This episode explores the intricacies of a financial valuation case study focusing on the company Saxon, guiding students through a comprehensive analysis. Against the backdrop of a demanding final exam, the instructor addresses student questions and clarifies the assignment's requirements, emphasizing the importance of a consistent base case for projections. More significantly, the discussion highlights the critical role of meticulous calculations and reasoned judgment in selecting comparable companies ("comps") and precedent transactions, warning against averaging without thoughtful consideration. For instance, the instructor stresses the need for a per-share valuation for the public company Saxon, unlike the previous Melco case. The instructor also emphasizes the importance of showing the step-by-step calculations, particularly for the weighted average cost of capital (WACC), and discourages cheating. Ultimately, this episode underscores the practical application of valuation techniques and the importance of critical thinking and clear communication in financial analysis, preparing students for real-world scenarios.
