HI5002 Company Performance Analysis
This is a group assignment for the Finance for Business unit (HI5002) at Holmes Institute during Trimester T1 2019. The purpose of the assessment is to analyse the financial performance of a selected company on the ASX and provide financial and investment advice to a wealthy investor. The assignment requires the group to undertake a comprehensive examination of the firm’s financial performance based on updated financial statements. The group must obtain copies of Annual Reports including Income Statements, Balance Sheets, and Statement of Changes in Equity, Cash Flows Statements and Notes for three financial years (2015-2016, 2016-2017, and 2017-2018) from the ASX website using the firm’s code. The assignment should cover the following areas: 1) description of operation and comparative advantages of the selected company, 2) trend analysis with two groups of financial ratios, 3) marketable securities available in current assets of the company, 4) sensitivity analysis, 5) systemic risks and un-systemic risks that may affect the performance of the selected company, 6) dividend payout ratio and dividend policy, and 7) recommendation letter. The final submission of the assignment must be made on Blackboard by the due date, along with a completed Assignment Cover Page. The assignment must be in MS Word format with appropriate section headings, page numbers, and references listed in Harvard referencing style. The word limit is 3,000 words, and the weight of the assignment is 30% of the total assessments.
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: ====> Company Performance Analysis in finance for business
Company performance analysis is a critical aspect of finance for business. It involves evaluating a company’s financial health and its ability to generate profits, pay debts, and meet its financial obligations.
There are several key metrics that analysts use to assess a company’s financial performance, including:
Revenue: This is the total amount of money a company earns from its sales. Revenue growth is an important indicator of a company’s financial health.
Profit Margin: This measures a company’s profitability by calculating the percentage of revenue that is left after deducting all expenses, including taxes and interest.
Return on Equity (ROE): This is a measure of how effectively a company is using shareholder equity to generate profits.
Debt-to-Equity Ratio: This measures the amount of debt a company has relative to its equity. A higher debt-to-equity ratio indicates that a company is more heavily indebted.
Price-to-Earnings (P/E) Ratio: This measures the price of a company’s stock relative to its earnings per share. A higher P/E ratio indicates that investors are willing to pay more for each dollar of earnings.
In addition to these metrics, analysts may also consider a company’s cash flow, asset turnover, and other financial ratios when evaluating its performance.
Overall, conducting a thorough analysis of a company’s financial performance is crucial for making informed investment decisions, identifying potential risks, and ensuring the long-term success of a business.
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.
HI5002 Finance for Business Group Assignment
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.
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.
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, 20162017 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)
Assignment Structure and Details of Assignment Tasks
Assignment structure and assignment tasks should be as the following:
(no more than 200 words)
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%
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.
Summarize the outcomes of your works (not more than 300 words)
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%