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Ratio Analysis

7. Start the eVal software, load the data file for Apple and examine the Advanced Dupont Model on the Ratio Analysis worksheet. Next, repeat the same steps for IBM.

8. Using the analysis in question 7 above, identify the primary underlying reasons for differences in the 2009 return on equity (ROE) for the two companies.

9. Does your analysis identify any opportunities for Apple to potentially increase its return on equity?

Forecasting Analysis

10. Start the eVal software, load the data file for Apple and examine the default forecasting assumptions on the forecasting assumptions worksheet. Are these assumptions plausible? If not, which assumptions do you feel are the most implausible and how would you change them to make them more plausible.

Valuation Analysis

11. Start the eVal software, load the case data for Apple and set the valuation date to November 2, 2009. How does the estimated price per share in eVal differ from Apples November 2, 2009 stock market price of around $190/share? Which do you think better approximates Apples intrinsic valuation on that date? 12. The analyst quoted in the case write-up is forecasting a 12 month price target for Apple of $260. Provide a critical evaluation of the justification used by the analyst to arrive at this price target.

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