SOUTHWESTERN ADVENTIST UNIVERSITY

100 WEST HILLCREST, KEENE, TX.

Post Course Assignment

Accenture and Lockheed Martin a Financial
Management Portfolio

Course:
BUAD521: Financial Management

Presented to:
Radhames A Lizardo, Ph.D,CPA

By:
Mark Samraj

Date:
August 15th, 2010
Introduction
This project on Accenture and Lockheed Martin discusses the management of funds in these two
companies.
Profile
Accenture plc
1 Grand Canal Square
Grand Canal Harbour
Dublin, 2
Ireland
Phone: 353 1 646 2000
Fax: 353 1 646 2020
Index Membership: N/A
Sector: Services
Industry: Management Services
Full Time Employees:190,000
Accenture plc (ACN)

Accenture plc operates as a management consulting, technology services, and outsourcing

company. Its management consulting services include customer relationship management,
finance and performance management, talent and organization performance, process and
innovation performance, strategy, and supply chain management services. The company also
provides various system integration consulting services, including enterprise solutions and
enterprise resource planning, industry and functional solutions, information management
services, service-oriented architecture, custom solutions, software as a service, mobility
solutions, and business solutions based on Microsoft Windows Server and other .NET
technologies; technology consulting (IT) services consisting of IT strategy and transformation,
enterprise architecture, infrastructure consulting, IT security consulting, application portfolio
optimization and renewal, digital solutions, and research and development; and IT outsourcing
services comprising application outsourcing services, such as application testing, application
management of enterprise-wide software programs and capacity services, and application
enhancement and development; infrastructure outsourcing services, including IT spend
management, data center, service desk, security and network, and workplace services. In
addition, it offers business process outsourcing services for specific business functions and/or
processes, including finance and accounting, human resources, learning, procurement and
customer contact, as well as various transaction-processing services comprising Internet
reservations, airport check-in, revenue management and accounting, crew scheduling and
management, and disruption recovery. Accenture plc primarily serves the communications,
electronics, high technology, media, and entertainment industries in the Americas, Europe, the
Middle East, Africa, and the Asia Pacific. The company was founded in 1995 and is based in
Dublin, Ireland.

Lockheed Martin Corporation (LMT)

Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, MD 20817
United States
Phone: 301-897-6000
Fax: 301-897-6919

Index Membership: S&P 100

S&P 500
S&P 1500 Super Comp
Sector: Industrial Goods
Industry: Aerospace/Defense Products & Services
Full Time Employees:140,000

Lockheed Martin Corporation engages in the research, design, development, manufacture,

integration, operation, and sustainment of advanced technology systems and products in the
United States and internationally. The company also provides management, engineering,
technical, scientific, logistic, and information services. It operates in four segments: Aeronautics,
Electronic Systems, Information Systems & Global Services (IS&GS), and Space Systems. The
Aeronautics segment provides military aircraft, including combat and air mobility aircraft,
unmanned air vehicles, and related technologies. Its products and programs include the F-35
Lightning II Joint Strike Fighter-multi-role coalition fighter, the F-22 Raptor-air dominance
attack and multi-mission stealth fighter, the F-16 Fighting Falcon-multi-role fighter, the C-130J
Super Hercules tactical transport aircraft, and the C-5M Super Galaxy strategic airlift aircraft.
This segment also supports P-3 Orion maritime patrol aircraft and U-2 Dragon Lady high-
altitude reconnaissance aircraft. The Electronic Systems segment offers air and missile defense;
tactical missiles; weapon fire control systems; surface ship and submarine combat systems; anti-
submarine and undersea warfare systems; land, sea-based, and airborne radars; surveillance and
reconnaissance systems; simulation and training systems; and integrated logistics and
sustainment services. The IS&GS segment provides federal services; information technology
solutions; software and systems engineering support services; logistics, mission operations
support, peacekeeping, and nation-building services for the various U.S. defense and civil
government agencies. The Space Systems segment produces government and commercial
satellites; strategic and defensive missile systems, including missile defense technologies and
systems, and fleet ballistic missiles; and space transportation systems. Lockheed Martin
Corporation was founded in 1909 and is based in Bethesda, Maryland.

