Finance work with excel | Business & Finance homework help

  

WEEK 6 Paper. Use the link at the top of this section to submit your paper. Click “Browse My Computer” and attach your paper as a MS Word document. Then click “Submit.”

Research and Analysis Paper 3:  As a new junior analyst for your firm, your first assignment is to research, analyze, and value Johnson & Johnson stock (NYSE listed).  Your boss recommends determining prices based on both the discounted cash flow method and comparable P/E ratio method.  You are concerned about your boss’s recommendation because your Corporate Finance professor explained that these two valuation methods can result in widely differing estimates when using real data. You are hoping the two methods will reach similar prices. Good luck with that!

Your assignment is:

  1. Find      and download the Johnson & Johnson 2019 Annual Report including Form      10-K for fiscal year ending December 29, 2019.
  2. Go to      Reuters (http://www.reuters.com) and      enter the symbol for Johnson & Johnson (JNJ) in the search box at the      top of the web page (select Johnson & Johnson JNJ).  From the      Reuters website collect the following information (you should be able to      find this in the free sections) and enter it into an Excel spreadsheet:
    1. The       current stock price (last trade – upper left of page)
    2. The       EPS (TTM)
    3. The       number of shares outstanding
    4. The       Industry PE Ratio (TTM) – you may need to look elsewhere for this.
  3. From      the Key Metrics tab scroll down to find the Revenue Growth Rate (5Y),      enter the number in your spreadsheet.
  4. Go to      Morningstar (http://www.morningstar.com)      and enter “JNJ” into the “Search Quotes and Site” box. Select Johnson      & Johnson under the U.S. Securities section.  Under      “Financials” click Income Statement.  Copy and paste (or      use “Export to Excel to create anew file) the most recent three years      (2017-2019) of income statements into a new worksheet in your existing      Excel file.  Repeat this for the balance sheets and the cash flow      statements for Johnson & Johnson.  Keep (or copy) all the      different financial statement data in the same Excel worksheet NOTE: Make      sure you are collecting the Annual data, NOT the Quarterly data.
  5. To      determine the stock value using the discounted cash flow method:
    1. Forecast       the free cash flows.  Start by using the historical data from the       financial statements downloaded from Morningstar to compute the       three-year average of the following ratios:
      1. EBIT/Sales
      2. Tax        Rate (income tax expense/income before sales)
      3. Property,        plant & equipment/Sales
      4. Depreciation/property,        plant & equipment
      5. Net        working capital/sales
    2. Create       an empty timeline for the next five years
    3. Forecast       future sales based on the most recent year’s total revenue growing at the       LT growth rate (5Y average) from Reuters for the first five years of the       forecast.
    4. Use       the average ratios from step 5. a. above to forecast EBIT, property plant       & equipment, depreciation, and net working capital for the next five       years.
    5. Forecast       the the free cash flow for the next five years using Eq. 10.2 from the       text (Section 10.1 in text).
    6. Determine       the horizon enterprise value for year 5 using Eq. 10.6 and a long-term       growth rate of 4% and a cost of capital of 11% for JNJ.
    7. Determine       the enterprise value of the firm as the present value of the free cash       flows.
    8. Determine       the stock price using Eq. 10.4. Note: your enterprise value is in       thousands of dollars and the number of shares outstanding Is in billions.
  6. To      calculate an estimate of the JNJ price based on a comparable P/E Ratio,      multiply the industry average P/E ratio by JNJ EPS.
  7. Compare      the stock values from both methods to the actual stock price. 

Submit a two-page double spaced paper summarizing for your boss your analysis and valuation with a few brief summary exhibits explaining how your analysis and outlook are quantified in your valuation model.  Would you recommend investing in the company? Why or why not?

Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.

Read more

Free-revision policy

The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.

Read more

Privacy policy

The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.

Read more

Fair-cooperation guarantee

By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency