Finance for Business Assignment
QUESTIONS - Your group is an investment adviser, working to build a foundation of wealth for your clients. One of your wealthiest clients already has a diversified portfolio, which includes managed funds, property; cash/fixed interest and a few direct share investments in Australia and around the world.
The assignment is a written comprehensive report and analysis of the firms' financial performance (including referencing).
Your group is required to do 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.
2. Specify ownership-governance structure of the company:
i) Name the main substantial shareholders:
With higher than 20.00% of shareholdings. Based on this argument you should classify a firm as a family or non -family company, and With higher than 5.00% of shareholdings.
ii) Name the main people involved in the firm governance:
The Chairman
Board members
CEO
Whether any of these people have the same surname as any of substantial shareholders (> 20% share capital). If yes- you could use this as an argument for the presence of an owner or family member(s) in the firm's governance.
Whether any of shareholders with more than 5% share capital are involved in firm governance.
3. Calculate the following Fundamentals Ratios for your selected company for the past 2 years. Annual reports are assessable via company websites:
Short term solvency (Liquidity ratios)
Long term solvency (Financial Leverage ratios)
Asset utilization (efficiency or turnover ratios)
Profitability ratios
Market value ratios
4. Using the information from the ASX website 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.
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?
5. Research via the internet or financial/business publications:
From research via the internet (using credible sources) or financial/business publications, note any significant announcements which may have influenced the shale price of your company. These factors could include merger activities, divestitures, changes in management's earnings forecasts, change in analysts' forecasts, unusual write-offs or abnormal items, macroeconomic factor, industry wide factors, significant management changes, changes in the focus of the company, impact of competitors or law suits etc. (Restrict the number of announcements to 5).
Your group MUST:
Obtain a copy of the last Financial Statements including Income Statements, Balance Sheets, and Statements of Changes in Equity, Cash Flow Statements and Notes. Your Group can download these documents from the suggested web site using the firm's code (example, BHP - for BHP Billiton Company, etc).
1. A description of the company
2. Identify your company (in terms of the ownership-governance structure)
3. Calculation of Performance Ratios
4. Two graphs from ASX website with the description of results
5. Identify any significant factors which may have influenced the share price of your company.
6. Calculation of beta values and expected Rates of Return using the CAPM
7. Weighted Average Cost of Capital (WACC)
8. Using the debt ratios for your company over the past two years, emphasise any improvement towards the maintenance of a preferred optimal capital structure.
9. Dividend Policy
10. Letter Recommendation
11. Formal structure.