AMA GROUP LIMITED
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).
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:
Ø 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)
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:
Ø With higher than 20.00% of shareholdings. Based on this argument
you should classify a firm as a family or non-family company, and
Ø With higher than 5.00% of shareholdings.
3 marks
ii) Name the main people involved in the firm governance:
Ø The Chairman
Ø Board members
Ø 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
EBIT x NPAT x TA = NPAT
TA EBIT OE OE
Be sure that you have “proven” the above equation.
12 marks
ii) Explain what phenomenon is being “captured” by the variable TA/OE, and how
it is impacting on the relationship between Return on Assets and Return on
Owners Equity.
4 marks
iii) Explain why the ROE (EBIT) is significantly greater than or less than the ROA
(EBIT).
4 marks
4. Using the information from the ASX website: www.asx.com.au you must complete
the following tasks:
HI5002: Finance for Business, Assignment, Trim 3, 2017
4
i) Prepare a graph / chart for movements in the monthly share price over the last
two years for the company that you are investigating. Plot them against
movements in the All Ordinaries Index.
6 marks
ii) Write a report which compares movements in the companies’ share price index
to the All Ords Index. For instance, how closely correlated is the line with the
All Ords Index. Above or below? More or less volatile?
6 marks
5. Research via the internet or financial/business publications:
From research via the internet (using credible sources) or financial/business
publications, note any significant announcements which may have influenced the share
price of your company. These factors could include merger activities, divestitures,
changes in management’s earnings forecasts, changes in analysts’ forecasts, unusual
write-offs or abnormal items, macroeconomic factors, industry wide factors, significant
management changes, changes in the focus of the company, impact of competitors or
law suits etc. (Restrict the number of announcements to 5).
10 marks
6. Go online to http://www.reuters.com/finance/stocks/ and type in the code for your
company into the Search Stocks field and click on the magnifying glass button.
i) What is their calculated beta (β) for your company?
2 marks
ii) If the risk free rate is 4% and the market risk premium is 6%, use the Capital
Asset Pricing Model (CAPM) to calculate the required rate of return for the
companies’ shares.
4 marks
iii) Is the company you have chosen a “conservative” investment? Explain your
answer.
2 marks
7. Weighted Average Cost of Capital (WACC)
i) Using information from the latest company report for the company (i.e. interest
rate on their major source of long-term loans) and the estimated cost of equity
capital calculated (in part 6ii above), calculate the WACC for your company.
6 marks
ii) Explain the implications that a higher WACC has on management’s evaluation
on prospective investment projects.
4 marks
8. Consider the debt ratio for your company over the past two years:
i) Does it appear to be working towards the maintenance of a preferred optimal
capital structure? (i.e., does it appear to be “stable”?). Explain your answer.
4 marks
HI5002: Finance for Business, Assignment, Trim 3, 2017
5
ii) What have they done to adjust/amend their gearing ratio? Increase or repay
borrowings? Issue or buy back shares? Has the Director’s Report given any
information as to why they have made any adjustments?
4 marks
9. Dividend policy
Discuss what dividend policy of the management of the company appears to be
implemented. Explain any reason related to that particular dividend policy.
7 marks
10. Based on your analysis above, write a letter of recommendation to your client,
providing an explanation as why you would like to include this company 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.
10 marks
11. Formal structure and referencing.
5 marks
__________________
Total = 100 Marks
v
GENERAL REQUIREMENTS
· The report must have an academic written structure including an introduction,
body and conclusion.
· This assignment must be completed INDIVIDUALLY.
· Use numbers in the body of the report (e.g., “5. Research via the internet”).
· Provide an explanation on each of these issues (points) and explain how they
confirm the underlying theory, particularly related to the ownership, financial
measures, risk-return, capital structure and dividend policy.
· You are required to submit the assignment on Blackboard
· You are required to submit this assignment to Turnitin. Please ensure the similarity
score is under 15%.
Presentation of written work
• Please submit your assignment on time (Week 11).
• Please make sure that your name and surname (student ID), subject name,
and code and lecture’s name are written on the cover sheet of the submitted
assignment.
• You are required to use Times New Roman font, size 12 with 1.5 line
spacing.
• Please insert page numbers into your assignment.
• Please use 3 cm margins.
HI5002: Finance for Business, Assignment, Trim 3, 2017
6
• Submitted work should be your original work showing your creativity.
• Always keep an electronic copy until you have received the final grade for
the Unit.
A high standard of work is always expected, so poorly presented work may be
returned unmarked with a request to re-submit.