I have chosen Accenture since it is a management consulting, technology services, and

outsourcing company. Its management consulting services include customer relationship
management, finance and performance management, talent and organization performance,
process and innovation performance, strategy, and supply chain management services. On a
personal front since Tiger Woods was its brand ambassador, and the company stood with him
despite his recent stories. I have chosen Lockheed Martin since it engages in the research,
design, development, manufacture, integration, operation, and sustainment of advanced
technology systems and products in the United States and internationally.

Company’s Mission statement, Industry and Financial Strategies.

Accenture’s mission statement is to become one of the world's leading companies, bringing
innovations to improve the way the world works and lives. 
Our six core values form the backbone of how we go to market. 
§ Client Value Creation - Understand and meet client expectations 100% of the time 
§ One Global Network - Act to enhance the collective values of the global organization while
sustaining local culture 
§ Integrity - Always act with openness and honesty 
§ Stewardship - Think future oriented; act and invest to build a stronger firm for tomorrow 
§ Best People - Are highly competent and make a commitment to excellence, teamwork, and the
success of our clients 
§ Respect for the Individual - Treat each person as we would like to be treated 
Accenture's mission is to become one of the world's leading companies, bringing innovations to
improve the way the world works and lives. 
Our six core values form the backbone of how we go to market. 
§ Client Value Creation - Understand and meet client expectations 100% of the time 
§ One Global Network - Act to enhance the collective values of the global organization while
sustaining local culture 
§ Integrity - Always act with openness and honesty 
§ Stewardship - Think future oriented; act and invest to build a stronger firm for tomorrow 
§ Best People - Are highly competent and make a commitment to excellence, teamwork, and the
success of our clients 
§ Respect for the Individual - Treat each person as we would like to be treated 

Accenture is expanding its business to different types of business so as to suite the customers the
best. Accenture maintains that diversifying it’s business operations would increase revenue as
well as Market Value added.

Lockheed Martin is LOCKHEED MARTIN USES E-BUSINESS STRATEGY TO

STREAMLINE CONTRACTING PROCESS, And also Lockheed Martin is aligning Logistics
career development to their corporate business strategy. Lockheed Martin is eyeing missile sales
to the middle east is a new strategy to increase revenue.

The Mission statement of Lockheed Martin Lockheed Martin is a diversified technology

company serving the needs of the government and military and selected international customers.

Values

 Customer focus
 Learning culture through integrated diversity
 Employee satisfaction
 Decisive and expeditious implementation
 Change propensity
 Continuous communications
  Mission success
 Shared vision through ethics and teamwork

Evaluation of its operating Activities

MVA/EVA
Accenture

MVA JULY 16,2010

1 RECENT PRICE 39.64

2 COMMON SHARES OUTSTANDING (Mil) 17.00

3 (1X2) MARKET VALUE OF EQUITY (Mil) 673.88

4 BOOK VALUE PER SHARE 10.86

5 (2X4) BOOK VALUE OF COMMON EQUITY (Mil) 10.370

6 (3-5) MVA (Mil) 663.510

EVA DECEMBER 31, 2009

7 EBIT (Mil) 2,691.857

8 TAX RATE 739.59 ÷ 2,691 27%

9 (1-T) 73%
10 (7 x 9) NOPAT = EBIT(1 - T) (Mil) 1,952.031

11 20 INVESTOR-SUPPLIED OPERATING CAPITAL 3,849.497

12 WACC (ESTIMATED) 8%

13 (11X12) DOLLAR COST OF CAPITAL 308

14 (10 - 13) EVA 1,644

15 NOTES PAYABLE (Mil) 955

17 PREFERRED STOCK 0
18 COMMON EQUITY (Mil) 2,887
19 SHORT-TERM INVESTMENT (Mil) 7.904
20 INVESTOR-SUPPLIED OPERATING CAPITAL 3,849.497
VALUATION MEASURES

