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HI5002: Finance for Business, Assignment, Trim 3, 2017 1 HI5002: Finance for Business Assignment (Case Study) Trimester 3, 2017 Unit Code: HI5002 Unit Name: Finance for Business Due: Week 11 Value: 30 % Venue: HOLMES Institute Description Students are required to study, undertake research, analyse and conduct academic work within the areas of business finance covered in learning materials 1 to 10 inclusive. The assignment should examine the main issues, including underlying theories, implement performance measures used and explain the firm financial performance. You are strongly advised to reference professional websites, journal articles and text books in this assignment (case study). Required: This assessment task is a written report and analysis of the financial performance of a selected company in order to provide financial advice to a wealthy investor. It needs to be completed individually. It will be based on financial reports of a listed company on the ASX (chosen by the lecturer). This assignment requires students to undertake a comprehensive examination of a firm’s financial performance and must be submitted by Week 11 of Trimester Three. Further details will be given later in the semester. Key elements or milestones will need to be completed in stages throughout the semester as per the schedule provided below. Discussions will be conducted and suggestions will be provided for each stage so that you can then amend subsequent sections if needed. MARKS will be subtracted for LATE SUBMISSIONS. HI5002: Finance for Business, Assignment, Trim 3, 2017 2 QUESTIONS You are an investment adviser, working to build a foundation of wealth for your clients. One of your wealthiest clients already has a diversified portfolio, which includes managed funds, property; cash/fixed interest and a few direct share investments in Australia and around the world. The investor wishes to expand his/her portfolio and is considering your company’s share to add to the portfolio. (The investor has an extra $10 million that wishes to invest into your company). The company which you will examine is allocated by your lecturer. The assignment is a written comprehensive report and analysis of the firms’ financial performance (including referencing). 100 marks STAGES TO BE COMPLETED Name of the student and a “business name” under which you will be providing your financial advisory services. The name of the company that you will investigate/analyse for the purposes of possible recommendation to your client. A company (listed on the ASX) will be allocated to each student by the lecturer. The students should obtain all information about the selected company from this web site: www.asx.com.au You MUST: Obtain a copy of the last Financial Statements including Income Statements, Balance Sheets, Statement of Changes in Equity, Cash Flows Statements and Notes. You can downloaded these documents from the suggested web site using the firm’s code (example, BHP- for BHP Billiton Company, etc). (Part 1 to 10) 1 A description of the company (Part 1) 2 Identify your company ( in terms of the ownership-governance structure) (Part 2 i & ii) 3 Calculation of Performance Ratios (Part 3 i, ii and iii) 4 Two graphs from www.asx.com.au with the description of results (Part 4 i & ii) 5 Identify any significant factors which may have influenced the share price of your company. (Part 5) 6 Calculation of ’ beta values and expected Rates of Return using the CAPM (Part 6 i, ii & iii) 7 Weighted Average Cost of Capital (WACC) (Part 7 i & ii) 8 Using the debt ratios for your company over the past two years, emphasise any improvement towards the maintenance of a preferred optimal capital structure. (Part 8 i & ii) 9 Dividend Policy (Part 9) 10 Letter Recommendation (Part 10) 11 Formal structure (Part 1 to 11) Final Submission of Complete Assignment on Blackboard (Week 11) http://www.asx.com.au/ http://www.asx.com.au/ HI5002: Finance for Business, Assignment, Trim 3, 2017 3 You are required to do the following tasks: 1. Prepare a brief description of the company, outlining the core activities, the market(s) in which it operates within and any factors in the companies’ history which you consider help present a “picture” of your company. 4 marks 2. Specify ownership-governance structure of the company: i) Name the main substantial shareholders: With higher than 20.00% of shareholdings. Based on this argument you should classify a firm as a family or non-family company, and With higher than 5.00% of shareholdings. 3 marks ii) Name the main people involved in the firm governance: The Chairman Board members CEO. o Whether any of these people have the same surname as any of substantial shareholders (>20% share capital). If yes- you could use this as an argument for the presence of an owner or family member(s) in the firm’s governance. o Whether any of shareholders with more than 5% share capital are involved in firm governance. 3 marks 3. Calculate the following key ratios for your selected company for the past 4 years. Annual reports are accessible via company websites (show all working out): i) Return on Assets (ROA) = (NPAT / Total Assets) Return on Equity (ROE) = (Net Profit After Tax / Ordinary Equity) Debt Ratio = Total Liabilities / Total Assets