Rules apply for electronic submission. When you submit your assignment
electronically, please save the file as ‘Assessment Task 1.doc’.
Referencing
When writing your assignments, a reference must be included every time you use
someone else’s ideas or information. In-text referencing of ALL sources, whether
academic books, journal articles, newspaper articles, material from the Internet etc.,
must be cited in the main text of the assignment itself. Harvard Style referencing is
required for this assignment.
A reference must be included when you:
• Paraphrase (express someone else’s idea in your own words).
·Quote (express someone else’s idea in their exact words).
·Copy (financial statement, reproduce a diagram, graph or table from
someone else’s work).
Example:
Titman, S., Martin, T., Keown, A.J., Martin, J.D, Financial Management: principles
and applications, 7
th Edition, Pearson Education, Melbourne, 2016, Australia.
Halili, E, Saleh, A and Zeitun, R (2015), 'Governance and Long-Term Operating
Performance of Family and Non-Family Firms in Australia', Studies in
Economics and Finance, vol.32, no.4, pp.398-421.
History of ASX, viewed Nov 07 2017 , https://www.marketindex.com.au/history
Plagiarism, collusion and cheating
Holmes Institute regards most seriously any act of dishonesty in assessments such as
plagiarism, collusion, cheating, re-submission of previously marked work in different
units, examination misconduct and theft of other students’ work.
In short:
‘Plagiarism’ means to take and use another person’s ideas and pass these off as your
own by failing to give appropriate acknowledgement, that is, not indicating by
referencing that the ideas expressed are not your own.
‘Collusion’ (or unauthorised collaboration) means joint effort in preparing material
submitted for assessment, between students or others, except where this has not been
approved by the lecturer in charge of the unit.
HI5002: Finance for Business, Assignment, Trim 3, 2017
7
‘Cheating’ means to obtain an unfair advantage in an examination or in other written or
practical work required to be submitted or completed by a student for assessment. If the
passing off was done intentionally, you have cheated; if it was unintentional, the offence
you have committed is the academic misdemeanour of failing to reference a source
correctly.
Acts of dishonesty in assessment could result in penalties including failure in the Unit
and possible exclusion from Holmes Institute. If you are unsure about this, please speak
to the subject co-ordinator.
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:
Ø 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)
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:
Ø With higher than 20.00% of shareholdings. Based on this argument
you should classify a firm as a family or non-family company, and
Ø With higher than 5.00% of shareholdings.
3 marks
ii) Name the main people involved in the firm governance:
Ø The Chairman
Ø Board members
Ø 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
EBIT x NPAT x TA = NPAT
TA EBIT OE OE
Be sure that you have “proven” the above equation.
12 marks
ii) Explain what phenomenon is being “captured” by the variable TA/OE, and how
it is impacting on the relationship between Return on Assets and Return on
Owners Equity.
4 marks
iii) Explain why the ROE (EBIT) is significantly greater than or less than the ROA
(EBIT).
4 marks
4. Using the information from the ASX website: www.asx.com.au you must complete
the following tasks:
HI5002: Finance for Business, Assignment, Trim 3, 2017
4
i) Prepare a graph / chart for movements in the monthly share price over the last
two years for the company that you are investigating. Plot them against
movements in the All Ordinaries Index.
6 marks
ii) Write a report which compares movements in the companies’ share price index
to the All Ords Index. For instance, how closely correlated is the line with the
All Ords Index. Above or below? More or less volatile?
6 marks
5. Research via the internet or financial/business publications:
From research via the internet (using credible sources) or financial/business
publications, note any significant announcements which may have influenced the share
price of your company. These factors could include merger activities, divestitures,
changes in management’s earnings forecasts, changes in analysts’ forecasts, unusual
write-offs or abnormal items, macroeconomic factors, industry wide factors, significant
management changes, changes in the focus of the company, impact of competitors or
law suits etc. (Restrict the number of announcements to 5).
10 marks
6. Go online to http://www.reuters.com/finance/stocks/ and type in the code for your
company into the Search Stocks field and click on the magnifying glass button.
i) What is their calculated beta (β) for your company?
2 marks
ii) If the risk free rate is 4% and the market risk premium is 6%, use the Capital
Asset Pricing Model (CAPM) to calculate the required rate of return for the
companies’ shares.
4 marks
iii) Is the company you have chosen a “conservative” investment? Explain your
answer.
