Adding GetFormula to Your SpreadsheetsRachel Koh Spring 20.docx
- 1. Adding GetFormula to Your Spreadsheets Rachel Koh Spring 2016 UMass Amherst This file illustrates how to use GetFormula (advocated by Simon Benninga) to show the formulas that have been used in Excel. It is extraordinarily useful to explain your results. With its help, users (including yourself) can easily understand the way you obtain your results or finding potential problems in your model. So I require you to annotate your model using this feature. However, GetFormula is not a built-in Excel function ready for using. Instead, it’s a macro that you need to add to your spreadsheets. Below are the steps to do so. • First, open your Excel file that you want the macro to work on. • Second, press Alt+F11 and you will see a window like this. For Mac users, go to “Tools” menu, find “Macro”, and select “Visual Basic Editor”. • Hit Insert—Module.
- 2. • Next, type in the following text1 and close the VBA Editor (the above window). Then you can use the function GetFormula. Function GetFormula(Cell As Range) As String GetFormula = Cell.Formula End Function • At last, when you save your Excel file, remember to save it as “Excel Macro-Enabled Workbook” (with suffix “.xlsm”). The normal “.xls” or “.xlsx” format can NOT save macros in it. In other words, you won’t have the “GetFormula” when you reopen “.xls” or “.xlsx” files. 1This short macro is available on-line. DataGlobal CompanyData DateTicker SymbolCurrent Assets - TotalAssets - TotalCommon Shares OutstandingEarnings Before InterestIncome Before ExtraordinaryCurrent Liabilities - TotalLiabilities - TotalNet Income (Loss)Pretax IncomeSales/Turnover (Net)Stockholders EquityInterest and Related ExpensePrice CloseKeyand TaxesItems- Total169020000930AAPL54276803335.67762078619332696786 1092798341072114.875169020010930AAPL51436021350.922- 333-3715182101-25- 52536339201621.9169020020930AAPL53886298358.95946651 65822036587574240951114.33169020030930AAPL5887681536 6.727256823572592699262074223821.37169020040930AAPL7 0558050391.4443492762680297427638382795076364.4169020
- 11. L29166.95840496.778317.7728338.4866520.4482747.4674492. 5546520.4488381.18923650.56336004.2240619.9816032920101 231GOOGL4156257851321.30110381850599961161085051079 629321462415593.9716032920111231GOOGL5275872574324.8 95122429737891314429973712326379055814558645.91603292 0121231GOOGL6045493798329.9791338610788143372208310 73713386501757171584707.3816032920131231GOOGL728861 10920335.83214089122141590823611129201449659825873098 31120.7116032920141231GOOGL80685131133680.1721687413 9281680526633144441725966001104500101530.66 Finance 305 Project: Stock Valuation and Evaluation Instructions 1. Please do all the computation in Excel and then write a report (in the form of MS Word). The report should include not only the reasoning and arguments but also all the results you get in Excel to support your project. Please write your full name as the name of the report and all other supplementary files. 2. Make sure to save any Excel file as “Excel Macro-Enabled Workbook.” 3. You must use Getformula() to show your formulas in Excel. Please read the pdf file named “Getformula” for directions. You have to show all formulas for any Excel computations used in the project. 5 points will be deducted if not. 4. I have a list of companies below. Pick any two. Google, Amazon, McDonald’s, Apple, JPMorgan, Bestbuy, Consolidated Ed, Amazon, Microsoft, Valeant, Gilead, AT&T, Exxon Mobile 5. (30 points) Calculate the two stocks’ CAPM betas over time. Go to “Yahoo Finance” and download their monthly price data from 2007-2015. Calculate their monthly returns (make sure the dates are in the ascending order). Also, download the monthly prices of the S&P500 and calculate returns. Use the slope() function to calculate the stocks’ betas. To get a stock’s beta in 2015, use returns 2011-2015. To get a stock’s beta in 2014, use returns 2010-2014, etc… Get betas over the five-year period.
- 12. Below is an example of how you can present your results. Year Beta 2015 2014 2013 2012 2011 Comment on your observations (1-2 sentences). 6. The Excel file “compf” has the companies’ annual financial data from S&P’s Compustat data. S&P’s Compustat contains fundamental and market information on publicly held companies from 1950 to present. In the Excel file, find your company’s ticker and use the most recent data of five years. All variables are in thousands. 7. (60 points) Calculate the following financial ratios for those five years (set to missing (‘.’) if any of the data needed to calculate the ratio is missing). Please create one table for each company that contains all the ratios over time. a. P/E (hint: price is per share.) b. Market-to-Book equity ratio c. ROE d. ROA e. Current ratio f. Profit margin or return on sales g. Leverage Ratio h. Tax Burden i. Total asset turnover j. Interest Burden
- 13. k. Interest Coverage 8. Answer the following questions and specifically use your calculated ratios to back up your statements. Please review pg.451-462. a. (20 points) Do your firms tend to be more growth or value stock? Why? If their status as growth or value changes over time, please also explain. (3-4 sentences.) b. (20 points) Please search for any news articles that may substantiate your analysis. i. Was there any unusual event for your company in the time period of interest? Ex) if the p/e ratio was unusually high in, say, 2012, look up what was going on around 2011-2013. ii. Articles may discuss debates on whether your company is a growth or value stock. c. (100 points) First, try to verify the Dupont decomposition using your calculated ratios. Then, analyze ROE in terms of the DuPont decomposition in 100-150 words. Please see pg.457 and 464-465 for ideas. 9. (70 points) Suppose you want to form a portfolio of the two stocks that you chose. Using weights ranging from 0% to 100% by increments of 5%, calculate your portfolio’s mean, variance, standard deviation, and CAPM alpha using the most recent 5- year monthly returns. Compare the portfolio’s mean and s.d. of returns with individual stocks’ mean and s.d. of returns. Plot your results in the risk-return plot (mean return on the y-axis and standard deviation on the x-axis). Comment on your observation. 10. (50 points) Suppose you want to combine your two-stock portfolio with the riskfree assets. Suppose that the mean return on 30-day T-bill (assume completely risk-free) for the most recent 5 years is 1%. Using weights ranging from 0% to 100% by increments of 5%, calculate your new portfolio’s mean, variance, standard deviation, and CAPM alpha using the most
- 14. recent 5-year monthly returns. Plot your results in the risk- return plot (mean return on the y-axis and standard deviation on the x-axis). Comment on your observation.