Nvidia is a strong and well-known semiconductor manufacturer. After a failed merger with arm Corp for close to 40 billion USD, the company is heavily and strategically thinking about

MCO103 · Financial Reporting & Analysis Task brief & rubrics

Case Study for Nvidia · NYSE:NVDA · SEC 10-K Financial Statements

Nvidia is a strong and well-known semiconductor manufacturer. After a failed merger with arm Corp for close to 40 billion USD, the company is heavily and

strategically thinking about its next steps. Assume that the board meets after 2021 (January 2022) close and decides to invest in several acquisitions (20 billion

USD) to make their digital twin business area stronger and market leading. Nvidia is already strong in AI chip production (ASIC) and Graphic cards, both corner

stones of the digital twin business they are striving for.

Read the articles enclosed (in the links) to get a better picture of what Nvidia is aiming at and use that information to make an educated decision about how to

time, structure and finance future acquisitions given the current stock market (and general economic outlook) situation.

As you can see above NVDA was selling for well below 100$ per share until COVID-19 situation was under control. The march 2020 COVID-19 hit in fact wasn’t

that severe for Nvidia, like for many other corporations. In Spring 2021 with the announcement of the arm M&A the market reacted positively, but ever since

dropping the M&A plans stock price has been heavily declining. Not even the excellent results from 2021 where able to halt erosion. What are Nvidia’s options

under the current scenario?

• Read the enclosed articles and financial statements

• Identify the main business areas Nvidia is on the market (you can find in the FS 2021)

• Which risks has the board of directors identified for the near future of the corporation?

• From your understanding and reading, which of the Nvidia assets could hide substantial risks (from a valuation perspective) if any? Explain.

• Look at their capital structure, compute the leverage, compare with semiconductor industry, and analyze their options to finance its 20 billion target

acquisitions.

• Will future earnings sustain the desired aggressive growth and secure their market dominance in the near future?

Reading materials:

https://www.arm.com/

https://www.twi-global.com/technical-knowledge/faqs/what-is-digital-twin

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001045810/ca04d49f-caab-436f-9e6f-e8493c8e8515.pdf

Formalities:

• Wordcount: 2500

• Cover, Table of Contents, References and Appendix are excluded of the total wordcount.

• Font: Arial 12,5 pts.

• Text alignment: Justified.

• The in-text References and the Bibliography must be in Harvard’s citation style.

Submission: Week 5 – November 6th (Sunday) @ 23.59 – Via Moodle (Turnitin).

Weight: This task is a 40% of your total grade for this subject.

It assesses the following learning outcomes:

• Outcome 1: Understand the Corporation in its context and pictured by regular Financial Statements (compulsory by SEC)

• Outcome 2: Find the relevant information for a detailed analysis on any performance measure like profitability, liquidity, solvency, leverage, …

• Outcome 3: Leverage Financial Reporting information to make educated business decisions to deleverage, M&A, downsize, or else…

• Outcome 4: Understand the balance sheet structure and the inherent risk (valuation) of different asset categories.

Rubrics for MCO103 Case Study

Learning Descriptors Fail Below 70% Fair 70-79 % Good 80-89% Exceptional 90-100%

Purpose & Understanding KNOWLEDGE & UNDERSTANDING 15%

Very poor coverage of central

purpose, goals, research

questions or arguments with

little relevant information

evident. Virtually no evidence of

understanding or focus.

Minimal understanding of

purpose of the study; factual

errors evident. Gaps in

knowledge and superficial

understanding. A few lines of

relevant material.

Reasonable understanding and

clearly identifies the purpose,

goals, research questions or

argument. Reflect partial achievement of

learning outcomes.

A sound grasp of, and clearly

identifies, the purpose, goals,

research questions or argument.

Some wider study beyond the

classroom content shown.

Effectively describes and explains

the central purpose, arguments,

research questions, or goals of

the project; explanation is

focused, detailed and

compelling. Recognition of

alternative forms of evidence

beyond that supplied in the

classroom.

Content KNOWLEDGE & UNDERSTANDING 15%

Content is unclear, inaccurate

and/or incomplete. Brief and

irrelevant. Descriptive. Only

personal views offered.

Unsubstantiated and does

not support the purpose,

argument or goals of the

project. Reader gains no

insight through the content

of the project.

Limited content that does not

really support the purpose of

the report. Very poor

coverage.

Displays only rudimentary

knowledge of the content

area. Reader gains few if any

insights

Presents some information

that adequately supports

the central purpose,

arguments, goals, or

research questions of the

project. Although parts

missing, it demonstrates a

level of partially proficient

knowledge of the content

area. Reader gains some

insights.

Presents clear and

appropriate information

that adequately supports

the central purpose,

arguments, goals or research

questions of the project.

Demonstrates satisfactory

knowledge of the content

area. Reader gains proficient

insights.

