Johnson & Wales University Financial Ratios Question

I’m working on a finance report and need an explanation to help me understand better.

ASSIGNMENT DESCRIPTION

FISV 3199 Course Individual Assignment #2 – Residual Operating Income (ROPI) Valuation Model

Using Excel and Company Research Reports (10-K Annual), prepare a Residual Operating Income (ROPI) Valuation Financial Model for a publicly-traded company, to communicate to senior management the attractiveness of an investment opportunity.

Residual Operating Income (ROPI) Valuation Financial Model Development
For an assigned publicly traded company that has little or no dividend payout history and no dividends estimate in future, but persistent growth, then develop a complete comprehensive Residual Operating Income (ROPI) Valuation Model, inputting historical data and assumptions to project growth Residual Income projection estimates and drivers with ROE (Return on Equity), NOPAT, Cost of Equity, Book Values, etc.

**Residual income, dividend discount, and free cash flow to equity models all use the required return on equity to value common stock. The residual income model starts with book value and then discounts the income leftover (residual) for the equity holders.

In addition, estimate the WACC (Cost of Capital) for the discount rate of the ROPI, including several approaches to calculating terminal value. Use data tables to analyze a broad range of scenarios given different assumptions.

Prepare a Report to effectively communicate to senior management and pitch the DCF analysis model outcome and reason to choose the specific company in the investment portfolio.

**See “FISV 3199 Residual Operating Income Model (ROPI) FINANCIAL MODEL GRADING RUBRIC” grading rubric

1. MODEL – EXCEL TEMPLATE – Residual Operating Income (ROPI) Valuation Model – graded
2. WRITTEN – REPORT – less than 1 page
3. SUPPORTING DOCUMENTATION – “PIB” – but all the soft copies (Book Value Ratios – ROE, NOPAT, Equity Research Reports, 10-K, 10-Qs, press-conference call tape recording scripts, any Equity estimates & insights sources/references, and any Sector, Industry, economic, market, etc. research and used in valuation).