Discuss the systemic risks and un-systemic risks

Reference no: EM132313113 , Length: word count:3000

Finance for Business Assignment - Company Performance Analysis

Purpose of the assessment - Students are required to form a group from 2 to 5 members to study, undertake research, analyse and conduct academic work within the areas of business finance covered in learning objectives. The assignment should examine the main issues, including underlying theories, implement performance measures used and explain the firm financial performance. Your group is strongly advised to reference professional websites, journal articles and text books in this assignment.

ASSIGNMENT SPECIFICATIONS -

Assignment Tasks - This assignment task is a written report and analysis of the financial performance of one selected listed company on the ASX in order to provide financial and investment advice to a wealthy investor. This assignment requires your group to undertake a comprehensive examination of a firm's financial performance based on update financial statements of the selected company.

Name of the company Wesfarmers. Need to do the assessments on which we have registered our group name on which is WES FARMERS.

Background - You're a group of investment analysts who work for a large investment consulting firm based in Australia. There's one big institutional investor from overseas that is interested in investing in the Australian market. You've been asked to choose one listed company the industry you think will have the most promising future for investment in Australia, then evaluate the performance of that company. Finally make a recommendation through your Report to the investor whether and why they should or should not invest in the company.

Create your group's "business name" under which your group will be providing the financial advisory services. Choose one listed company that your group will investigate/analyse for the purposes of possible recommendation to your client. The group should obtain all information about the selected company from Australian Securities Exchange web site.

Requirements - Obtain copies of Annual Reports including Income Statements, Balance Sheets, and Statement of Changes in Equity, Cash Flows Statements and Notes for three (3) financial year 2015-2016, 2016- 2017 and 2017-2018. Your group can download these documents from the suggested web site using the firm's code (example, BHP- for BHP Billiton Company, etc.). The assignment should cover the contents described in Part 1 to 7 bellows.

STAGES TO BE COMPLETED -

1. Description of operation and comparative advantages of the selected company.

2. Identify and conduct a trend analysis with two groups of financial ratios, including profitability, and operating efficiency of the selected company.

3. Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company.

4. Perform a sensitivity analysis with data provided.

5. Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company.

6. Calculate the dividend payout ratio and comment on the dividend policy of the chosen company through 3 years.

7. Recommendation Letter

Assignment Structure and Details of Assignment Tasks - Assignment structure and assignment tasks should be as the following:

Abstract (no more than 200 words)

I. Introduction

Briefly introduction of you work: the purpose of assignment, the selected company, your findings and structure of your assignment (not more than 300 words)

II. Financial Analysis of selected company

2.1. Description of the company

Prepare a brief description of the selected company, outlining the core activities, the market(s) in which they operate within and any factors in the company's history which you consider help present the pictures of your company. Identify and comment on their comparative advantages.

2.2. Calculation and analysis of selected performance ratios

Using financial data obtained from current financial statements of your selected companies for the past 3 years. Annual reports are accessible via company websites or ASX website. Your client requests a comprehensive analysis of two groups of financial ratios, including profitability and operating efficiency of the company. Choose the relevant financial ratios for your analysis to meet your client's requirement. Do a research to explain the trend of financial ratios of the selected company through 3 years to your client. You need to provide charts and/or tables for analysis and justification.

2.3. Cash management analysis

Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company. Tips: try to do a little research about instruments of cash management to enrich your comments and analysis.

2.4. Perform a sensitivity analysis with data provided

Assume that your selected company is considering a potential project with a new product that is expected to sell for an average price of $20 per unit and the company expects it can sell 300 000 unit per year at this price for a period of 4 years. Launching this project will require purchase of a $2 000 000 equipment that has residual value in four years of $200 000 and adding $ 600 000 in working capital which is expected to be fully retrieved at the end of the project. Other information is available below:

Depreciation method: straight line
Variable cost per unit: $12
Cash fixed costs per year $300 000
Discount rate: 10%
Tax Rate: 30%

Do an analysis with cash flows of the project to determine the sensitivity of the project NPV with the following changes in the value drivers and provide your results in (a) relevant tables:

Unit sales decrease by 10%
Price per unit decreases by 10%
Variable cost per unit increases 10%
Cash fixed cost per year increases by 10%

2.5. Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company

Do a research about the systemic risks and un-systemic risks that may affect performance of the selected company. Tips: Notes to Financial Statement of a company often provide some information about the risks faced by the company.

2.6. Identify the dividend payout ratio and dividend policy

Identify the dividend payout ratios of the selected company through the 3 year time frame. Discuss what dividend policy of the management of the company appear to be implemented and how it is changing or kept constant through three years. Explain any reason related to that particular dividend policies.

III. Recommendation letter

Based on your analysis above, write a letter of recommendation to your client, providing an explanation as why you would like to include one of selected the companies 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.

IV. Conclusion

Summarize the outcomes of your works (not more than 300 words).

Reference no: EM132313113

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Reviews

len2313113

5/28/2019 5:13:40 AM

Word limit - Not more than 3,000 words. Actually this assessment has different sections but QN. 4 (Perform a sensitivity analysis with data provided.) has already been done so we don't need to do that which mean out of 3000 words 900 has already been done so, now we just need 2000 words. Name of the company Wesfarmers, we need to do the assessments on which we have registered our group name on which is WES FARMERS. So please do consider that when you do the assessment. It's the assessment which is regarding the finance sector.

len2313113

5/28/2019 5:13:34 AM

Submission Guidelines - All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page. Make sure that your group member’s name and surname, student ID, unit name, and code and lecture’s name are written on the cover sheet of the submitted assignment. The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers. Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.

len2313113

5/28/2019 5:13:25 AM

Submitted work should be your original work showing your creativity. Please ensure the self-check for plagiarism to be done before final submission in accordance with SafeAssign Student Guide in Black Board. As a guide, a similarity score of over 30% is considered as excessive except in the cases where the similarity is caused by the use of template provided by the lecturer, references or sources of data. Please note that it takes 48 hours for the self-check report to be available for your viewing. When you submit your assignment electronically, please save the file as ‘Group Assignment- your group name .doc’. You are required to submit the assignment at Group Assignment Final Submission, which is under Assignment and Due Dates on Black Board. Always keep an electronic copy until you have received the final grade for the Unit. Please make sure that you submit the correct file. Any appeal relating to submitting wrong files after the deadline will not be considered.

len2313113

5/28/2019 5:13:14 AM

MARKING RUBRIC - Outstanding data and information provided to answer the questions; Independent and deep analysis, based on wide research; Issues and factors are presented and analyzed in a logical interconnectedness; Broad and credible sources of references in proper referencing style. Calculation and presentation are demonstrated clearly; Required financial ratios, calculations for sensitivity analysis and dividend payout ratios are derived, analyzed and justified with exemplary analysis that based on current issues and key factors; Indicate clearly dividend policy Comparison, implications and explanation are provided convincingly; Consistent 3 year trend analysis and properly justified for inclusions or exclusions. Indicating a clear and well-presented list of marketable securities and systemic and un- systemic risks that affect company performance with reliable data and proper analysis and justification;

len2313113

5/28/2019 5:13:04 AM

Analyzing and comparing dividend payout ratios and dividend policy of the company with exceptional good justification and data based analysis; Outstanding research is conducted with wide based sources and proper referencing. Presenting a wide ranges of adequate recommendations that exemplarily supported by justification and analysis; Using data and information derived from financial analysis completed in an efficient, analytical and logical manner; Demonstrated a high level of understanding and skills of academic writing by means of criticism, logical argument, and interpretation of data and information.

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