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MSc in Management

Ferrari, Toyota, and Prada: Exploring Valuation in Business Analysis

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Throughout the 4-weekday Business Analysis course for our MSc in Management program, Prof. Kentaro Koga aims to improve your ability to build sophisticated financial models, stressing the integration of financial and accounting principles and their implementation in Excel. For students, interactive learning takes the forms of case method class discussions and simulated decision-making using spreadsheets. Two main topics covered in the course are portfolio theory and corporate valuation.

On day 3 of the course, Prof. Koga explored the latter topic, introducing the concept of the price to earnings ratio (otherwise known as the P/E ratio), explaining how this foundational valuation technique is key to investors' identification of potentially profitable opportunities.

Although comparing the P/E ratios of different companies within the same industry can determine which is a better investment, Prof. Koga pointed out the importance of careful categorization. "Ferrari, for instance, is a car company much like Toyota, but their P/E is more likely to be in line with a company like, say, Prada," he cautioned with a smile.

For young professionals developing their ability to deliver results that distinguishes them from their peers, exploring the interplay between the various factors contributing not only to a firm's success or failure, but also how it is perceived in the marketplace, forms an important part of reframing thinking toward a managerial perspective.