Skills

Analyse a Real Corporate Finance Decision

8 weeks · 0 milestones

Analyse a real, documented corporate finance decision — a major acquisition, a restructuring, a capital structure change, or a significant capital allocation choice — applying the relevant analytical frameworks (NPV, WACC, leverage analysis, etc.) and arriving at a reasoned position on whether the decision was correct and why. The case must be a real event with documented financial data, not a textbook example. Proof requires review and challenge by a finance professional who can confirm the framework application is correct and the position is analytically defensible.

Part of: Business · Proves for: UG

Milestone map

3 milestones

Apply Capital Structure Analysis to a Real Company

3–4 weeks

Select a real listed company and analyse its current capital structure using the Modigliani-Miller framework, trade-off theory, and pecking order theory. Calculate the company's WACC, debt-equity ratio, and interest coverage ratio. Assess whether the current capital structure appears optimal relative to industry norms.

Proof required

Submit: (a) a capital structure analysis (minimum 1,200 words) for the chosen company covering: current D/E ratio with historical trend (five years), WACC calculation with inputs sourced, interest coverage ratio, comparison against two named industry peers, and an assessment of whether the structure is appropriate under trade-off theory, and (b) links to the actual financial filings used.

What gets checked

D/E ratio and interest coverage calculated from actual financial statements — not pulled from a data site without verification
Trade-off theory assessment addresses the tax shield and financial distress costs explicitly
Comparison against named peers with actual peer ratios

Common mistakes

Applying capital structure theory without grounding in the company's actual balance sheet
Treating the current D/E ratio as 'correct by definition' — the analysis must assess optimality

Powstik Guide

A 1,200-word capital structure analysis of a real company.

Steps

Pull debt and equity from the latest filings.
Work out the D/E ratio.
Compare with two peers.
Say whether the mix looks right and why.

Template

Company:        Filing date:
Debt:        Equity:        D/E:
Peer 1 D/E:        Peer 2 D/E:
Assessment:

What gets sent back

Under 1200 words.
Claims without sources.
No clear recommendation.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Challenge the trade-off assessment: 'You concluded the company is underleveraged — but their interest coverage ratio is already below the investment-grade threshold. How do you reconcile that with the recommendation to take on more debt?'

You'll sign in first, then come straight back here.

Analyse a Capital Allocation Decision (Dividend, Buyback, or M&A)

2–3 weeks

Analyse a specific capital allocation decision made by the company in the last three years — a dividend policy change, a share buyback programme, or an acquisition. Apply the relevant corporate finance frameworks (Dividend Irrelevance Theory, free cash flow theory, synergy valuation) to assess whether the decision created or destroyed shareholder value.

Proof required

Submit a capital allocation decision analysis (minimum 1,500 words) covering: (a) description of the specific decision with timeline and magnitude, (b) application of the relevant corporate finance framework with justification for the framework chosen, (c) market reaction analysis (stock price response in the 90 days following the announcement), and (d) your assessment of whether the decision created or destroyed value and why.

What gets checked

Specific decision is real and identifiable — not a hypothetical scenario
Framework application is justified — why this framework for this decision type
Value assessment takes a position with reasoning — not both sides without a conclusion

Common mistakes

Describing the decision without applying a framework
Confusing stock price reaction with value creation — short-term market reactions are not a reliable measure of long-term value creation

Powstik Guide

A verdict on one real capital allocation decision.

Steps

Pick one dividend change, buyback or deal from the last three years.
Find its size and timing in the company's annual report.
Choose the framework that fits and say why.
Look at the 90-day share price reaction, but don't stop there.
Decide: did it create or destroy value, and why?

Template

Decision:            Date announced:        Size:
Framework chosen and why:
What the framework predicts:
What happened (cash flows, returns, 90-day price):
Verdict: created / destroyed value — because:

What gets sent back

A hypothetical decision.
Describing the decision without applying a framework.
Treating the stock price reaction as proof of value.

Resources

Foundationstart here

Depthgo deeper

What a verifier looks for

Challenge the value assessment: 'You concluded the acquisition destroyed value because the stock fell on announcement — but acquirer stocks routinely fall on M&A announcements due to uncertainty rather than expected value destruction. How does your analysis go beyond the stock price reaction?'

You'll sign in first, then come straight back here.

Present Case Analysis to a Corporate Finance Professional

1 week

Present the capital structure and capital allocation analyses to a corporate finance professional (CFO, investment banker, corporate finance academic, or equity analyst) who will challenge at least two of your analytical conclusions.

Proof required

Submit: (a) Q&A log from the review session (minimum 350 words with at least two challenges and responses), and (b) attendance record with reviewer name and finance credentials.

What gets checked

Reviewer has corporate finance credentials — not just general accounting background
Q&A log shows challenges to framework application or conclusions
Responses address the challenge analytically

Common mistakes

Review session with an accountant rather than a corporate finance practitioner — the frameworks are different
Challenges are deflected rather than addressed analytically

Powstik Guide

Your finance case, challenged by a practitioner.

Steps

Summarise both analyses on one page.
Explain how moving to your target debt ratio adds value.
Book a CFO, banker, equity analyst or finance academic.
Ask them to challenge two conclusions.
Log the session and your revised view.

