Report and analysis of the financial performance

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Reference no: EM132215409

Assessment

THE COMPYANIES ARE SUNCORP AND QBE INSURANCE AND ONE OPTION IS

STEADFAST HAVE TO CHOSSE JUST TWO

INSTRUCTIONS

Students are required to form a group to study, undertake research, analyse and conduct academic work within the areas of business finance covered in learning materials Topics 1 to 10 inclusive. 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 (case study).

Tasks

This assessment task is a written report and analysis of the financial performance of two selected listed companies 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 chosen companies.

Group Arrangement

This assignment must be completed IN Group. Each group can be from 2 to maximum 5 student members. Each group will choose two companies and once the companies has been chosen, the other group cannot choose the same two companies. First come first served rule applies here, it means you need to form your group, choose two companies from the list of ASX and register them with your lecturer as soon as possible. Once your lecturer registers your chosen companies, they cannot be chosen by any other group. Your lecturer then will put your group on Black Board to enable you to interact and discuss on the issues of your group assignment using Black Board environment. However, face to face meeting, discussion and other methods of communication are needed to ensure quality of group work. Each group needs to have your own arrangement so that all the group members will contribute equally in the group work. If not, a Contribution Statement, which clearly indicated individual contribution (in terms of percentage) of each member, should be submitted as a separate item in your assignment. Your individual contribution then will be assessed based on contribution statement to avoid any free riders.

Required:

Obtain copies of Financial Statements 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 6 bellows.

Details of financial analysis tasks:

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

2. Calculation and comparison 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 is strongly interested in the liquidity and profitability of the companies. Choose the relevant financial ratios for your analysis to meet your client's requirement. Do a research to explain the trend of liquidity and profitability of the selected companies to your client. You need to provide charts and/or tables for analysis and justification.

3. Share price movement analysis: Using the information from the ASX website, complete the following tasks:

- Prepare graphs for movements in the monthly share price over the last three years for the companies that you are investigating. Plot them against movements in the All Ordinaries Index.

- Write a report which compares movements in the companies' share price index to each other and to the All Ords Index. For instance, how are the prices of the two selected moving? In the same trend or diverse trends? How closely are they correlated with the All Ords Index. Above or below? More or less volatile? What are the factors that affect share price movements?

4. Calculation and analysis of WACC:

- Determine and compare the current capital structure weights of the two selected companies

- If the current required rate of returns for the industry debts (kD) is 7%, the required rate of returns for preference shares (kP) is 12% and required rate of return for ordinary shareholders (kE) is 15%, calculate the weighted average cost of capital (WACC) of the two selected companies and compares them.

5. Capital Structure Policy:

- Identify and compare capital structure policy of the two selected companies by calculating and analysing 03 capital structure ratios (debt ratios, debt-to-enterprise ratio and interest coverage ratio).

- Identify whether the selected companies have favourable financial leverage or unfavourable financial leverage. Assuming that the two companies plan to raise AUD 10 million through equity offering. Evaluating and comparing the effect of that offering on the firm capital structure and earning per share (EPS) of the two selected companies

6. 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.

7. Presentation, structure and academic writing

Verified Expert

The paper is in relation to the analysis of the company for making investment by way of fundamental analysis as well as technical analysis. The company chosen for this were Suncorp Limited and QBE Insurance Limited, both being in the sector of Insurance. The company QBE though having global existence does not have better results than Suncorp Limited. The analysis of ratios, stock price movement, capital structure policy and weighted average cost of capital was conducted to arrive at the recommendation.

Reference no: EM132215409

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Reviews

len2215409

1/15/2019 3:21:00 AM

When writing your assignments, a reference must be included every time you use someone else’s ideas or information. In-text referencing of ALL sources, whether academic books, journal articles, newspaper articles, material from the Internet etc., must be cited in the main text of the assignment itself. Harvard Style referencing is required for this assignment. A reference must be included when you: ? Paraphrase (express someone else’s idea in your own words). ? Quote (express someone else’s idea in their exact words). ? Copy (financial statement, reproduce a diagram, graph or table from someone else’s work).

len2215409

1/15/2019 3:20:53 AM

Presentation of written work The report must have an academic written structure including an introduction, body and conclusion. ? Use numbers to structure body of the report (e.g., “2.5. Research via the internet”). ? Provide an explanation on each of these issues (points) and explain how they confirm the underlying theory, particularly related to the ownership, financial ratios, capital structure, average cost of capital and capital structure policy. ? You are required to use Times New Roman font, size 12 with 1.5 lines spacing. ? Please insert page numbers into your assignment and use 3 cm margins. A high standard of work is always expected, so poorly presented work may be returned unmarked with a request to re-submit.

len2215409

1/15/2019 3:20:35 AM

Please make sure that your group member’s name and surname, student ID, subject name, and code and lecture’s name are written on the cover sheet of the submitted assignment. 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 Group Assignment and Due Dates on Black Board. 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.

len2215409

1/15/2019 3:20:27 AM

Students are required to form a group to study, undertake research, analyse and conduct academic work within the areas of business finance covered in learning materials Topics 1 to 10 inclusive. 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 (case study).

len2215409

1/15/2019 3:20:04 AM

Providing no recommendations or inadequate recommendations for investment decisions; No relevant justification using data and information derived from the analysis of financial statements; Failing to meet the requirements of academic writing in terms of structure, presentation, wordings and referencing Addressing limited recommendations; Demonstrating limited justification and analysis of the given recommendations; Demonstrating limited skills of academic writing in terms of structure, presentation, wordings and referencing Presenting adequate recommendations that properly supported by justification and analysis; Data and information derived from financial analysis completed are properly used to support the recommendations Demonstrating the ability to present the ideas in proper analytical and contextual level

len2215409

1/15/2019 3:19:52 AM

4 and 5 Calculations are not demonstrated for the required financial ratios, weights of capital, WACC and capital structure ratios Proving no explanation of implications of the variables; Providing no comparison of financial ratios, WACC, liquidity and profitability, and capital structure ratios. Single year analysis. Calculations are limitedly demonstrated; Required financial ratios, weights of capital, WACC and capital structure ratios are provided inadequately; Providing limited analysis and comparison of the WACC, liquidity, profitability and capital structure ratios; Inconsistent time period of analysis.

len2215409

1/15/2019 3:19:14 AM

CRITERIA FOR GROUP ASSIGNMENT ASSESSMENT Content Unsatisfactory (0-49% marks given) 1 No specific data and information provided to answer the questions; No research basis for analysis; Merely relying on secondary data from internet; No reference. Limited Demonstration (50-60% marks given) Limited data and information provided to answer the questions; Limited research conducted; Limited references; Proficient (61-79% marks given) Adequate data and information provided to answer the questions; Reasonable research conducted; Issues are discussed based on sufficient research and in relation to each other; Adequate references in proper referencing style; Exemplary (80%-full marks given) 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.

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