HI5002: Finance for Business

HI5002 Finance for Business Group Assignment T2 2018

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HI5002: Finance for Business

Trimester 2 2018

Group Assignment

Assessment Value: 30%

Due Date: Sunday 23:59 pm, Week 10

Group: 2 - 4 students

Length: Min 3,000 words

INSTRUCTIONS

Students are required to form a group 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 corporate financial

performance. Your group is strongly advised to reference professional websites, journal

articles and text books in this assignment (case study).

Tasks

This assessment task is a written report and analysis of the financial performance of two

selected listed companies 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 corporate financial performance based on update financial statements of

the chosen companies.

Group Arrangement

This assignment must be completed IN Group. Each group can be from 2 to maximum 4

student members. Each group will choose two companies and once the companies has

been chosen, the other group cannot choose the same two companies. First come first

served rule applies here, it means you need to form your group, choose two companies

from the list of ASX and register them with your lecturer as soon as possible. Indicate

your group leader when registering your group with your lecturer for assignment

administration and submission. Once your lecturer registers your chosen companies,

they cannot be chosen by any other group. Your lecturer then will put your group on

Black Board to enable you to interact and discuss on the issues of your group assignment

using Black Board environment. However, face to face meeting, discussion and other

methods of communication are needed to ensure quality of group work. Each group

needs to have your own arrangement so that all the group members will contribute

equally in the group work. If not, a Contribution Statement, which clearly indicated

individual contribution (in terms of percentage) of each member, should be submitted as

a separate item in your assignment. Your individual contribution then will be assessed

based on contribution statement to avoid any free riders.

HI5002 Finance for Business Group Assignment T2 2018

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Submission

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.

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.

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 self-check report to be available for your viewing.

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.

Deadlines

Registration of groups and chosen companies: 5 pm Friday, Week 4

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.

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 two large companies

operating under the same industry in Australia (the industry you think will have the most

promising future for investment) then evaluate and compare them. Finally make a

recommendation through your Report to the investor which one is more superior

fundamentally.

Create your group’s “business name” under which your group will be providing the

financial advisory services. Choose two listed companies that your group will

investigate/analyse for the purposes of possible recommendation to your client. The group

should obtain all information about the selected companies from this web site:

www.asx.com.au.

Required:

Obtain copies of Financial Statements including Income Statements, Balance Sheets,

and Statement of Changes in Equity, Cash Flows Statements and Notes for three (3)

financial year 2014-2015, 2015-2016 and 2016-2017. Your group can download these

documents from the suggested web site using the firm’s code (example, BHP- for BHP

HI5002 Finance for Business Group Assignment T2 2018

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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 two chosen companies.

2 Calculation and comparison of performance ratios of the two companies

3 Analysis of monthly share prices movements of the two companies within 3 years

4 Identify any significant factors which may have influenced the share price of your chosen

companies during the time frame.

5 Calculation of Beta values and expected Rates of Return using the CAPM of the two

chosen companies

6 Identify and compare dividend policy of the two chosen companies

7

Letter Recommendation

Final Submission of Complete Assignment on Blackboard (Week 10)

Details of financial analysis tasks:

1. Description of operation and comparative advantages of the two chosen companies: Prepare a brief description of the chosen companies, outlining the core activities, the

market(s) in which they operate within and any factors in the companies’ history which

you consider help present the pictures of your companies. Identify and compare their

comparative advantages.

2 marks

2. Calculation and comparison of 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 is strongly

interested in the three groups of ratios:

- Liquidity ratios;

- Profitability ratios

- Capital structure (leverage) ratios

You need to provide charts and/or tables for analysis and justification.

6 marks

HI5002 Finance for Business Group Assignment T2 2018

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3. Analysis of monthly share prices movements: Using the information from the ASX website, complete the following tasks:

- Prepare graphs for movements in the monthly share price over the last three years for the companies that you are investigating. Plot them against movements in the All

Ordinaries Index.

2 marks

- Write a report which compares movements in the two selected companies’ share prices to each other and to the All Ords Index. For instance, how are the prices of the

two selected moving? In the same trend or diverse trends? How closely are they

correlated with the All Ords Index. Above or below? More or less volatile?

