Report and analysis of the financial performance

Reference no: EM132369788

Company Performance Analysis

Purpose of the assessment (with ULO Mapping) Students are required to form a group from 2 to 5 members to study, undertake research, analyse and conduct academic work within the topics of financial management from week 1 to week 9 . 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 Tasks

ASSIGNMENT SPECIFICATIONS

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.

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 this 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 2016-2017, 2017- 2018 and 2018-2019. 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.

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
Description of one key product or service provided by the company
Prepare a brief description of one key product or area of service offered by the selected company. Describe and comment on the importance of the product or service in maintaining the comparative advantages of the company.

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 liquidity and capital structure 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.

Perform a non-current asset analysis: Analyse the non-current assets of the company through 3 years. Identify the depreciation method applied by the company and discuss how depreciation is treated to identify operating cash flow of a project involving buying a long term asset. Tips: try to do a little research about depreciation and CAPEX to enrich your comments and analysis.

Perform a scenario 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 $25 per unit and the company expects it can sell 450 000 unit per year at this price for a period of 4 years. Launching this project will require purchase of a $2 500 000 equipment that has residual value in four years of $500 000 and adding $ 800 000 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: $15
Cash fixed costs per year $450 000 Discount rate: 12%
Tax Rate: 30%

Do a scenario analysis with cash flows of the assumed project to determine the sensitivity of the project's NPV to different scenarios that are defined in terms of the estimated values for each of the project's value drivers. Please work on two scenarios corresponding to the worst- and best- case outcomes for the project. You need to provide your results in (a) relevant tables:

Worst case: Unit sales decrease by 20%; price per unit decreases by 20%; variable cost per unit increases by 20 %; cash fixed cost per year increases by $100 000

Best case: Unit sales increase by 20%; price per unit increases by 20%; variable cost per unit decreases by 20%; cash fixed cost per year decreases by $100 000

Based on the scenario analysis outcome, draw relevant conclusion about project NPV's sensitivity.

Identify and discuss any latest share or bond issuance by the selected company:
Do a research about the latest share or bond issuance taken by the company. The following questions should be addressed: when was the issuance, what was the amount of issuance, was it a private placement or public offering, who were the underwriter and trust bank for this issuance, what is the type of underwriting or selling arrangement, how much was the floating cost of the issuance, was it a successful issuance or not? Discuss on how the securities issuance affect the capital structure of the company

Calculate and discuss the PE ratios and share price movement of the selected company through 3 years

Identify net profit and compute the PE ratio of the selected company through the 3 year time frame. Go to ASX website to find out the share price data of the company for the recent 3 years, construct a graph where you display the PE movement and share price movement in the same arena and time frame. Comment on any convergence and divergence between the trend of the company's profit and share price. Do further research to explain any case where there is a divergence between profitability and share price.

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)

Attachment:- Finance for Business.rar

Reference no: EM132369788

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Reviews

len2369788

9/12/2019 2:05:04 AM

7 and 8 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. Presenting very good recommendations that properly supported by justification and analysis; Data and information derived from financial analysis completed are properly used to support the recommendations Very rational demonstration of the ability to present the ideas in proper analytical and contextual level

len2369788

9/12/2019 2:04:42 AM

3 and 5 Indicating a clear and well-presented analysis of non- current assets, depreciation method, treating of depreciation in OCF analysis, share or bond issuance with reliable data and proper analysis and justification; Analysis is taken with exceptional good justification and data based analysis; Outstanding research is conducted with wide based sources and proper referencing. Very good analysis, justification and presentation the analysis of non- current assets, depreciation method, treating of depreciation in OCF analysis, share or bond issuance on reliable data within proper time frame; Very good research conducted with relevant referencing.

len2369788

9/12/2019 2:04:34 AM

2, 4, and 6 Calculation and presentation are demonstrated clearly; Required financial ratios, calculations for scenario analysis and PE ratios are derived, analyzed and justified with exemplary analysis that based on current issues and key factors. Conclusion based on outcome of scenario analysis is proper and well presented Excellent time based PE and share price comparison and analysis. Comparison, implications and explanation are provided convincingly; Consistent 3 year trend analysis and properly justified for Very good demonstration of calculations; Required financial ratios, calculations for scenario analysis and PE ratios are derived logically and well presented with relevant implications and explanation; Indicate clearly time line based PE and share price comparison, analysis and justification and assumptions are clear; Consistent 3 year analysis.

len2369788

9/12/2019 2:04:27 AM

Task Excellent (80%-full marks given) Very Good (71-79% marks given) 1 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. Very good data and information provided to answer the questions; Very good research conducted; Issues are discussed adequately based on sufficient research and in relation to each other; Adequate references in proper referencing style.

len2369788

9/12/2019 2:04:14 AM

Marking criteria Marking criteria Weighting Description of one significant product or area of service offered by the selected company. 2% Identify and conduct a trend analysis with two groups of financial ratios, including liquidity and capital structure of the selected company. 5% Perform a non-current asset analysis 4% Perform a scenario analysis with data provided. 7% Identify and discuss any latest share or bond issuance by the selected company. 5% Calculate and discuss the PE ratios and share price movement of the selected company through 3 years 3% Recommendation Letter 2% Presentation, structure and academic writing 2% TOTAL Weight 30%

len2369788

9/12/2019 2:03:56 AM

• 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. • 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.

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