Template

Review session log
Date:            Duration:
Reviewer name:
Reviewer role and years of experience:

Challenge 1 (a framework or conclusion):
  What they asked:
  My answer:
  Did it hold? What would I change?

Challenge 2:
  What they asked:
  My answer:
  Did it hold? What would I change?

Change I made after the session:
Reviewer's overall view (their words):

What gets sent back

An accountant reviewing instead of a corporate finance practitioner.
Challenges deflected rather than answered.
Fewer than two challenges logged.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Your most valuable challenge: 'Under your capital structure analysis, you've computed the optimal D/E ratio as X — walk me through the specific mechanism by which you would expect the company's value to increase if management moved to that ratio.'
Provide written confirmation (minimum 150 words) of your corporate finance credentials and the challenges raised.

You'll sign in first, then come straight back here.

Part of

Prove Your Corporate Finance Chops →Business Administration 3: Finance →

Related outcomes

Milestone map

3 milestones

Apply Capital Structure Analysis to a Real Company

3–4 weeks

Proof required

What gets checked

D/E ratio and interest coverage calculated from actual financial statements — not pulled from a data site without verification
Trade-off theory assessment addresses the tax shield and financial distress costs explicitly
Comparison against named peers with actual peer ratios

Common mistakes

Applying capital structure theory without grounding in the company's actual balance sheet
Treating the current D/E ratio as 'correct by definition' — the analysis must assess optimality

Powstik Guide

A 1,200-word capital structure analysis of a real company.

Steps

Pull debt and equity from the latest filings.
Work out the D/E ratio.
Compare with two peers.
Say whether the mix looks right and why.

Template

Company:        Filing date:
Debt:        Equity:        D/E:
Peer 1 D/E:        Peer 2 D/E:
Assessment:

What gets sent back

Under 1200 words.
Claims without sources.
No clear recommendation.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Challenge the trade-off assessment: 'You concluded the company is underleveraged — but their interest coverage ratio is already below the investment-grade threshold. How do you reconcile that with the recommendation to take on more debt?'

You'll sign in first, then come straight back here.

Analyse a Capital Allocation Decision (Dividend, Buyback, or M&A)

2–3 weeks

Proof required

What gets checked

Specific decision is real and identifiable — not a hypothetical scenario
Framework application is justified — why this framework for this decision type
Value assessment takes a position with reasoning — not both sides without a conclusion

Common mistakes

Describing the decision without applying a framework
Confusing stock price reaction with value creation — short-term market reactions are not a reliable measure of long-term value creation

Powstik Guide

A verdict on one real capital allocation decision.

Steps

Pick one dividend change, buyback or deal from the last three years.
Find its size and timing in the company's annual report.
Choose the framework that fits and say why.
Look at the 90-day share price reaction, but don't stop there.
Decide: did it create or destroy value, and why?

Template

Decision:            Date announced:        Size:
Framework chosen and why:
What the framework predicts:
What happened (cash flows, returns, 90-day price):
Verdict: created / destroyed value — because:

What gets sent back

A hypothetical decision.
Describing the decision without applying a framework.
Treating the stock price reaction as proof of value.

Resources

Foundationstart here

Depthgo deeper

What a verifier looks for

Challenge the value assessment: 'You concluded the acquisition destroyed value because the stock fell on announcement — but acquirer stocks routinely fall on M&A announcements due to uncertainty rather than expected value destruction. How does your analysis go beyond the stock price reaction?'

You'll sign in first, then come straight back here.

Present Case Analysis to a Corporate Finance Professional

1 week

Proof required

Submit: (a) Q&A log from the review session (minimum 350 words with at least two challenges and responses), and (b) attendance record with reviewer name and finance credentials.

What gets checked

Reviewer has corporate finance credentials — not just general accounting background
Q&A log shows challenges to framework application or conclusions
Responses address the challenge analytically

Common mistakes

Review session with an accountant rather than a corporate finance practitioner — the frameworks are different
Challenges are deflected rather than addressed analytically

Powstik Guide

Your finance case, challenged by a practitioner.

Steps

Summarise both analyses on one page.
Explain how moving to your target debt ratio adds value.
Book a CFO, banker, equity analyst or finance academic.
Ask them to challenge two conclusions.
Log the session and your revised view.

Template

Review session log
Date:            Duration:
Reviewer name:
Reviewer role and years of experience:

Challenge 1 (a framework or conclusion):
  What they asked:
  My answer:
  Did it hold? What would I change?

Challenge 2:
  What they asked:
  My answer:
  Did it hold? What would I change?

Change I made after the session:
Reviewer's overall view (their words):

What gets sent back

An accountant reviewing instead of a corporate finance practitioner.
Challenges deflected rather than answered.
Fewer than two challenges logged.

Resources

Foundationstart here

Depthgo deeper

Masteryfor the dedicated

What a verifier looks for

Your most valuable challenge: 'Under your capital structure analysis, you've computed the optimal D/E ratio as X — walk me through the specific mechanism by which you would expect the company's value to increase if management moved to that ratio.'
Provide written confirmation (minimum 150 words) of your corporate finance credentials and the challenges raised.

You'll sign in first, then come straight back here.