Market Cap (intraday)5: 24.73B

Enterprise Value (Aug 15, 2010)3: 20.41B

Trailing P/E (ttm, intraday): 16.30

Forward P/E (fye Aug 31, 2011)1: 13.35

PEG Ratio (5 yr expected): 1.20

Price/Sales (ttm): 1.10

Price/Book (mrq): 8.38

Enterprise Value/Revenue (ttm)3: 0.90

Enterprise Value/EBITDA (ttm)3: 6.07

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends: Aug 31

Most Recent Quarter (mrq): May 31, 2010

Profitability

Profit Margin (ttm): 6.98%

Operating Margin (ttm): 12.68%

Management Effectiveness

Return on Assets (ttm): 15.19%

Return on Equity (ttm): 53.48%

Income Statement

Revenue (ttm): 22.77B

Revenue Per Share (ttm): 35.89

Qtrly Revenue Growth (yoy): 7.90%

Gross Profit (ttm): 6.84B

EBITDA (ttm): 3.36B

Net Income Avl to Common (ttm): 1.59B

Diluted EPS (ttm): 2.38

Qtrly Earnings Growth (yoy):10.50%

Balance Sheet

Total Cash (mrq): 4.32B

Total Cash Per Share (mrq): 6.79

Total Debt (mrq): 771.00K

Total Debt/Equity (mrq): N/A

Current Ratio (mrq): 1.52

Book Value Per Share (mrq): 4.71

Cash Flow Statement

Operating Cash Flow (ttm): 2.89B

Levered Free Cash Flow (ttm): 2.07B

TRADING INFORMATION

Stock Price History

Beta: 0.65

52-Week Change3: 7.56%

S&P500 52-Week Change3: 7.49%

52-Week High (Apr 23, 2010)3: 44.67

52-Week Low (May 6, 2010)3: 17.74

50-Day Moving Average3: 39.54

200-Day Moving Average3: 40.48

Share Statistics

Avg Vol (3 month)3: 5,316,260

Avg Vol (10 day)3: 3,336,070

Shares Outstanding5: 636.52M

Float: 632.58M

% Held by Insiders1: 0.13%

% Held by Institutions1: 79.80%

Shares Short (as of Jul 30, 2010)3: 8.14M

Short Ratio (as of Jul 30, 2010)3: 1.90

Short % of Float (as of Jul 30, 2010)3: N/A

Shares Short (prior month)3: 7.11M

Dividends & Splits

Forward Annual Dividend Rate4: 0.75

Forward Annual Dividend Yield4: 1.90%

Trailing Annual Dividend Yield3: 1.13

Trailing Annual Dividend Yield3: 2.90%

5 Year Average Dividend Yield4: N/A

Payout Ratio4:47.00%

Dividend Date3: May 13, 2010

Ex-Dividend Date4: Apr 14, 2010

Last Split Factor (new per old)2: N/A

Last Split Date3: N/A

The Economic Value added for Accenture is 1,644 million dollars and the MVA is 663.510
Million dollars. The company has the following

Profit Margin (ttm):6.98%

Operating Margin (ttm):12.68%
Return on Assets (ttm): 15.19%
Return on Equity (ttm):53.48%
Diluted EPS (ttm):2.38
Beta:0.65
Avg Vol (3 month)35,316,260

Interpretation Of Beta

Regression Analysis Between LMT And the S&P

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.71286
R Square 0.50817
Adjusted R Square
0.49983
Standard Error 0.04991
Observations 61

ANOVA
df SS MS F Significance F
Regression 1 0.15188 0.15188 60.9593 1.2E-10
Residual 59 0.147 0.00249
Total 60 0.29887

Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%
Lower 95.0%
Upper 95.0%
Intercept 0.00781 0.00639 1.22184 0.22663 -0.00498 0.0206 -0.00498 0.0206
RS&P 1.04386 0.1337 7.80764 1.2E-10 0.77634 1.31139 0.77634 1.31139
Regression Analysis Between ACN And the S&P

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.57526
R Square 0.33092
Adjusted R Square
0.31958
Standard Error 0.04933
Observations 61

ANOVA
df SS MS F Significance F
Regression 1 0.07102 0.07102 29.181 1.2E-06
Residual 59 0.1436 0.00243
Total 60 0.21462

Coefficients
Standard Error t Stat P-value Lower 95%Upper 95%
Lower 95.0%
Upper 95.0%
Intercept 0.01224 0.00632 1.93704 0.05753 -0.0004 0.02488 -0.0004 0.02488
RS&P 0.71384 0.13214 5.40194 1.2E-06 0.44942 0.97825 0.44942 0.97825

Calculation of Stock holder’s required rate of return.

CAPM=Rrf+(Rm-Rrf)Beta
Rrf 2.50%
Rm -1.43
Beta (Acn) 0.71384
Beta (Ltm) 1.04386 Rounded to
CAPM Accenture
-0.30537 0
CAPM LMT -1.60239 0

The Beta for Accenture is 0.713835

A portfolio is always more than one company, so the other company for comparison in this
project is Lockheed Martin.
MVA/EVA
Lockheed Martin (LMT)

