ACCT7101: Financial Report Analysis and Business Decision Making - Accounting Assignment Help

Assignment Task:

Aims of this assignment  

This assignment aims to develop your  

a) ability to understand and analyse financial reports,  

b) skills and knowledge to compare financial information of two listed companies, and 

c) capacity to evaluate financial information and synthesise financial and non-financial information to make business decisions. 

This assignment is to be completed on an individual basis. 

Your submitted assignment must be entirely your own work. You may seek guidance from  lecturers, tutors or fellow students to clarify concepts or the application of concepts to the financial statements in general. In addition, please look at the "Frequently Asked Questions  (FAQs)" document uploaded on Blackboard, which may have the clarifications you need.  Advice that is clearly associated with the assignment tasks cannot be sought or provided.  

Plagiarism is the submission of work or ideas which are not your own but for which academic  credit is claimed. It is important that you review the University’s policy on plagiarism. The  originality of your assignment will be assessed by the Turn-it-in system. Information from the  course profile relating to plagiarism is reproduced below.

Assignment overview  

You have been randomly assigned two ASX listed companies that operate in the same  industry (Company A and Company B). See the file “Companies allocated to students” under  the Assessment tab on Blackboard to find your companies.  

Obtain each of your company’s annual reports for the 2019, 2018, and 2017 financial years  from the company’s website or www.asx.com.au. The annual reports contain the chairperson’s  report, directors’ report and financial statements (Statement of Financial Position, Statement  of Profit or Loss, Statement of Changes in Equity, Statement of Cash Flows and Notes to the  Financial Statements). The financial statements include comparative figures from the prior  year, therefore, you will have data for three financial years: 2019, 2018 and 2017.  

Research the financial press and other sources of available information to familiarise yourself  with the industry in which your allocated companies operate and with company specific factors  that may have or will affect either company’s performance.  

Two business scenarios are described below. Scenario 1 relates to Company A only and  Scenario 2 involves Company A and Company B. Knowledge of the industry, company specific  context and their financial data will be important inputs that inform the decision that you  recommend in relation to each scenario.  

Scenario 1  

Company A has submitted an application to the Bank of Brisbane for a loan. The amount of  the loan is equal to 40% of total shareholders’ equity at the end of the 2019 financial year. The  purpose of the loan is to fund expansion of Company A’s operating capacity. The loan term  sought is 10 years and the loan would be secured against company’s property.  

Assume you are a branch lending officer of the Bank of Brisbane who assesses loan  applications. The lending officer must make a recommendation to the head office lending  manager advising whether the loan application from Company A should be accepted or  rejected.  

Scenario 2  

Both Company A and Company B have offered St. Lucia Investments Limited, a listed  investment company (LIC), a private placement of ordinary shares. The amount of share offer  is equal to 30% of total shareholders’ equity of each company at the end of the 2019 financial  year. St. Lucia Investments Ltd can afford either of the two private placements. The purpose  of an increase in equity for each company is to raise funds to finance an expansion of operating  capacity. 

Assume you are an investment manager at St. Lucia Investments Ltd who evaluates private equity placements. St. Lucia Investments Ltd has limited funds available for investing  decisions. The manager must make a recommendation to the board of directors advising  whether to accept Company A’s offer to sell to St. Lucia Investments a new issue of ordinary  shares and reject Company B’s offer, or accept Company B’s offer to sell to St. Lucia Investments a new issue of ordinary shares and reject Company A’s offer or alternatively reject  both offers.