HC2091 Business Finance HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION Assessment Details and Submission Guidelines Trimester T3 2019 Unit Code HC2091 Unit Title Business Finance Assessment Type 3...

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subject business financeSelected company name is Pensana metals ltd
please ensure a proper assessment structure with index, paragraphing, minimum 10 reference and couple pictures and intext citation



HC2091 Business Finance HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION Assessment Details and Submission Guidelines Trimester T3 2019 Unit Code HC2091 Unit Title Business Finance Assessment Type 3 Assessment Title Group Assignment Purpose of the assessment (with ULO Mapping) Students are required to form a group of 3 to 4 members (Minimum of 3 and Maximum of 4) 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). Weight 25 % of the total assessments Total Marks 25 Word limit Not more than 2500 words Due Date Registration of groups and chosen companies: 5 pm Friday, Week 7 Final Submission of Group Assignment: Midnight (23:59 pm.) Sunday, Week 10 Late submission incurs penalties of 5 (five) % of the assessment value per calendar day unless an extension and/or special consideration has been granted by the lecturer prior to the assessment deadline. Page 2 of 7 HC2091 Business Finance Submission Guidelines • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page. 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. • 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. 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. • 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. Students need to read and understand the Holmes Academic Integrity Policy before they start any assessment. (Please refer section 4.3 Guide to Academic Integrity p27 of the Holmes Student Handbook). • 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 3 of 7 HC2091 Business Finance ASSIGNMENT SPECIFICATIONS ASSIGNMENT TASK 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 prospective investor (No restriction to choose one of the company which you used for your individual assignment). This assignment requires to undertake an examination of a firm’s financial performance based on most recent financial statements of the selected company mainly focusing on  Liquidity (based on liquidity ratios)  Capital Structure (based on capital structure ratios) You are required to obtain the relevant information from chosen company annual reports and company web site. You can access the company web site via www.asx.com.au. To download the relevant please referee the Company code in ASX (see the following examples) ABP Abacus Property Group APZ Aspen Group Limited AGL AGL Energy Limited WES Wesfarmers Ltd WOW Woolworths Group Ltd Note: The above table gives you only examples and you are not asked to choose them for the analysis. ASSIGNMENT STRUCTURE Assignment structure should be as follows: Title of the assignment Example: Analysis of ABX Company Financial Performance Group details and the contribution of each group member You need to give full details of all the group members in your group including their names and student IDs. Please make sure all the names written in the assignment are matched with the group created in Blackboard. To ensure that all students participate equitably in the group assignment and that students are responsible for the academic integrity of all components of the assignment. You need to complete the following table which identifies which student/students are responsible for the various sections of the assignment. Assignment Section Student/Students The above table needs to be completed and submitted with the assignment as it is a compulsory component required before any grading is undertaken. http://www.asx.com.au/ http://www.asx.com.au/ http://www.asx.com.au/ http://www.asx.com.au/ http://www.asx.com.au/ http://www.asx.com.au/ http://www.asx.com.au/ Page 4 of 7 HC2091 Business Finance CONTENT OF THE ASSIGNMENT 1. INTRODUCTION The introduction should briefly explain the purpose of the assignment, the selected company for analysis and the type of analysis. 2. FINANCIAL PERFORMANCE ANALYSIS OF THE SELECTED COMPANY a. Description of the company Prepare a brief description of the selected company (when they started, key milestones etc.), outlining the core activities (major business, key products) competitive advantages, and the market in which it operates (in which industry sector they are in ASZX, do they export their products and services or whether they serve only the local market). b. Analysis of company net working capital position Based on balance sheet information and the notes to the financial statements,  Analyse the working capital position of the company over minimum of past 2 years (composition of current assets and current liabilities, changes in CA and CL, any significant decision about working capital management etc.)  Calculate the networking capital and give your opinion on the net working capital position of the company. c. Calculation of cost of equity of the firm Based on the data of just paid dividend (D0), current share price (collect this information from the annual report) and assumption that the company will maintain a constant dividend growth rate of 3% from now on, calculate the cost of equity of your selected company, using constant dividend growth model. d. Analysis of company liquidity and capital structure using liquidity and capital structure ratios Using data from financial statements of your selected company, calculate the following ratios for past 4 years and present them using suitable charts. Discuss the implications of the identified trends for company performance.  Liquidity ratio (calculate minimum of 2 liquidity ratios over 4 years and analyse them using suitable charts)  Capital Structure ratio (calculate minimum of 2 capital structure ratios over 4 years and analyse them using suitable charts) 3. Conclusion Based on the analysis in section 2, provide brief conclusion on the company financial performance and make a recommendation for prospective investors. 4. Reference Follow the Holmes reference guideline and give your reference details Note: You need to show all the calculation in an appendix All the graphs and tables should be correctly label Graphs should have clear information (legends, axis title etc.) Page 5 of 7 HC2091 Business Finance Marking criteria Marking criteria Weighting 1 Introduction 2 mark 2 Description of the company including their core business activities 4 marks 3 Analysis of company net working capital position Comparison of working capital position Calculation of net working capital over the past 2 years 4 marks 4 Calculation of cost of equity of the firm Identification of correct information on dividend and current share price from firm’s annual reports Calculation of cost of equity based on identified information and the given growth rate 4 marks 5 Analysis of company liquidity and capital structure using liquidity and capital structure ratios Calculation of liquidity ratios and presenting them using suitable graphs Analysis of company liquidity position based on the above calculation Calculation of capital structure ratios and presenting them using suitable graphs Analysis of company capital structure based on the above calculation 4 marks 6 Suitable recommendation and conclusion which is based on the overall analysis 4 marks 7 Presentation, structure and academic writing 3 marks Total marks 25 marks TOTAL Weight 25 % Assessment Feedback to the Student: Page 6 of 7 HC2091 Business Finance Marking Rubric Content Excellent Very Good Good Satisfactory Unsatisfactory (80%-full marks given) (70-79% marks given) (61-69% marks given) (50-60% marks given) (0-49% marks given) Introduction Outstanding introduction addressing the key purpose of the assignment and the selection of the company. Very Good introduction addressing the key purpose of the assignment and the selection of the company. Good introduction addressing the key purpose of the assignment and the selection of the company. Satisfactory introduction addressing the key purpose of the assignment and the selection of the company. No reasonable explanation on the purpose of the assignment or the company selection. Description of the Company Outstanding analysis of the selected company, targeting their core business and competitive advantages. Very good analysis of the selected company, targeting their core business and competitive advantages. Good analysis of the selected company targeting their core business and competitive advantages. Satisfactory analysis of the selected company targeting their core business and competitive advantages. No sufficient analysis on the selected company targeting their core business and competitive advantages. Analysis of company net working capital position Outstanding analysis of company net working capital with accurate calculation and suitable
Answered Same DayJan 20, 2021HC2091

