HC2091: Finance for Business

1.Description of the companies

Prepare a brief description of the selected company, outlining the core activities, competitive advantages, and the market in which it operates within and any factors in the company’s history which you consider help present a “picture” of your chosen company.

5 marks

2.Calculation and analysis of financial ratios

Using financial data obtained from current financial statements of your selected company for the given 2 years to calculate the following ratios and present them in relevant charts or tables. Provide analysis on the company performance and justify your opinions using the data:

- Liquidity ratios

- Profitability ratios

- Market value ratios

5 marks

3.Graphs and comparison of share price movements

Using the information from the ASX website: www.asx.com.au to prepare one or more graph displaying movements in the monthly share prices over the last two years for the chosen company that you are investigating.

Providing an analysis to compare the movements in the companies’ share prices to the All Ordinaries Index. For instance, whether your selected company price trend is more or less volatile compared to the index? How closely it is correlated with the All Ordinaries Index, above or below the index?

Do a research to identify the factors that affected the share price movements of the company within 2 years.

5 marks

4. Calculation cost of equity

1. 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.

4

What is the calculated beta (β) for your company?

If the risk free rate is 6 % and the market risk premium is 7 %, use the Capital Asset Pricing Model (CAPM) (SML approach) to calculate the required rate of return for the company’s shares.

5 marks

5. Identify the capital structure

2. Identify and discuss the capital structure of the company by calculation capital structure ratios and weights of debts and equity capital. Comment on any change in the company’s capital structure through years. Support your comments and analysis by further research.

5 marks 6. Consulting Report

After completion of your analysis, you need to present a well-structured report to your client using appropriate style and language. Structure of the Report: will include: 1. Title 2. Introduction 3. Table of Content 4. Body (in text citation: paraphrased or quotation to support your arguments) 5. Conclusion 6. Recommendation 7. Reference lists (Harvard Style)

5 marks