A Teaching Note is available for this material.
Susana Martinez Meyers
Publish date:June 1, 2017
Valuation & Accounting: You can't have one without … CF1-126-B-I
Theresa has been hired for her first job as a junior equity research analyst in an investment bank. The first assignment that her boss gives her is to help with the coverage of the oil sector. She uses a Top-down approach in the sector analysis looking at macro, sector and then company specific issues. Theresa has to decide which will be the best company to include in the model portfolio from a selection of European and American companies. To make this decision, Theresa needs to compare the financial ratios of the different companies, paying special attention to inventory ratios, which are key to the sector. Furthermore, the oil sector recently experienced an unexpected and sharp fall in the Brent price that is impacting the financial reports of the companies and their stock prices. During a coffee break, she saw a senior analyst named Bruno. They talked about her report and he warned her to check that the ratios are comparable. The case ends with Theresa recalculating her numbers and being surprised by the results.
This case is intended for master level degrees. The case "The Oil Sector: The importance of inventory ratios" is similar, but intended for undergraduates, if that's your target.Academic Area:Financial Accounting | Cost Accounting & Management ControlFormat: PDFLanguage: EnglishType of publication:Case Study