Financial and Economic Interpretation and Communication Assessment - Wealth report
Assessment Description -
This assessment requires you to prepare a wealth report for a prospective shareholder that interprets the annual report of an Australian company and makes appropriate recommendations about the company's suitability for investment
You will be assessed on the thoroughness of your interpretation, including the conclusions you draw, the recommendations you make, and the way in which these have been justified by the evidence you include in your report. Importantly, it needs to be focused** on the needs and priorities of a prospective shareholder.
You will be penalised if you engage in 'data dumping' without accompanying interpretation and analysis.
Task
You need to choose a company that is currently listed on the ASX.
You are required to write a report interpreting the company's most recent annual report. This report will need to be written for a potential investor.
You will also be required to source additional information about the company's performance, for example, via credible articles that discuss the management of the company.
Please note that where the annual report may have both group and parent company financial statements, you should use the group financial statements.
It is important that you refer to financial analysis measures in your report. See "Workbook: The Tools we use" file which can be found in Supplementary Resources at the bottom of the subject resources page on the portal.
This provides further elaboration and for examples of analysis measures that you can use. These can be selected from any analysis measures stated in the annual report and/or your own calculations based on financial statements in the annual report or those provided to you by your workshop leader. It is important to source financial information relevant to your stakeholder.
Relevant non-financial topics are outlined in Resource B below.
It is expected that the language and structure of your report will reflect its formal nature and the preference of the potential shareholder. Please use Resource A below as a guide.
Resource A - Financial Analysis Report content
Executive summary - The executive summary is usually no longer than 10% of the original document.
Provides a background of the company you have chosen, their main activities and the purpose of the report
Analysis - This in generally in the form of a table that shows the key measures and data you have extracted from the annual report.
A brief commentary describes significant changes in the financial results.
Interpretation - Explains the causes of the changes in clusters (profitability, liquidity, cash management, market (relevant financial information),
Non-financial information is also brought into this section. The non-financial information should come from a wider range of sources beyond the company's own publications.
Provides information about the company's business activities during the year and the financial implications of these. Identify business/economic causes for the trends in financial results.
Link these individual aspects together to give an overall picture of the company's situation relevant to the needs of the stakeholder.
Conclusion - Make a recommendation to the stakeholder tailored towards their specific needs. For example, if the report is for a potential shareholder, the recommendation should include a market analysis. If the report is for a potential employee, the recommendation should include specific details of staff relocations, redundancies or changes in the recent past.
Include information from commentaries in the company's annual report or refer to events with wider economic implications such as natural disasters, economic downturns, changes in government policy, inflation, or exchange rate movements.
Justify your recommendation by explaining how it will meet the needs of the stakeholder.
In your report and recommendation, identify assumptions you have made and limitations, for example, items in the accounts or auditor's report that you do not completely understand due to their complex technical nature.
Resource B -
The following questions may assist you with your interpretation and with explaining non-financial aspects of the company from the annual report that may be relevant for the external user.
Depending on the entity, some of these may not be contained within the report. You may need to use other sources.
- What are the core business area(s) and geographic locations in which the entity operates?
- How have the financial results improved or changed in the specific area?
- Is there evidence from other sources that can verify the trends for the industry?
- What are the entity's current business strategy or strategies and key points of difference in the target market? Is there a specific skill-set required of employees?
- What is the current and future market potential for the entity? What influence have recent global events apparently had on the entity? In which specific areas?
- Identify strengths of the entity's management team and how these may benefit the organisation in future financial years.
- What are the remuneration trends from last year to this year for the highest earners?
- Is there a difference in the wages that could be earned in a competitor's business?
- What is the current management structure and ownership structure?
- Identify strengths of the entity's management team and how these may benefit the organisation in future financial years.
- What are the remuneration trends from last year to this year for the highest earners?
- Are there other non-wage-related benefits of being an employee at the entity?