Presents balanced, significant

and valid information that

clearly and convincingly

supports the central purpose,

arguments, research

questions or goals of the

project. Demonstrates in-

depth and specialised

knowledge of the content

area. The reader gains

important insights

Organization COMMUNICATION 10%

Information/content is not

logically organized or

presented.

Topics/paragraphs are

frequently disjointed and fail

to make sense together.

Reader cannot identify a line

of reasoning and loses

interest.

Information/content is not, at

times, logically organized or

presented. Topics/paragraphs

are frequently disjointed

which makes the content

hard to follow. The reader

finds it hard to understand

the flow of the report.

Information/content is

presented in a reasonable

sequence.

Topic/paragraph transition is

unclear in places with

linkages for the most part.

Reader can generally

understand and follow the

line of reasoning, although

work needed to be

proficiently organized.

Information/content is

presented in a clear and

understandable sequence.

Topic/paragraph transition is

good with clear linkages

between sections and

arguments. Reader can

understand and follow the

line of reasoning.

Information/content is

presented in a logical,

interesting and effective

sequence. Topics and

arguments flow smoothly

and coherently from one to

another and are clearly

linked.

Reader can easily follow

the line of reasoning and

enjoyed reading the

report.

Style & Tone COMMUNICATION 2,5%

Writing is poor, unclear and

unengaging, and the reader

finds it difficult to read and

maintain interest. Tone is

not professional or suitable

for an academic research

Writing is unengaging and

reader finds it difficult to

maintain interest. Tone is not

consistently professional or

suitable for an academic

research project. Work

Writing is usually engaging

and keeps the reader’s

attention. Tone is generally

appropriate for an academic

research project, although a

clearer and more

Writing style and tone is

generally good and sustains

interest throughout. Tone is

professional and appropriate

for an academic research

project.

Writing is compelling and

sustains interest throughout.

Tone is consistently

professional and appropriate

for an academic research

project.

project. A reorganization

and rewrite is needed.

needed on academic writing

style.

professional style and tone is

needed.

Use of References COMMUNICATION 2,5%

Little or no evidence of

reference sources in the

report. Content not

supported and based on

unsubstantiated views.

Most references are from

sources that are not peer-

reviewed or professional,

and have uncertain

reliability. Few if any

appropriate citations are

provided. Reader doubts the

validity of much of the

material.

Professionally legitimate

references are generally

used. Fair citations are

presented in most cases.

Some of the

information/content/evidence

comes from sources that are

reliable, but more academic

sources needed to be

convincing.

Professionally and

academically legitimate

references are used. Clear

and accurate citations are

presented in most cases. The

majority of the

information/content/evidenc

e comes from sources that

are reliable.

Presents compelling evidence

from professionally and

academically legitimate

sources. Attribution is clear

and accurate. References are

75% from primarily peer-

reviewed professional

journals or other approved

sources.

Formatting COMMUNICATION 2,5%

Research project exhibits

no formatting, or

frequent and significant

errors in Harvard

formatting.

There are too many errors in

the Harvard formatting to be

acceptable as a partially

proficient piece.

Harvard formatting is

employed in the research

project with minor errors. A

review and rework of format

and style of referencing in

text and in the bibliography

is needed.

Harvard formatting is used

accurately and consistently

throughout the research

project, although some

issues are apparent as the

reader is unable to find

sources.

Harvard formatting is used

accurately and consistently

throughout the research

project. Accurate hyperlinks

are included where required,

making it easy for readers to

review sources.

Written Communication Skills COMMUNICATION 2,5%

The written project exhibits

multiple errors in grammar,

sentence structure and/or

spelling. Inadequate writing

skills (e.g., weaknesses in

language facility and

mechanics) hinder

readability and contribute to

an ineffective research

project.

The written project exhibits

errors in grammar,

punctuation and spelling.

The written project comes

across as untidy and not

properly checked for

mistakes. Errors present in

written communication

make readability frustrating.

Written research project

displays good word choice,

language conventions and

mechanics with a few minor

errors in spelling, grammar,

sentence structure and/or

punctuation. Errors do not

represent a major distraction

or obscure meaning.

Readability of the project is

good due to the clarity of

language used. Grammar,

spelling and punctuation is

without error.

Spelling and grammar

thoroughly checked.

Readability of the project is

enhanced by facility in

language use/word choice.

Excellent mechanics and

syntactic variety. Uses

language conventions

effectively (e.g., spelling,

punctuation, sentence

structure, paragraphing,

grammar, etc.).

Analytical / Critical Thinking Skills CRITICAL THINKING 25%

Research problem, concept or

idea is not clearly articulated,

or its component elements

are not identified or

described. Research

information is poorly

organized, categorized

and/or not examined;

research information is often

inaccurate or incomplete.

