Arowwai Industries
VALUATION IN PRACTICE:
INVESTMENT AND EQUITY
DECISIONS
Arowwai Industries
CAPITAL INVESTMENT
DECISIONS
-INVOLVE THE JUDGMENTS MADE BY A
MANAGEMENT TEAM IN REGARD TO
HOW FUNDS WILL BE SPENT TO
PROCURE CAPITAL ASSETS.
-ALSO KNOWN AS CAPITAL
BUDGETING.
Arowwai Industries
INVESTMENT
DECISION
-IS A WELL-PLANNED ACTION THAT
ALLOCATES FINANCIAL RESOURCES TO
OBTAIN THE HIGHEST POSSIBLE RETURN
Arowwai Industries
FACTORS AFFECTING
INVESTMENT DECISION
1. Investment objective
2. Return on investment
3. Return frequency
4. Involved risks
5. Maturity period
6. Tax benefit
7. Volatility
8. Liquidity
9. Inflation rate
Arowwai Industries
refers to financial services concerning
INVESTMENT large and complex transactions,
investment advice, capital raising, risk
BANKING management, and other financial
solutions
Arowwai Industries
INVESTMENT BANKS
are financial institutions that seek to
profit from the flow of money between
different actors
Arowwai Industries
WHAT DO INVESTMENT BANKS
DO?
Arowwai Industries
FUNCTIONS OF INVESTMENT BANKING
1. UNDERWRITING
Capital raising and underwriting groups
work between investors and companies
that want to raise money or go public via
the IPO process.
Arowwai Industries
THREE TYPES OF
UNDERWRITING:
Firm Commitment
Best Efforts
All-or-None
\
Arowwai Industries
FUNCTIONS OF INVESTMENT BANKING
2. MERGERS &
ACQUISITIONS (M&A)
Advisory roles for both buyers and sellers
of businesses, managing the M&A process
from start to finish
Arowwai Industries
FUNCTIONS OF INVESTMENT BANKING
3. SALES & TRADING
Matching up buyers and sellers of
securities in the secondary market
Arowwai Industries
FUNCTIONS OF INVESTMENT BANKING
4. EQUITY RESEARCH
The equity research group research, or
“coverage”, of securities helps investors
make investment decisions and support
the s trading of stocks.
Arowwai Industries
FUNCTIONS OF INVESTMENT BANKING
5. ASSET MANAGEMENT
Managing investments for a wide range of
investors including institutions and
individuals, across a wide range of
investment styles.
Types
of Investment Banking
01 02 03
BULGE BRACKET BOUTIQUE INDUSTRY/
REGIONAL
FACTORS
Arowwai Industries
CAREERS IN
INVESTMENT BANKING
Analyst
Associate
Vice President
Director
Managing Director
Head, Vice Chair, or another special title
Arowwai Industries
EQUITY
RESEARCH
analyzing the company’s financials, performing
ratio analysis,
forecasting the financials in excel (financial
modeling), and
exploring scenarios to make a BUY/SELL stock
investment recommendation.
Arowwai Industries
Arowwai Industries
EQUITY RESEARCH
REPORT
-is a communication from a securities
firm to its clients with a very specific
purpose.
-intended to help an investor decide
on the allocation of resources.
Arowwai Industries
EQUITY RESEARCH
PROFESSIONAL
APPROACH
1.Economic Analysis
-learning about the economic parameters
affecting the industry, the industry
dynamics, competitors, etc.
Arowwai Industries
EQUITY RESEARCH
PROFESSIONAL
APPROACH
-the method of determining the intrinsic
2. Fundamental Analysis value of a company's stock to benefit from
its trading.
EXAMPLE OF COLGATE RATIO ANALYSIS
3. Preparing a Professional Financial
EQUITY RESEARCH
PROFESSIONAL
=
Model
APPROACH
FINANCIAL
MODEL
forecasts a
business’s financial
performance into
the future
Arowwai Industries
EQUITY RESEARCH
PROFESSIONAL
APPROACH
4. Valuations – DCF
EXAMPLE OF FREE CASH FLOW PROJECTION
EQUITY RESEARCH
PROFESSIONAL
5. Valuations
APPROACH
-Relative Valuations
Arowwai Industries
EQUITY RESEARCH
PROFESSIONAL
APPROACH
6. Research Report
TYPES OF EQUITY RESEARCH REPORT
it provides insight
on whether investors INITIATION REPORT
should buy, hold, or SECTOR REPORT
sell STRATEGIC REPORT
QUARTERLY REPORT
FLASH REPORT
Arowwai Industries
TYPES OF EQUITY
RESEARCH REPORT
1. INITIATION
REPORT
detailed report contains the
stock details and overall
competition, industry
dynamics, etc.
Arowwai Industries
TYPES OF EQUITY
RESEARCH REPORT
2. SECTOR
REPORT
provides deep insights into
Industry dynamics,
competitors, government
regulations, and key forecasts.
Arowwai Industries
TYPES OF EQUITY
RESEARCH REPORT
3. STRATEGIC
REPORT
contain information on general
macroeconomics, currency
movements, commodities, etc.
Arowwai Industries
TYPES OF EQUITY
RESEARCH REPORT
4. QUARTERLY
REPORT
generally smaller and contain
only vital highlights of
quarterly/annual results.
Arowwai Industries
TYPES OF EQUITY
RESEARCH REPORT
5. FLASH REPORT
could be anything important
that is worth communicating to
clients.
KEY DIFFERENCES
INVESTMENT BANKING EQUITY RESEARCH
- equity research analyst
-investment banker
-analyzes the assets and liabilities of
-willing to raise capital
an entity
-responsibility of the preparation of
-responsibility of the preparation of
pitch books
the valuation models as well as the
-information is publicly available
equity research reports
-gets to deal with information that is
not public in nature
Arowwai Industries
INVESTMENT
BANKING
FUNCTIONS OF
INVESTMENT BANKING
UNDERWRITING
MERGER AND ACQUISITION
EQUITY RESEARCH
TRADING AND SALES
ASSET MANAGEMENT
Arowwai Industries
EQUITY RESEARCH PROFESSIONAL
APPROACH
Economic Analysis / Industry Analysis / Company
Analysis
Fundamental Analysis
Preparing a Professional Financial Model
Valuations – DCF
Valuation – Relative Valuations
Research Report
Types of Equity Research Report
Initiation Report
Sector report
Strategic report
Quarterly report
Flash report
Arowwai Industries
REPORTERS:
GROUP 4 MARY ANGEL D. IBASAN
REJEAN RUSS G. MENDOZA
HAZEL S . RAMOS
PAULA JANE S. SANCHEZ
MA. CRISTINE SEGUNDO
