Assignment 3: Forecasting
Please dont forget the excel work book along with the paper
In the first two assignments, you looked at: (1) how NVIDIA (NASDAQ: NVDA) and Intel (NASDAQ: INTC) 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, you 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 annual reports you have been studying, as well as analyst reports and other resources available on the Internet.
A. Complete the Assignment 3 Worksheet to assemble and assess your forecasts of working capital.
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:
a. Which company has the stronger income statement? Explain.
b. Which company has the stronger cash flows? Explain.
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?
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?
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?
v. 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.
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.
RUBRIC Weight: 18% of Course Grade Assignment 3: Forecasting CRITERIA Unsatisfactory Low Pass Pass High Pass Honors
1. Complete the assignment worksheet Weight: 30% Did not submit worksheet or had fewer than 60% correct data sets entered. Submitted worksheet had between 60% and 69% correct data sets. Submitted worksheet had between 70% and 79% correct data sets. Submitted worksheet had between 80% and 89% correct data sets. Submitted worksheet had 90% or higher correct data sets.
2. Present synopsis of data Weight: 30% Synopsis was missing, incomplete, inaccurate, or did not align with data. Synopsis was overly simplistic; restated the data, but did not provide a coherent overview. Synopsis was good; provided general snapshot of key data, but did not focus on the most critical elements. Synopsis was very good; focused on the most critical elements with only minor elements unclear/missing. Data synopsis was excellent; accurately highlighted key data presented in both annual reports and third-party sources.
3. Present and defend sound recommended finance strategies Weight: 30% Recommended strategies were missing, superficial, and/or were not supported by data and analysis. No options were presented. Recommended strategies were basic or were not supported by data and analysis or tied to desired outcomes. Made minimal reference to options, but did not explain why these were not recommended. Recommended strategies were good, but lacked clarity on how they could be implemented to drive outcomes. Addressed other options, but was unclear why these were not chosen. Presented and defended very good finance strategies; solid connection to core finance principles and to real-world circumstances. Very good consideration of viable options with good rationale for why options were not chosen. Presented and defended excellent finance strategies; exemplary connection to core finance principles and to real-world circumstances. Excellent consideration of viable options with very clear rationale for why options were not chosen.
4. Include appropriate citations and use professional writing standards Weight: 10% No citations provided and/or references to course materials were missing or did not support key content in submission; numerous writing mistakes. Included some citations and references to course materials, but failed to cite for several key references; contained distracting grammatical or formatting errors. Citations and references to both course materials and additional sources were properly documented; contained some grammatical and formatting errors. Citations and references to both course materials and additional sources were properly documented; contained minor grammatical and formatting errors. Citations and references to both course materials and additional sources were properly documented; free from grammatical and formatting errors; adhered to maximum length.
