HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI5002 Finance for Business Group Assignment Assessment Details and Submission Guidelines Trimester T1 2019 Unit Code HI5002 Unit Title Finance for Business Assessment Type Group Assignment Assessment Title 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 areas of business finance covered in learning objectives 1, 3, 4, 5, 8, 10 & 11. 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. Weight 30 % of the total assessments Total Marks 30 Word limit Not more than 3,000 words Due Date Registration of groups and chosen companies: 5:00 pm Friday, Week 7 Final Submission of Group Assignment: 11:59 pm Sunday, Week 10 Submission Guidelines 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 selfcheck report to be available for your viewing. 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 Assignment and Due Dates on Black Board. Always keep an electronic copy until you have received the final grade for the Unit. Please make sure that you submit the correct file. Any appeal relating to submitting wrong files after the deadline will not be considered. Page 2 of 6 HI5002 Finance For Business Group Assignment ASSIGNMENT SPECIFICATIONS Assignment Tasks 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: www.asx.com.au. 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 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 7 bellows. STAGES TO BE COMPLETED 1 Description of operation and comparative advantages of the selected company. 2 Identify and conduct a trend analysis with two groups of financial ratios, including profitability, and operating efficiency of the selected company. 3 Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company. 4 Perform a sensitivity analysis with data provided. 5 Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company. 6 Calculate the dividend payout ratio and comment on the dividend policy of the chosen company through 3 years 7 Recommendation Letter Final Submission of Complete Assignment on Blackboard (Week 10) Page 3 of 6 HI5002 Finance For Business Group Assignment 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 2.1. Description of the company Prepare a brief description of the selected company, outlining the core activities, the market(s) in which they operate within and any factors in the company’s history which you consider help present the pictures of your company. Identify and comment on their comparative advantages. 2.2. 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 profitability and operating efficiency 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. 2.3. Cash management analysis: Identify the marketable securities that are available in current assets of the company. Discuss using of these securities as an instrument for cash management by the company. Tips: try to do a little research about instruments of cash management to enrich your comments and analysis. 2.4. Perform a sensitivity 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 $20 per unit and the company expects it can sell 300 000 unit per year at this price for a period of 4 years. Launching this project will require purchase of a $2 000 000 equipment that has residual value in four years of $200 000 and adding $ 600 000 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: $12 Cash fixed costs per year $300 000 Discount rate: 10% Tax Rate: 30% Do an analysis with cash flows of the project to determine the sensitivity of the project NPV with the following changes in the value drivers and provide your results in (a) relevant tables: Unit sales decrease by 10% Price per unit decreases by 10% Variable cost per unit increases 10% Cash fixed cost per year increases by 10% Page 4 of 6 HI5002 Finance For Business Group Assignment 2.5. Identify and discuss the systemic risks and un-systemic risks that may affect performance of the selected company Do a research about the systemic risks and un-systemic risks that may affect performance of the selected company. Tips: Notes to Financial Statement of a company often provide some information about the risks faced by the company. 2.6. Identify the dividend payout ratio and dividend policy Identify the dividend payout ratios of the selected company through the 3 year time frame. Discuss what dividend policy of the management of the company appear to be implemented and how it is changing or kept constant through three years. Explain any reason related to that particular dividend policies. 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) Marking criteria Marking criteria Weighting Description of the company 2% Calculation and analysis of selected performance ratios 8% Identify the marketable securities that are available in current assets 3% Perform a sensitivity analysis with data provided 7% Identify and discuss the systemic risks and un-systemic risks 3% Identify the dividend payout ratio and dividend policy 3% Recommendation letter 2% Presentation, structure and academic writing 2% TOTAL Weight 30% Page 5 of 6 HI5002 Finance For Business Group Assignment MARKING RUBRIC Task Excellent (80%-full marks given) Very Good (71-79% marks given) Good (61-70% marks given) Satisfactory (50-60% marks given) Unsatisfactory (0-49% 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. Adequate data and information provided to answer the questions; Reasonable research conducted; discussed based on sufficient research; Adequate references in proper referencing style. Satisfactorily meet the requirements but with limited data and information provided to answer the questions; Satisfactory research conducted; Limited references. No specific data and information provided to answer the questions; No research basis for analysis; Merely relying on secondary data from internet; No reference. 2, 4, and 6 Calculation and presentation are demonstrated clearly; Required financial ratios, calculations for sensitivity analysis and dividend payout ratios are derived, analyzed and justified with exemplary analysis that based on current issues and key factors; Indicate clearly dividend policy Comparison, implications and explanation are provided convincingly; Consistent 3 year trend analysis and properly justified for inclusions or exclusions. Very good demonstration of calculations; Required financial ratios, calculations for sensitivity analysis and dividend payout ratios are derived logically and well presented with relevant implications and explanation; Indicate clearly time line based dividend policy comparison, analysis and justification and assumptions are clear; Consistent 3 year analysis. Adequate demonstration of calculations; Required financial ratios, calculations for sensitivity analysis and dividend payout ratios are derived with relevant implications and explanation; Indicate clearly dividend policy comparison, analysis and justification and assumptions are clear; Relative consistent 3 year analysis. Satisfactorily addressing all the questions but calculations are limitedly demonstrated; Some of required financial ratios, calculations for sensitivity analysis and dividend payout ratios are provided inadequately; Providing limited trend analysis of financial ratios and dividend payout ratios; Providing limited analysis of dividend policy Inconsistent time period of analysis. Calculations are not demonstrated for the required financial ratios, calculations for sensitivity analysis and dividend payout ratios; Proving no explanation of implications of the variables; Providing no trend analysis of financial ratio and dividend payout ratios; Indicate no dividend policy; Single year analysis. Page 6 of 6 HI5002 Finance For Business Group Assignment 3 and 5 Indicating a clear and well-presented list of marketable securities and systemic and unsystemic risks that affect company performance with reliable data and proper analysis and justification; Analyzing and comparing dividend payout ratios and dividend policy of the company 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 of list of marketable securities and systemic and unsystemic risks that affect company performance on reliable data within proper time frame; Very good research conducted with relevant referencing. Relevant analysis, justification and presentation of the list of marketable securities and systemic and unsystemic risks that affect company performance based on reliable data within proper time frame; Adequate research conducted with relevant referencing. Indicating limited list of marketable securities and systemic and unsystemic risks that affect company performance; Limited analysis and explanation; Limited research conducted, inadequate referencing. No or inadequate information on marketable securities and systemic and unsystemic risks that affect company performance; No adequate comparison and explanation No relevant research and referencing. 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 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 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 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