2 marks

4. Significant factors which may have influenced the share price: Research via the internet or financial/business publications:

From research via the internet (using credible sources) or financial/business publications,

identify at least 2 significant announcements which may have influenced the share price

of your selected companies within 3 years. These factors could include merger or

acquisitions, positive or negative earnings forecasts, unusual write-offs or abnormal items,

macroeconomic factors, industry wide factors, significant management changes, changes

in the focus of the companies, impact of competitors or law suits etc.

4 marks

5. Calculation of beta values and expected Rates of Return using the CAPM: Go online to http://www.reuters.com/finance/stocks/ and type in the code for your companies into

the Search Stocks field and click on the magnifying glass button.

- What is their calculated beta (β) for your companies?

2 mark

- If the risk free rate is 5% 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.

2 marks

6. Dividend policies:

Discuss what dividend policies appear to be implemented by the companies’ management

boards. Explain any reason related to that particular dividend policies.

4 marks

7. 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.

4 marks

HI5002 Finance for Business Group Assignment T2 2018

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8. Presentation, structure and academic writing 2 marks

__________________

Total = 30 marks

Academic Writing, Referencing and Plagiarism

Presentation of written work

The report must have an academic written structure including an introduction, body and

conclusion.

▪ Use numbers to structure body of the report (e.g., “2.5. 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, and capital structure and dividend policy.

▪ You are required to use Times New Roman font, size 12 with 1.5 lines spacing. ▪ Please insert page numbers into your assignment and use 3 cm margins.

A high standard of work is always expected, so poorly presented work may be returned

unmarked with a request to re-submit.

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, 7th 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:

HI5002 Finance for Business Group Assignment T2 2018

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‘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.

‘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.

CRITERIA FOR GROUP ASSIGNMENT ASSESSMENT

Content Unsatisfactory

(0-49% marks given)

Limited

Demonstration

(50-60% marks

given)

Proficient

(61-79% marks

given)

Exemplary

(80%-full marks

given)

1 and 4 No specific data and

information provided to answer the

questions;

No research basis for

analysis;

Merely relying on

secondary data from

internet;

No reference.

Limited data and

information provided

to answer the

questions;

Limited research

conducted;

Limited references;

Adequate data and

information provided

to answer the

questions;

Reasonable research

conducted;

Issues are discussed

based on sufficient

research and in

relation to each other;

Adequate references

in proper referencing

style;

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.

2 and 5 Calculations are not

demonstrated for the

required financial

ratios

Proving no

explanation of

implications of the

variables;

Providing no

comparison of

financial ratios

Single year analysis.

Calculations are

limitedly

demonstrated;

Financial ratios are

provided

inadequately;

Providing limited

analysis and

comparison of the

ratios;

Inconsistent time

period of analysis.

Adequate

demonstration of

calculations;

Financial ratios are

derived with relevant

implications and

explanation;

Comparison, analysis

and Justification and

assumptions are clear;

Consistent 3 year

analysis.

Calculation and

presentation are

demonstrated clearly;

Financial ratios are

derived, compared and

justified with

exemplary analysis

that based on current

issues and key factors;

Comparison,

Implications and

explanation are

provided convincingly

Consistent 3 year

analysis and properly

HI5002 Finance for Business Group Assignment T2 2018

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justified for inclusions

or exclusions.

3 and 6 Providing no graphs of

share price and index

price,

No or inadequate

information on

dividend policy and

factors that may affect

share price

No adequate

comparison and

explanation of trends,

dividend policy and

factors affecting share

price

No relevant research

and referencing

Providing graphs of

share price and index

but not in relevant

time frame;

Indicating limited

number of factors

affecting share price

Limited analysis,

comparison and

explanation of price

trends and dividend

policy and factor

affecting share prices;

Limited research

conducted, inadequate

referencing

Providing adequate

graphs of share price

and index, list of

relevant factors that

may affect share price

Indicating clearly

dividend policy

Relevant analysis,

comparison and

justification of price

trend and dividend

policy based on

reliable data within

proper time frame;

Adequate research

conducted with

relevant referencing

Providing well

established graphs of

share price and price

index, which shows

clearly price trends in

the given time frame

Indicating a list of

factors that affect

share price with

reliable data and

proper justification

Analyzing and

comparing price

trends and dividend

policy of the

companies with

exceptional good

justification and data

based analysis

Outstanding research

is conducted with

wide based sources

and proper referencing

7 and 8

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

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

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

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.