earnings .. even pay extra premiums B u s i n e s s F i n a n c e

earnings .. even pay extra premiums B u s i n e s s F i n a n c e

Hello, Instructor #1!

In the first two assignments, we looked at: (1) how AMD and Intel are positioned to take advantage of opportunities and manage risks, and (2) how well each is currently managing their performance. As part of this analysis, we identified potential areas for improvement and considered whether a merger or acquisition could strengthen their financial performance.

Based on your insights and recommendations, Buffett is now asking for an assessment of what the future holds for these businesses. In order to deliver this, you must be able to accurately forecast cash flows (the money that comes in and the money that goes out).

Like any predictions about the future, these forecasts require the collection and analysis of reliable data, including leading indicators in the broader economy as well as the market forces that impact competitive dynamics.

This analysis will enable you to make smarter decisions about how to plan for the future in order to maximize returns, minimize risks, and beat the competition.

Instructions

For this assignment, you will continue to use the published data from the most recent COMPANY annual reports as well as analyst reports and other resources available on the Internet.

A.I completed already the Assignment 3 Worksheet and assemble the data to further assess forecasts of working capital. Please do check 2019 data for both intel and adm.

The guidance for this is found on pages 131-163 of The CFO Guidebook.

B.Summarize your Analysis and Recommendations by addressing the following questions:

i. Which metrics/trends are most critical for forecasting future performance and for budgeting?

To answer this, you must include an analysis of both past trend performance AND the applicability and reliability of key forecast indicators. In your response, consider:

What are the most important drivers to help you out look into the budget, the future? You can go back and refer to the worksheet or the 10k to get insights.

a. Which company has the stronger income statement? Explain.

b. Which company has the stronger cash flows? Explain.

on the cash flows look for the the differences in the company’s business model, we know AMD has to outsource their supply chain (Assignment 2), and intel does not…

c. Which company has the stronger operating performance? Explain.

ii. Why are the metrics/trends in the data sets above so critical? How reliable are they as predictors of future performance?

when using data you want to consider three different perspectives: 1)you want to consider data itself, 2)you cant to consider the trend and 3)its comparison as a benchmark to other companies….

iii. Based on the data you have analyzed, which metrics would you focus on to improve the performance of the weaker company against the stronger one? Why?

investors look for companies that are consistent on their earnings..even pay extra premiums for companies that provide such return! Do any of these two companies provide this results?

a. How would you do this? What specific financial tools would you apply? Why?

b. What would “realistic” improvement look like?

c. How would you measure success?

C.If you were given the opportunity to join either of these two companies as the new cfo, which one would you pick, and why? In considering your answer to this question, the majority of your compensation plan will be tied to the improvements you can help to drive. Therefore, you should not base your decision on which company is currently performing better, but on which company’s performance – and valuation – has the greatest potential for growth.

D.Submission Requirements

A. Complete and submit the Assignment 3 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.