Financial Valuation of Microsoft Corporation

Antonina Katsebo

Bachelor's thesis

Abstract:

The bachelor thesis aims to perform a comprehensive financial valuation of Microsoft Corporation, which can be beneficial for potential investors and managers for reasonable decision-making. For this purpose, modern financial methods are applied in this work, such as ratio and comparative analysis, discounted cash flow (DCF) model, sensitivity analysis, and Monte Carlo simulation. Based on the analysis done, Microsoft has a strong financial and strategic position in the software market compared to its nearest competitors. The intrinsic price of the company, found using the DCF model, shows that the current share price (424.59$) is undervalued.The expected market return rate, revenue growth rate, and perpetual growth rate are factors that have the highest influence on the intrinsic share price. Consequently, the findings suggest that Microsoft Corporation presents a compelling investment opportunity.

Abstract:

The bachelor thesis aims to perform a comprehensive financial valuation of Microsoft Corporation, which can be beneficial for potential investors and managers for reasonable decision-making. For this purpose, modern financial methods are applied in this work, such as ratio and comparative analysis, discounted cash flow (DCF) model, sensitivity analysis, and Monte Carlo simulation. Based on the analysis done, Microsoft has a strong financial and strategic position in the software market compared to its nearest competitors. The intrinsic price of the company, found using the DCF model, shows that the current share price (424.59$) is undervalued.The expected market return rate, revenue growth rate, and perpetual growth rate are factors that have the highest influence on the intrinsic share price. Consequently, the findings suggest that Microsoft Corporation presents a compelling investment opportunity.

Keywords

investment, Microsoft, financial valuation, DCF model, sensitivity

Keywords

financial valuation, Microsoft, investment, sensitivity, DCF model

Language used: English

Date on which the thesis was submitted / produced: 15. 5. 2024

Thesis defence

• Date of defence: 11. 6. 2024
• Supervisor: Tanweer Ali
• Reader: Karel Pernica

Vysoká škola ekonomická v Praze

Bachelor programme:
Bachelor of Business Administration