Reference no: EM132376041 , Length: word count : 3000

Assessment- Written Research on the Australian Financial Market

To complete this assessment, students are required to:

1. Explain the institutional framework of the Australian financial system;

2. Discuss the financial instruments available from their chosen company, their uses and apply the financial concepts to their chosen company;

3. Perform financial ratio calculations and analysis.

4. Assess the relationships between financial institutions that make up their chosen industry.

Assignment Tasks

The choosen company is Carltex Australia Lmtd, CTX Energy. CARLTEX AUSTRALIA LMTD.

The assignment task is a written report and analysis of your chosen financial institution and the financial environment. You will be required to apply the financial concepts you have learned in class to your chosen industry and company.

In groups of 3-5, students should first choose an industry (GICS Industry Group) from the ASX Company List provided on Blackboard. Second task is to pick one ASX listed company within the industry to undertake financial ratio analysis and competitor analysis. Finally, identify the regulator of the industry and your chosen ASX Listed Company and the recent actions (within the last 3 years) that they have taken to control ethical behaviour in the industry. Note that groups cannot have the same ASX Listed Company. The first come, first served rule will apply.

Assignment Structure should be as the following:

Requirement/s and Guide Questions

1 Industry Description

a) Characterize the size of the industry and the level of competition.

b) Identify the regulator/s of the industry. Comment on the extent of the regulator’s power to ensure compliance within the industry.

c) Are there any industry groups that help regulate behaviour aside from regulators?

2 Company Description

a) What is/are the main source of business? What are the products and services being sold?

b) What is the ownership structure of your company? What is the management structure of your company?

c) What is your company’s role within the Financial System (e.g. source of funds, borrower of funds, regulator, financial intermediary, etc.)?

3 Financial Instrument Analysis

a) Secure a copy of the 2018 Balance Sheet and Income Statements of your chosen firm and attach it as an exhibit or table in your appendix. What are the financial instruments that your firm deals in? Check Assets, Liabilities and Equities section. Also read through the Notes to Financial Statements to get a better description of the financial instruments.

b) Does your firm engage in Off Balance Sheet business (OBS)? What financial instruments comprise the Off Balance Sheet business? What is the volume of OBS business compared to Balance Sheet business of your chosen company?

4 Part A: Financial Structure Analysis

Suppose your chosen company requires AUD 10 Million to finance a new project and your finance managers are evaluating whether to borrow or issue new shares.

a) Identify 3 key financial ratios that will be important to creditors.

b) Identify 3 key financial ratios that will be important to shareholders.

c) Calculate the 6 financial ratios based on the financial statements you have attached.

d) Based purely on Financial Ratios, recommend whether it is better for the company to borrow the AUD 10 Million or issue AUD 10 Million new shares.

5 Financial Market Analysis

a) How do the financial players (borrowers, investors, financial intermediaries, regulators) within your chosen industry interact with each other? Research and comment on whether the players are in a mutually beneficial relationship or in a combative relationship.

b) Does the industry require government intervention? If so, identify the cause of the need for government to step in. What actions have regulators taken to ensure ethical behaviour within the industry?

Hint: Look at the financial news for the last 3 years regarding the industry.

c) Conduct further research on your chosen company. Has it been involved in any unethical practices in the past? How did the regulators and investors react? What corrective actions were taken by the company? Alternatively, if there has been no reported incidence of unethical behaviour, comment on your chosen company’s processes that ensure compliance to the law.

6 Findings, Conclusion and Recommendations

Based on a summary of your findings, conclude whether the financial market for your chosen industry is healthy. What further recommendations from regulators and industry experts can be applied to sustain the health and development of the industry? Do you agree with these recommendations? State why or why not.

7 Presentation of Paper (including Assignment Cover Page and Reference List)