Answer To: HC2091 Business Finance HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION Assessment Details and...

Kushal answered on Jan 28 2021
139 Votes
Financial Analysis of Pensana Metals Limited (PM8.AX)
Contents
Company Description-    1
Important parameters    1
Value Chain Analysis    4
Liquidity Ratios (2019)-    4
Solvency Ratios (2019)–    5
Profitability Ratios-    5
Risk faced by the industry and company    7
Stock Recommendation-    7
References –    8
Company Description-
Pensana Metals Limited, formerly Rift Valley Resources Limited, is a mineral exploration firm operated in the Australia. The major
components of the Company is exploration for metals in Tanzania and rare earths, gold and copper in Africa. This Miyabi site is located in the Africa region. The firm has been engaged into the exploration of the minerals which include the major precious metals like platinum, gold, silver and others. This is a capital intensive business and the firm has been lately not performing well and the operations have not been profitable due to very high fixed costs that the firm has to incur and the revenue has been more or less flat due to the very low success rate. AS compared to the competitors the firm has been performing very ordinarily which has been rewarded by the share markets very poorly. The firm has been operating in the multiple regions, primarily located in the Australia, operates majorly in the African countries.
Important parameters
1. Activities generating cash for the firm
Operating cash flows more or less focus majorly on the operations of the mining where the mines of Gold and other rare earth metals are explored and selling these raw minerals to the industries comprise of the majority of the cash flows.
2. Working capital Assessment
As far as the working capital of the firm is concerned, the firm has been constantly growing their working capital year over year. The current assets which include the cash, account receivables, the inventories account for 8.35 AUD millions in 2019 as compared to 6 million AUD in the year of 2018.
As far as the current liabilities are concerned, the firm has been witnessing a constant decrease in the current liabilities and hence, this decrease in the current liabilities is a good sign for the firm. It has decreased to 0.65 AUD millions from the 0.77 AUD millions.
If we look at the overall working capital, it has been on a steady rise and it will see the increase if we move forward which could be a negative sign as well.
3. Revenue components -
Sales of the raw metals and minerals
4. Operational Effectiveness
As far as the different cost pullers are concerned, the biggest cost driver in the value chain is the expenses incurred during the exploration and its processing costs to ensure that this could be sold to the other firms in a condition where they can use the same.
5. Free Cash flow to the firm –
· Free Cash Flow to Firm – This method (Brush, T.H., Bromiley, P. and Hendrickx, M.) is used for the valuation of the firm operating assets. For this we will need to calculate the free cash flow and this can be arrived using the multiple methods as follows -
FCFF = CFO + Interest * (1- Tax rate)– Capital Expenditure
· Discount Rate = WACC
· Since, we are calculating the free cash flows to the FIRM; we need to calculate the WACC using the market value of debt and equity, and Cost of debt and equity to discount the cash flows.
· Cost of debt = The cost at which the firm is issuing the debt or taking loans from institutes
· Generally, investors tend to use the capital asset pricing model for the calculations of the cost of equity where the investors are awarded the return equivalent to the cost of equity based on the additional risk born by the investors over and above investing in the markets. Beta is the estimate of the riskiness of the firm.
· WACC is calculated based on the cost of equity and cost of debt and the weights of the debt and equity.
· Ke = Rf + Beta ( Rm-Rf)
· Free Cash flow to Equity - This method is used for the valuation of the firm operating assets. For this we will need to calculate the free cash flow and this can be arrived using the multiple methods as follows -
· Discount Rate = Cost of Equity
· The residual income belongs to the shareholders only. Hence, Cost of equity is used for the discounting.
FCFF for Pensana – For the Pensana Metals Limited, the firm has been EITDA negative and the cash flow to the firm has been negative.
Rf = 1.13% (Source- Thomson Reuters)
Rm = 7% (Source- Analysis)
Beta = 0.93 (Source- Thomson Reuters)
Cost of equity = 1.13% + 0.93 ( 7 -1.13)% = 6.59%
The firm has not been raising any...
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