2 marks
7. Weighted Average Cost of Capital (WACC)
i) Using information from the latest company report for the company (i.e. interest
rate on their major source of long-term loans) and the estimated cost of equity
capital calculated (in part 6ii above), calculate the WACC for your company.
6 marks
ii) Explain the implications that a higher WACC has on management’s evaluation
on prospective investment projects.
4 marks
8. Consider the debt ratio for your company over the past two years:
i) Does it appear to be working towards the maintenance of a preferred optimal
capital structure? (i.e., does it appear to be “stable”?). Explain your answer.
4 marks
HI5002: Finance for Business, Assignment, Trim 3, 2017
5
ii) What have they done to adjust/amend their gearing ratio? Increase or repay
borrowings? Issue or buy back shares? Has the Director’s Report given any
information as to why they have made any adjustments?
4 marks
9. Dividend policy
Discuss what dividend policy of the management of the company appears to be
implemented. Explain any reason related to that particular dividend policy.
7 marks
10. Based on your analysis above, write a letter of recommendation to your client,
providing an explanation as why you would like to include this company 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.
10 marks
11. Formal structure and referencing.
5 marks
__________________
Total = 100 Marks
v
GENERAL REQUIREMENTS
· The report must have an academic written structure including an introduction,
body and conclusion.
· This assignment must be completed INDIVIDUALLY.
· Use numbers in the body of the report (e.g., “5. Research via the internet”).
· Provide an explanation on each of these issues (points) and explain how they
confirm the underlying theory, particularly related to the ownership, financial
measures, risk-return, capital structure and dividend policy.
· You are required to submit the assignment on Blackboard
· You are required to submit this assignment to Turnitin. Please ensure the similarity
score is under 15%.
Presentation of written work
• Please submit your assignment on time (Week 11).
• Please make sure that your name and surname (student ID), subject name,
and code and lecture’s name are written on the cover sheet of the submitted
assignment.
• You are required to use Times New Roman font, size 12 with 1.5 line
spacing.
• Please insert page numbers into your assignment.
• Please use 3 cm margins.
HI5002: Finance for Business, Assignment, Trim 3, 2017
6
• Submitted work should be your original work showing your creativity.
• Always keep an electronic copy until you have received the final grade for
the Unit.
A high standard of work is always expected, so poorly presented work may be
returned unmarked with a request to re-submit.
Rules apply for electronic submission. When you submit your assignment
electronically, please save the file as ‘Assessment Task 1.doc’.
Referencing
When writing your assignments, a reference must be included every time you use
someone else’s ideas or information. In-text referencing of ALL sources, whether
academic books, journal articles, newspaper articles, material from the Internet etc.,
must be cited in the main text of the assignment itself. Harvard Style referencing is
required for this assignment.
A reference must be included when you:
• Paraphrase (express someone else’s idea in your own words).
·Quote (express someone else’s idea in their exact words).
·Copy (financial statement, reproduce a diagram, graph or table from
someone else’s work).
Example:
Titman, S., Martin, T., Keown, A.J., Martin, J.D, Financial Management: principles
and applications, 7
th Edition, Pearson Education, Melbourne, 2016, Australia.
Halili, E, Saleh, A and Zeitun, R (2015), 'Governance and Long-Term Operating
Performance of Family and Non-Family Firms in Australia', Studies in
Economics and Finance, vol.32, no.4, pp.398-421.
History of ASX, viewed Nov 07 2017 , https://www.marketindex.com.au/history
Plagiarism, collusion and cheating
Holmes Institute regards most seriously any act of dishonesty in assessments such as
plagiarism, collusion, cheating, re-submission of previously marked work in different
units, examination misconduct and theft of other students’ work.
In short:
‘Plagiarism’ means to take and use another person’s ideas and pass these off as your
own by failing to give appropriate acknowledgement, that is, not indicating by
referencing that the ideas expressed are not your own.
‘Collusion’ (or unauthorised collaboration) means joint effort in preparing material
submitted for assessment, between students or others, except where this has not been
approved by the lecturer in charge of the unit.
HI5002: Finance for Business, Assignment, Trim 3, 2017
7
‘Cheating’ means to obtain an unfair advantage in an examination or in other written or
practical work required to be submitted or completed by a student for assessment. If the
passing off was done intentionally, you have cheated; if it was unintentional, the offence
you have committed is the academic misdemeanour of failing to reference a source
correctly.
Acts of dishonesty in assessment could result in penalties including failure in the Unit
and possible exclusion from Holmes Institute. If you are unsure about this, please speak
to the subject co-ordinator.
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