Presents little if any analysis

or interpretation;

Research problem, concept

or idea is not clearly

articulated at times and

confusing. Research

information is badly

organized, categorized,

and/or only superficially

examined; research

information is often

incomplete. Presents limited

analysis or interpretation;

inaccurately and/or

Adequately identifies and

describes (or sketches out)

the research problem,

concept or idea and its

components. Gathers and

examines information

relating to the research

problem, concept or idea;

presents and appraises

research information with

some minor inconsistencies,

irrelevancies or omissions.

Formulates a clear

description of the research

problem, concept or idea,

and specifies major elements

to be examined. Selects

information appropriate to

addressing the research

problem, concept or idea;

accurately and appropriately

analyses and interprets

relevant research

information. Effectively

Effectively formulates a clear

description of the research

problem, concept or idea,

and specifies major elements

to be examined. Selects and

prioritizes information

appropriate to addressing

the research problem,

concept, or idea; accurately

and appropriately analyzes

and interprets relevant

research information.

inaccurately and/or

inappropriately applies

research methods,

techniques, models,

frameworks and/or theories

to the analysis. Presents few

solutions or conclusions;

solutions or conclusions are

often not well supported, are

inaccurate and/or

inconsistent, and are

presented in a vague or

rudimentary manner.

inappropriately applies

research methods,

techniques, models,

frameworks and/or theories

to the analysis. Presents

some solutions or

conclusions but they are

often not well supported, or

logical.

Generally applies

appropriate research

methods, techniques,

models, frameworks and/or

theories although with

inaccuracies. Outlines

solutions or conclusions that

are somewhat logical and

consistent with the analysis

and evidence; identifies

and/or lists solutions or

conclusions although not

always clearly.

applies appropriate research

methods, techniques,

models, frameworks and/or

theories in developing and

justifying multiple solutions

or conclusions; solutions or

conclusions are coherent,

well supported and

complete.

Precisely and effectively

applies appropriate research

methods, employs advanced

skills to conduct research.

Uses techniques, models,

frameworks and/or theories

in developing and justifying

multiple solutions or

conclusions; solutions or

conclusions are insightful,

coherent, well supported,

logically consistent and

complete. Displays a mastery

of complex and specialized

areas.

Integration Skills APPLICATION & EVALUATION 25%

Shows little ability to employ

theory and practice across

the functional areas of

business in the assessment

of issues relating to the

research problem, concept,

or idea. Does not recognize

or correctly identify cross-

functional organizational

issues relevant to the

research problem, concept

or idea. Does not

adequately evaluate the

research problem, concept

or idea in light of relevant

principles, theories and

practices across the

business functional areas.

Few if any solutions,

recommendations for action,

or conclusions are

presented, and/or they are

not appropriately justified

or supported.

Shows some ability to employ

theory and practice across the

functional areas of business in

the assessment of issues

relating to the research

problem, concept or idea.

Recognizes organizational

issues relevant to the research

problem, concept or idea but

does not show

understanding. Does not

adequately evaluate the

research problem, concept or

idea in light of relevant

principles, theories and

practices across the business

functional areas. Some

solutions offered but difficult

to understand.

Recommendations for action,

or conclusions are presented,

but they are often not well

supported, or logical.

Exhibits application of

principles, theories and

practices across the

functional areas of business

to the analysis of the

research problem, concept

or idea. With some

exceptions, outlines and

describes (or sketches out)

some cross- functional

organizational issues that

are relevant to the research

problem, concept or idea.

Adequately identifies and

describes (or summarizes)

solutions, recommendations

for action, or conclusions

that are, for the most part,

appropriate, but which need

to be more aligned with

principles and concepts in

the functional areas of

business.

Demonstrates an ability to

integrate and apply

principles, theories and

practices across the

functional areas of business

to the analysis of the

research problem, concept

or idea.

Identifies, examines and

critically evaluates important

cross- functional

organizational issues

associated with the research

problem, concept or idea.

Clearly justifies solutions,

recommendations for action,

or conclusions based on

analytics and an insightful

synthesis of cross-

disciplinary principles and

concepts in the functional

areas of business.

Demonstrates well-

developed ability to

integrate and apply

principles, theories and

practices across the

functional areas of business

to the analysis of the

research problem, concept

or idea. Effectively identifies,

examines and critically

evaluates important cross-

functional organizational

issues associated with the

research problem, concept,

or idea. Clearly and

effectively justifies solutions,

recommendations for

action, or conclusions based

on strong analytics and an

insightful synthesis of cross-

disciplinary principles and

concepts in the functional

areas of business. Can link

thinking across disciplines

and contexts.

Financial Statement Analysis

Overview, Techniques, Ratios and Limitations

Carlos B. Steinblock · [email protected]

Recap

● What is accountable? Who is the Accounting for? ● Accounting Equation & Dual Aspect Principle ● On your tracks · Open logbook

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