Harvard University

Extension School
Business Analysis & Valuation
MGMT E-2620
Case Questions
Version of November 13, 2012
Professor: Viktoria Dalko, PhD. TA: Deepu Pylee
These are team assignments, maximum 4 people can be in each team. Please form your
own team before preparing an submitting the first written assignment. Please uploa
your answers to the following !uestion before the class begins, an bring a har copy to
class. The ue ates are in your syllabus as well as on the course web page. "n case of
conflict between these two, follow the course web page rop box ealines.
The case write ups in general shoul be #$4 pages single space, plus exhibits, unless
note otherwise. Answer only the liste !uestions specifically, an in the orer state.
The role of capital market intermediaries in the dot-com crash of 2000
%. &ist the ieal role of each financial intermeiary
'. (hat are their respecti)e financial interests*
#. +ow can you align their interest with their ieal role*
America Online
%. Prior to %,,-, why was America .nline /A.&0 so successful in the
commercial online inustry relati)e to its competitors, 1ompu2er)e an
Proigy*
'. As of %,,-, what are the key changes taking place in the commercial online
inustry* +ow are they likely to affect A.&3s future prospects*
#. (as A.&3s policy to capitali4e subscriber ac!uisition costs 5ustifie prior to
%,,-*
4. 6i)en the changes iscusse in !uestion b, o you think A.& shoul change
its accounting policy as of %,,-* "s the company3s response consistent with
your )iew*
-. (hat woul be the effect on A.&3s %,,4 an %,,- ening balance sheets if
the company ha followe the policy of expensing subscriber ac!uisition
outlays instea of capitali4ing them* (hat woul be the effect of expensing
subscriber ac!uisition costs on A.&3s %,,- income statement*
Harnischfeger Corp.
%. "entify all the accounting policy changes an accounting estimates that
+arnischfeger mae uring %,74. 8stimate, as accurately as possible, the
effect of these on the company3s %,74 reporte profits.
Page 1 of 2 Business Analysis and
Valuation
Harvard University
Extension School
'. (hat o you think are the moti)es of +arnischfeger3s management in making
the changes in its financial reporting policies* Do you think in)estors will see
through these changes*
#. Assess the company3s future prospects, gi)en your insights from the first two
!uestions.
The Home Depot, Inc.
%. 8)aluate +ome Depot3s business strategy. Do you think it is a )iable strategy
in the long run*
'. Analy4e +ome Depot3s financial performance uring the fiscal years %,7#$
%,7-. 1ompare +ome Depot3s performance in this perio with +echinger3s
performance. 9ou may want to use the ratios an cash flow analysis in 8xhibit
# in this summary. 9ou also nee to use the :AV software an compare the
results from the two methos.
#. +ow proucti)e were +ome Depot3s stores in the fiscal years %,7#$%,7-*
/9ou may want to use the statistics in 8xhibit % in this analysis.0
Home Depot in the Ne !illenni"m
%. (hat is your most likely estimate of the intrinsic )alue of +ome Depot3s stock
as of ;ebruary %, '<<%* 9ou nee to use the :AV software. =ustify your
assumptions base on your strategy analysis. 8xplain all forecast output from
the :AV software. /+int: focus on sales an nopat margin forecast, an try
some capital market )ariables as ifferent scenarios0.
'. (hat set of assumptions regaring +ome Depot3s future growth rate, return
on e!uity, an cost of e!uity are consistent with its obser)e stock price of
>47.'< on ;ebruary %, '<<%* 9ou nee to use the :AV software. =ustify your
assumptions, an explain if you fin those assumptions to be reasonable.
#ri$ati%ation of Anatolia National Telekom
8)eryone will recei)e a role to play in class.
Please stuy the article ?6eneral "nstructions@, the ?Aote on )aluation of
pri)ati4ing enterprises@, an the secret role you recei)e in class.
9ou will nee to use the AAT excel file for )aluation purposes.
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Valuation