Reference no: EM133511183 , Length: word count:2500

This assignment gives you an opportunity to leverage on the existing knowledge in the financial performance research and the skill you developed while learning the financial statements and their ratios. The objective is to synthesise the effect of capital structure on firm performance. In other words, you will be able to estimate the direction and magnitude of the capital structure on the firm's financial performance. In doing so, you can advise the management on the risks associated with different sources of fund to finance a business.

Question 1. Download relevant data for 100 Australian companies over a 10-year period. The data should include, but not limited to, the
followings.

A. Total assets.
B. Industry type of each company in your list.
C. Net profit margin.
D. Return on asset.
E. Return on equity.
F. Total revenue.

Consider other variables that you think can affect or correlated with firm's profitability. You could treat them as control variables. You can look at step 3 to get a better idea.

Watch this video on how to download data from Refinitiv using Excel.

Question 2. Go to Science Direct collection at ECU Library. You will need your ECU access credential to log into the database. Here is the link to the repository.

Question 3. Search for related research articles on 'capital structure and firm performance'. You will use some of them as a foundation for your own analysis. Use the following questions to guide your endeavour. These questions will assist you to make your analysis
relevant.

A. What are the findings?
B. What are the variables, including the control variables, they use and why?
C. What are the limitations of these existing studies?
D. How would your analysis extend the existing research?

Question 4. Create regression model for your analysis.

Question 5. Using the model in step 4, run a regression analysis, correlation test (i.e., produce a correlation matrix for the variables in the model). Answer the following questions.
A. Does the capital structure affect firm performance?
B. If it does, what is the magnitude and the direction of the effect?
C. Is there any other variable in your model demonstrates a statistically significant effect? Discuss.

Question 6. Write a 2500-word report on your analysis. The professional report is to be presented to an intelligent, non-specialist audience. You can use these headings to structure your report.
A. Executive summary.
B. Introduction.
C. Methodology.
D. Results, discussion. and recommendation.
E. Limitations and conclusion.
F. References.

You may be tempted to simulate the writing structure of the academic literature that you read in step 2. That's a good sign. However, your report is intended for managerial level decision makers. They don't need standardised beta and p-values. They need actionable results. Include persuasive data visualisation where necessary. What we mean here is use charts.