MVA JULY 16,2010

1 RECENT PRICE 73.7

2 COMMON SHARES OUTSTANDING (Mil) 371.00

3 (1X2) MARKET VALUE OF EQUITY (Mil) 27,342.70

4 BOOK VALUE PER SHARE 10.86

5 (2X4) BOOK VALUE OF COMMON EQUITY (Mil) 4,029

6 (3-5) MVA (Mil) 23,314

EVA DECEMBER 31, 2009

7 EBIT (Mil) 4,589

8 TAX RATE 1260 ÷ 4,284 29%

9 (1-T) 71%
10 (7 x 9) NOPAT = EBIT(1 - T) (Mil) 3,239

11 20 INVESTOR-SUPPLIED OPERATING CAPITAL 9,181

12 WACC (ESTIMATED) 8%

13 (11X12) DOLLAR COST OF CAPITAL 734

14 (10 - 13) EVA 2,505

15 NOTES PAYABLE (Mil) 5,052

17 PREFERRED STOCK 0
18 COMMON EQUITY (Mil) 4,129
19 SHORT-TERM INVESTMENT (Mil) 0
20 INVESTOR-SUPPLIED OPERATING CAPITAL 9,181
 Accentur RACC RLM
Date e LMT S&P N T RS&P
 1030.7
6/1/2010 38.65 74.5 1 3.01% -6.78% -5.39%
1089.4 -
5/3/2010 37.52 79.92 1 14.02% -5.11% -8.20%
1186.6
4/1/2010 43.64 84.22 9 4.93% 2.01% 1.48%
1169.4
3/1/2010 41.59 82.56 3 4.97% 7.01% 5.88%
1104.4
2/1/2010 39.62 77.15 9 -2.49% 5.21% 2.85%
1073.8
1/4/2010 40.63 73.33 7 -1.24% -1.11% -3.70%
12/1/2009 41.14 74.15 1115.1 1.13% -2.43% 1.78%
1095.6 13.18
11/2/2009 40.68 76 3 10.66% % 5.74%
-
1036.1 11.90
10/1/2009 36.76 67.15 9 1.43% % -1.98%
1057.0
9/1/2009 36.24 76.22 8 12.93% 4.14% 3.57%
1020.6
8/3/2009 32.09 73.19 2 -5.89% 1.05% 3.36%
7/1/2009 34.1 72.43 987.48 4.79% -7.30% 7.41%
6/1/2009 32.54 78.13 919.32 11.78% -3.57% 0.02%
5/1/2009 29.11 81.02 919.14 1.71% 7.24% 5.31%
13.76
4/1/2009 28.62 75.55 872.81 7.07% % 9.39%
3/2/2009 26.73 66.41 797.87 -5.85% 9.39% 8.54%
- -
22.45 10.99
2/2/2009 28.39 60.71 735.09 -7.49% % %
1/2/2009 30.69 78.29 825.88 -3.76% -2.42% -8.57%
12/1/2008 31.89 80.23 903.25 5.84% 9.04% 0.78%
11/3/2008 30.13 73.58 896.24 -6.25% -8.63% -7.48%
- -
- 22.45 16.94
10/1/2008 32.14 80.53 968.75 11.63% % %
1166.3
9/2/2008 36.37 103.84 6 -8.13% -5.81% -9.08%
1282.8 12.02
8/1/2008 39.59 110.25 3 -0.95% % 1.22%
1267.3
7/1/2008 39.97 98.42 8 2.54% 5.75% -0.99%
6/2/2008 38.98 93.07 1280 -0.23% -9.85% -8.60%
5/1/2008 39.07 103.24 1400.3 8.71% 3.60% 1.07%
 8
1385.5
4/1/2008 35.94 99.65 9 6.77% 6.79% 4.75%
3/3/2008 33.66 93.31 1322.7 -0.24% -3.78% -0.60%
1330.6
2/1/2008 33.74 96.98 3 1.81% -3.99% -3.48%
1378.5
1/2/2008 33.14 101.01 5 -3.91% 2.53% -6.12%
1468.3
12/3/2007 34.49 98.52 6 4.26% -4.89% -0.86%
1481.1 -
11/1/2007 33.08 103.58 4 11.50% 0.96% -4.40%
1549.3
10/1/2007 37.38 102.6 8 -1.97% 1.42% 1.48%
1526.7
9/4/2007 38.13 101.16 5 -2.33% 9.43% 3.58%
1473.9
8/1/2007 39.04 92.44 9 -2.18% 1.03% 1.29%
1455.2
7/2/2007 39.91 91.5 7 -1.77% 4.62% -3.20%
1503.3
6/1/2007 40.63 87.46 5 4.77% -4.05% -1.78%
1530.6
5/1/2007 38.78 91.15 2 4.70% 2.40% 3.25%
1482.3
4/2/2007 37.04 89.01 7 1.45% -0.90% 4.33%
1420.8
3/1/2007 36.51 89.82 6 7.73% -0.26% 1.00%
1406.8
2/1/2007 33.89 90.05 2 -5.23% 0.42% -2.18%
1438.2
1/3/2007 35.76 89.67 4 2.23% 5.56% 1.41%
12/1/2006 34.98 84.95 1418.3 9.59% 1.80% 1.26%
1400.6
11/1/2006 31.92 83.45 3 2.41% 4.46% 1.65%
1377.9
10/2/2006 31.17 79.89 4 4.91% 1.01% 3.15%
1335.8
9/1/2006 29.71 79.09 5 6.91% 4.19% 2.46%
1303.8
8/1/2006 27.79 75.91 2 1.39% 4.04% 2.13%
1276.6 11.07
7/3/2006 27.41 72.96 6 3.32% % 0.51%
6/1/2006 26.53 65.69 1270.2 0.61% -1.04% 0.01%
1270.0
5/1/2006 26.37 66.38 9 -3.16% -4.09% -3.09%
 1310.6
4/3/2006 27.23 69.21 1 -3.34% 1.02% 1.22%
1294.8
3/1/2006 28.17 68.51 7 -7.94% 3.10% 1.11%
1280.6
2/1/2006 30.6 66.45 6 3.59% 8.15% 0.05%
1280.0
1/3/2006 29.54 61.44 8 9.21% 6.32% 2.55%
1248.2
12/1/2005 27.05 57.79 9 1.54% 5.00% -0.10%
1249.4
11/1/2005 26.64 55.04 8 8.07% 0.57% 3.52%
1207.0
10/3/2005 24.65 54.73 1 4.58% -0.78% -1.77%
1228.8
9/1/2005 23.57 55.16 1 4.34% -1.94% 0.69%
1220.3
8/1/2005 22.59 56.25 3 -2.55% 0.14% -1.12%
1234.1
7/1/2005 23.18 56.17 8 10.49% -3.80% 3.60%
1191.3
6/1/2005 20.98 58.39 3 -2.65% -0.03% -0.01%
5/2/2005 21.55 58.41 1191.5

