Delivery in day(s): 4
HI5002 Finance for Business Assignment
Students will get significant information regarding their Finance for Business Assignment.
This assignment is based on a case study and based on that students are required to complete the given questions.
The total value of this assignment is 30% and it contains 100 marks.
You need to review, take on research, evaluate and conduct academic work in the field of business finance covered in learning materials 1 to 10. This assignment should .assess the key problems, containing underlying theories, applying performance measures used and explain the financial performance of the firm
You are advised to reference proper websites, articles, journals, and textbooks in this assignment.
This task is a written report and study of a selected company’s financial performance to provide financial advice to a wealthy investor. It needs to be selected individually and take on a comprehensive examination of a firm’s financial performance.
You need to complete the following tasks:
1. Prepare a brief description of the company, outlining the core activities, the market(s) in which it operates within and any factors in the companies’ history which you consider help present a “picture” of your company. (4 marks)
2. Specify ownership-governance structure of the company:
(i) Name the main substantial shareholders: Ø
a. With higher than 20.00% of shareholdings. Based on this argument you should classify a firm as a family or non-family company, and Ø
b. With higher than 5.00% of shareholdings. (3 marks)
(ii) Name the main people involved in the firm governance:
c. Board Members
d. Whether anyone of the above has the same surname as any of substantial shareholders (Less than 20% share capital). If yes then you can use this as an argument for the occurrence of an owner or family member/s in the firm governance. (3 marks)
e. Whether any of shareholders with over 5 percent share capital is elaborated in firm governance. (3 marks)
3. Calculate the following key ratios for your selected company for the past 4 years. Annual reports are accessible via company websites (show all working out):
(i) Return on Assets (ROA) = (NPAT / Total Assets)
Return on Equity (ROE) = (Net Profit after Tax / Ordinary Equity)
Debt Ratio = Total Liabilities / Total Assets EBIT/TA x NPAT/EBIT x TA/OE = NPAT/OE
Be sure that you have “proven” the above equation. (12 marks)
(ii) Explain what phenomenon is being “captured” by the variable TA/OE, and how it is impacting on the relationship between Return on Assets and Return on Owners Equity. (4 marks) (iii) Explain why the ROE (EBIT) is significantly greater than or less than the ROA (EBIT). (4 marks)
4. Using the information from the ASX website: www.asx.com.au you must complete the following tasks:
(i) Prepare a graph/chart for movements in the monthly share price over the last two years for the company that you are investigating. Plot them against movements in the All Ordinaries Index. (6 marks)
(ii) Write a report which compares movements in the companies’ share price index to the All Ords Index. For instance, how closely correlated is the line with the All Ords Index. Above or below? More or less volatile? (6 marks)
5. Research via the internet or financial/business publications:
From research through the internet by the use reliable sources or financial/business publications, note any important announcements which may have the share price of your company. These things could comprise merger activities, deviations in earnings forecasts of management, divestitures, changes in analysts’ forecasts, macro economic factors, unusual write-offs or abnormal items, industry-wide factors, changes in the focus of the company, significant management changes and impact of competitors or lawsuits. (Limit the no. of announcements to 5). (10 marks)
6. Go online to http://www.reuters.com/finance/stocks/ and type in the code for your company into the Search Stocks field and click on the magnifying glass button.
(i) What is their calculated beta (β) for your company? (2 marks)
(ii) If the risk-free rate is 4% and the market risk premium is 6%, use the Capital Asset Pricing Model (CAPM) to calculate the required rate of return for the companies’ shares. (4 marks)
(iii) Is the company you have chosen a “conservative” investment? Explain your answer. (2 marks)
7. Weighted Average Cost of Capital (WACC)
(i) Using information from the latest company report for the company (i.e. interest rate on their major source of long-term loans) and the estimated cost of equity capital calculated (in part 6ii above), calculate the WACC for your company. (6 marks)
(ii) Explain the implications that a higher WACC has on management’s evaluation on prospective investment projects. (4 marks)
8. Consider the debt ratio for your company over the past two years:
(i) Does it appear to be working towards the maintenance of a preferred optimal capital structure? (i.e., does it appear to be “stable”?). Explain your answer. (4 marks)
(ii) What have they done to adjust/amend their gearing ratio? Increase or repay borrowings? Issue or buy back shares? Has the Director’s Report given any information as to why they have made any adjustments? (4 marks)
9. Dividend policy
Discuss what dividend policy of the management of the company appears to be implemented. Explain any reason related to that particular dividend policy. (7 marks)
10. Based on your analysis above, write a letter of recommendation to your client, providing an explanation as for why you would like to include this company in his/her investment portfolio. Please refer to the ratio results calculated earlier and any other trends or factors that you believe to be important. (10 marks)
11. Formal structure and referencing. (5 marks)
a. The report structure must have an introduction, main body and conclusion.
b. Provide an explanation on each point and describe how they confirm the underlying theory, especially related to the ownership, financial measures, capital structure, risk-return, and dividend policy.
c. You are required to use font style Times New Roman and size 12 with 1.5 line spacing. Also, use 3 cm margins.
Different challenges students can face in completing this assignment
In completing this assignment within a specific time limit, students may face several problems like making proper referencing, lack of academic writing skills, applying performance measures etc. Students can take help from our accounting experts and make their assignment impressive.