MPAcc Common Final Project

Initiation Report Covering both Long and Short Targets

A written report no longer than 25 pages including citations and tables/charts and appendices. Include links or exhibits for dashboards if needed. Submit as a pdf file. This document should include the following analysis:

• A description of the screening process & factors used to identify target firms (attach files/tables/input/output as appendix)
• A brief summary of the company/industry backgrounds & competitive landscape, and the similarities and differences in exposure that your two firms have to these opportunities and risks
• A detailed report of the Financial Statement Analysis used to support your recommendations and valuation assumptions (including quality of earnings, cash flow analysis, and key ratios, stress tests and scenario analyses around key ratios, and impact of accounting judgments on key ratios)
• A detailed description of your forecast assumptions (including descriptions of the processes and analytical tools used, assumptions about expected changes in accounting methods, or other accounting anomalies or features)
• A discussion of the key valuation model assumptions using a residual income model or equivalent
• A discussion of similarity between the pairs identified and risks associated with the two positions
• A discussion and support of the recommendation: investment thesis, catalysts, risks to each position, and potential returns
• A discussion of potential slippage risk (risks that the firms do not neutralize the market return) and reversal risk (the risk that your assumptions of over or undervaluation are incorrect and the pairs trade moves in the opposite direction)
• Appendices covering material that supports, but is not central to the items discussed above

Appendices

Decide on what material is an Appendix or included in the initiation report covering the following topics:

• Depending on how your team develop the project an appendix may or may not be necessary. Each firm will have different information that is relevant to the analysis and team will use different analyses to produce their report. Below are some examples of material that could be considered as non-central to the analysis and put into an appendix. The weight between the main analysis and the appendix is expected to vary by team based on the analyses performed. Not all teams will need to use all appendices discussed below.
• Audit Risk Appendix: Audit risks analyzed may be considered as non-central to the report if they do not have a major impact on perceived accounting/financial reporting quality. In this case, an appendix could discuss the identification of the Top 2–3 financial reporting risks tied to valuation drivers (e.g., revenue recognition, impairment), and discuss what the risks are and why they are mitigated by an audit. In contrast, if a accounting/financial reporting quality plays a role in the identification of a target, this material should be discussed in the main body of the report.
• Codification Appendix: Material relating to the identification of potential changes in recent or potentially upcoming changes in accounting codification that could impact your firm(s) would be in the main analysis if it is expected to have a significant effect. If not, then the material would be in an appendix. An appendix would describe how valuation assumptions are not affected by these accounting changes, and/or why you believe that a potential change will not add slippage or reversal risks to your recommendations.
• Data Analytics Appendix: Material relating to technical innovation in data collection or analysis that goes beyond the class material but is not central to your assumptions (they help you undertake the analysis more cleanly / robustly). Any forecasting assumptions, or scenario analysis performed that is not central to your analysis and recommendations, but is mentioned in the report as undertaken (e.g., supporting analyses, footnotes in the main body).
• Financial Analysis Appendix: Any materials that are not central to your main analyses but mentioned (e.g., supporting analyses, footnotes in the main body, non-central ratio analyses in tables with minimal impact on the recommendations).

Analytics Support Material

An appendix or set of separate files (Excel, PowerBI, Tableau, etc.) that includes the following:

• Support of your screening process (including data sources, factor definitions, and output) if used to identify target firms
• Support of your forecasting assumptions and process (including data sources, variable and model definitions, and output) if used to develop your forecasts
• Support of your scenario analysis and valuation assumptions (including data sources, tying of assumptions to parameters, and output) if used to develop valuation scenario analysis

Residual Income Valuation File

An excel or other file that includes your residual income valuation model that includes the following:

• Clearly labeled accounts and assumptions that tie to your initiation report

Final Presentation and Materials (10-12 minutes per team)

A final presentation delivered to the class and supporting materials (e.g., PowerPoint and dashboard materials if applicable) that includes the following:

• A clear discussion of your investment thesis and recommendation
• Discussions of key findings from your financial statement analysis that support your forecast and valuation assumptions
• Discussions of key findings from your data analytics that validate and/or challenge your forecast and valuation assumptions

Final Presentation

Dec 10, 2026

Final Project Presentations (both classes).