ACCN LMT S&P

Annual Return 13.67% 7.88% -1.43%
24.45 16.70
Standard Deviation 20.72% % %
Coefficient of Correlation 0.35992
Standard Deviation of a Portfolio (enter data only on the blue areas)

WA= 0.5 ρAB= 0.360 ŕA= 0.140 σA= 0.21

WB= 0.5 ŕB= 0.079 σB= 0.24
σA= 0.21 Wa σp= r-bar
σB= 0.24 1.00 21.00% 14.00%
ŕA= 0.14 0.60 18.39% 11.56%
ŕB= 0.079 0.75 18.76% 12.48% 16.00%
ρAB= 0.36 0.50 18.57% 10.95%
C1 0.011025 0.30 19.95% 9.73% 14.00%
C2 0.0144 0.00 24.00% 0.00% 12.00%
C3 0.009072 0.00 24.00% 0.00%
10.00%
Total 0.034497 0.00 24.00% 0.00%

Returns
SD= 0.1857 0.00 24.00% 0.00% 8.00% Series1
0.00 24.00% 0.00%
6.00%
0.00 24.00% 0.00%
Minimun Risk Portfolio 4.00%

2.00%

σA= 0.21 0.00%

σB= 0.24 0.00% 10.00% 20.00% 30.00%
ρAB= 0.36 SDp
Num.= 0.039456
Denom.= 0.065412
WA= 0.603192

 p  W A2 A2  (1  W A ) 2  B2  2W A (1  W A )  AB A B (1)

 B ( B   AB A )
WA  (2)
   B2  2 AB A B
2
A Exp.Retu
Asset rn σ
A 10% 20%
WA= 1.00 0.60 0.75 0.50 0.30 0.00 0.00 0.00 0.00 0.00 0.00 B 16% 40%
WB= 0 0.4 0.25 0.5 0.7 1 1 1 1 1 1 ρAB=0.35
σA= 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
σB= 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24 0.24
ŕA= 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14
ŕB= 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079 0.079
ρAB= 0.36 0.36 0.36 0.36 0.36 0.36 0.36 0.36 0.36 0.36 0.36
C1 0.0441 0.01588 0.02481 0.01103 0.00397 0 0 0 0 0 0
C2 0 0.00922 0.0036 0.0144 0.02822 0.0576 0.0576 0.0576 0.0576 0.0576 0.0576
C3 0 0.00871 0.0068 0.00907 0.00762 0 0 0 0 0 0
Total 0.0441 0.0338 0.03521 0.0345 0.03981 0.0576 0.0576 0.0576 0.0576 0.0576 0.0576
SD= 0.210 0.184 0.188 0.186 0.200 0.240 0.240 0.240 0.240 0.240 0.240

C1=FIRST PART OF (1), C2=SECOND PART OF (1), C3=THIRD PART OF (1)

Efficient frontier of the feasible set

16.00%

14.00%

12.00%

10.00%
Returns

8.00%

6.00%

4.00%
Rf
2.00%

0.00%
18.00% 20.00% 22.00% 24.00% 26.00%

SDp

Rf is the risk free rate and it is at 2.5%