’s virtual desktop (VDI); however, technical support will not be provided by SNHU if you select this option.
You will prepare projected financial statements and cash flows for five years for the same company you have been researching throughout the milestones. Any discounts appropriate from the research should be included in the valuation as identified below. Once you have gathered all the information, you will prepare a professional report for your team.
For the final valuation calculation, you will be estimating your selected company’s value by using an earnings-based approach, specifically the discounted cash flow model. You will be applying all applicable discounts to arrive at a final indication of value.
You will have an opportunity to correct your answers from Milestone Two in the Project Workbook Template on the corrected tabs based on the feedback from your instructor.
Specifically, you must address the following rubric criteria:
Project Workbook TemplateCorrect all errors from Milestone Two by using the Corrected Balance Sheet, Corrected Income Statement, and Corrected Ratios tabs. Highlight corrections in green or with an asterisk.
Forecast income statements of the company for the next five years on the Prospective Analysis tab. Use the historical statements as a guide with your external research on the company and the industry. Include the following details in your response:Forecast the annual revenue growth rate percentage each year over the next five years.
Forecast the annual gross profit margin as a percentage that you expect to see over the next five years.
Forecast the selling, general, and administrative (SG&A) expenses as a percentage of revenue over the next five years.
Forecast your company’s future interest expense each year for the next five years.
Forecast any additional other income (expense) as determined is necessary.
Forecast the cash flow of the company for the next five years on the DCF (discounted cash flow) tab. Include the following details in your response:Add back estimated depreciation to the company’s forecasted net income.
Subtract out projected spending on capital expenditures for the company.
Subtract out or add back the future cash flow from financing expected for the company.
Note: If you received a perfect score for Milestone Two, you do not need to correct any errors. Simply note it in the designated section within the workbook. You will receive full points for this rubric criterion.
Business Valuation Template
Assumptions and Rationale
Explain all assumptions used in the forecast and your rationale. Include the following details in your response:Explain assumptions for the Prospective Analysis tab (revenue growth rate, gross profit margin, SG&A expenses, interest expense).
Explain assumptions for the DCF tab (depreciation added back, capital expenditures, and debt reduction).
Explain assumptions for the Valuation Summary tab.
Explain all discounts that are used in the valuation process and how they are derived. Include the following details in your response:Include current discount rate.
Include discount for lack of marketability (DLOM) and discount for lack of control (DLOC).
Provide your rationale if you changed the given discount rates.
Provide evidence in your write up that all supported assumptions are related to research.
Determine if the metrics have any correlation with the company performance. Include the following details in your response:Explain if the turnover rates relate to the company.
Explain if the advancement rates relate to the company.
Explain if the diversity representation rates relate to the company.
Summarize the micro and macroeconomic factors that impact your industry.
Identify historical global and/or domestic major event(s) and relate it back to historical financial company health changes. Global and/or domestic events include significant natural disasters, global conflicts, and/or health crises. Consider the following questions to guide your response:What was the financial health of the company before global and/or domestic major events?
What was the financial health of the company during global and/or domestic major events?
What was the financial health of the company after global and/or domestic major events?
Explain changes in consumer behavior patterns due to historical global and/or domestic major event(s) that may impact your company’s projections.
Analysis Explain the difference between the current market price and the final valuation. Include the following details in your response:Provide today’s market price of the stock for the company.
Provide a rationale.
Explain financial qualitative information in regulatory filings. Include the following details in your response:Comment on any potential earnings management happening in the financial statements.
Comment on any other potential fraudulent activity.
Explain how historical global and/or domestic major event(s) in the industry may impact the company into the future. Consider the following questions to guide your response:Was there a major shift with technology advances?
Did a competitor make a huge shift in its products or services offered?
Business Valuation Team Report
Create visualizations to show findings that are relevant to the valuation team.
Create a professional report for the valuation team that is easy to follow and clearly documents how you arrived at your final valuation along with your recommendation. Include the following detail in your response:Include the metrics on how you projected the company’s revenue profit margins and cash flow.
Include a cover page.
Include all key elements (executive summary, company overview, economic and industry trends, financial analysis, valuation approaches and methods used, discounts and other considerations, and appraisal conclusion).
Include your recommendation on investing in the company at this time.
If you need writing support, access the Academic Support module of your course.
What to Submit
To complete this project, you must submit the following:
Completed Project Workbook Template
Submit the same file submitted for Milestone Two with your instructor feedback and the following tabs completed: Corrected Balance Sheet, Corrected Income Statement, Corrected Ratios, Prospective Analysis, DCF, Valuation Summary.
Completed Business Valuation Template
Submit the same file submitted for Milestone One, Milestone Two, and Milestone Three with the Project section completed of the Business Valuation Template. The Project section should be 4- to 6-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins within the completed template. Sources should be cited according to APA style.
Valuation Team Report
Submit a 4- to 6-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins that includes visualizations to support your findings. Sources should be cited according to APA style