Finance paper about IBM company

Finance paper about IBM company
1-Five major sections:

l Company background / introduction

l Competitive strengths

l Financial analysis (focus section)

l Stock valuation analysis

l Investment summary & recommendations

2- Company Competitive strengths

• Cost / price leadership

• Differentiated products

• Industry positioning:

• market share, brand & reputation, corporate culture, management track record, etc.

3- Economic moats

• A cost advantage

• A size advantage: economic scale

• Intangible assets: patents, brand recognition, government licenses, etc.

• High switching cost

• Network effect: a firm’s value increases as number of users increase

Soft moats: exceptional management, unique corporate culture.

4- Financial analysis

• Sales / growth analysis

• Profitability and margin analysis

• Asset turn over analysis

• Liquidity analysis

• Financial leverage

• ROE analysis (DuPont formula)

• WACC analysis and Enterprise value

• Free cash flow projections

5- Sales / growth analysis

• Sales

• by business segments

• by regions

• Historic sales growth rate (last 5 years)

• Estimating future growth rate:

• next 5-year growth rate from Yahoo Finance

• Sustainable growth rate

6- Ratio analysis

• Profitability and margin analysis:

• EBIT margin and net margin

• Asset turn over analysis:

• Total asset turnover

• Inventory turnover

• Liquidity analysis

• Quick ratio

• Financial leverage

• Debt/equity ratio

• EBIT/interest coverage
7- ROE analysis

8- Free cash flow projections

Using the % of sales approach:

• Look up 2016 year:

• sales, EBIT, depreciation, taxes, capex and working capital change

• Estimate sales growth rate for next 3 years;

• Estimate growth rates for other income statement items:

• EBIT, Taxes, capex and working capital change

• Estimate free cash flows for next 3 years
9- WACC analysis

• Market value of debt

• Market value of equity

• Total enterprise value

• Cost of debt estimate

• Cost of equity estimate using CAPM

• WACC calculation

10- Questions to be answered in the paper:

• What are the company’s competitive strengths?

• How are the company’s financial conditions?

• What are reasonable estimates for company beta and growth rate and discount rate?

• What is the fair value from the DDM and DCF models?

• Does the price target from the stock valuation models provide 10% upside?

• What’s the investment recommendation based on the buy criteria?

10 pages needed about IBM Company. Use the details above to write about IBM, the computer company. Yahoo finance and other good soruces are needed. Also need 1 more page of work cited work, thank you.

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