AFIN3053: Advanced Corporate Finance - The Dividend Payout Policy - Accounting and Finance Assignment Help

Assignment Task:

PART 1: 
ASSIGNMENT TASKS 
In this assignment, you are required to conduct research and analysis of a public company listed on ASX. Your research will focus on the dividend payout policy. You will also study the franking credit system in Australia, which helps you understand the dividend tax payments when you become a shareholder in the future. 
You can find in the appendix a list of companies on the ASX that pay regular dividends.  Choose one company from the list and present an analysis report to address the following. 
Task 1: Company background 
Provide an introduction of the company you choose, such as its main business, corporate  structure, industry, market share and/or business strategies. The description should be your  own writing, not copied directly from the company’s website or financial reports. You  should also comment on the source of revenue/income and major risks faced by the  company. Lastly include a brief analysis of the company’s historical share price.  
Task 2: Dividend yield and payout policies 
Conduct a detailed analysis of the dividends in the past five years, from 1 July 2015 to 30  June 2020:  
• Calculate the annual dividend yields and dividend payout ratios of the firm in the last  five years (financial year from 1 July 2015 to 30 June 2020).  
• Explain how the ratios are calculated.
Determine whether there has been a major change in the company’s dividend policy in the  last five years, and discuss the possible reasons why there is/isn’t a major change. In  particular, under the current pandemic, most companies’ financial performance was worse  than expected. Comment specifically on how the most recent dividend payment was  affected, with reference to your analysis result. Is the influence likely to be long-term or  short-term? What do you think would happen to the future dividends and payout policies? 
Task 3: Dividend payment and price movement 
Conduct an analysis of the dividend payments of the company, using the data from 1 July  2018 to 30 June 2020: 
• How frequently does the company pay a regular dividend? 
• What is the amount of the dividend? 
• List the dividend payment timeline for each dividend, including the announcement  day, registration day, ex-dividend date and the payment day. Find the number of  trading days in between these dates and summarise your findings. 
• Examine the price movement at the time of the dividend announcement: how do  you interpret these price movements? 
• Examine the ex-dividend price movements: How big was the price change relative to  the dividend? Were they supposed to be the same? What are the possible reasons  for the difference between the two values? 
Task 4: Franking credit  
In Australia, dividends are paid with franking credit. Conduct a research and explain how the  franking credits will influence the tax payments of the shareholder. For your chosen  company, to what extent are the dividends franked? 
Using the data of the company’s most recent dividend, calculate the tax payments for the  following three shareholders. They all hold 10,000 shares of the company but have different  marginal tax rate: 
• Grace: marginal tax rate 45% 
• Nathan: marginal tax rate 32.5% 
• Yun: marginal tax rate 19% 
Summarise your findings and comment on the following quote: 
“The franking credit system eliminates double taxation, and the total tax payment  (corporate and personal) on $1 of pre-tax profit earned by the company is ultimately  determined by individual shareholder’s marginal tax rate”.
Presentation (15 marks) 
Format: 
Use section titles to answer the questions clearly and concisely. Although you are not  required to produce a business report (ie, executive summary is not necessary), your  assignment should be different from answering homework questions where you just list  numbers. You are expected to present your answers, including the numerical results and  justification/analysis results, in a coherent way.  
Make sure to edit your assignment before submitting. The font, size, alignment, line space  must be consistent throughout. You are expected to use tables and/or diagrams to  summarise or emphasise findings but the information in a table/diagram must be referred  to and clearly explained in-text.  
Additional instructions/comments: 
If you have questions about the assignment, ask them in the “assignment discussion forum”,  to make sure that the answer to the question is available to all. Teaching staff will not  answer any private question sent via email or message on ilearn to make it fair to everyone.  Try to join in the discussions on forum.  
Not all questions will be answered, such as “should I use P0 or P1?”, or “can I just add two  semi-annual dividends to get the annual dividend?”. These are the questions you have to  answer yourself, which is part of the assignment. 
Sometimes there is no single right answer, and it is your justification that counts. 
Pick a company that you are interested in. The company list contains companies from a  variety of industries in the ASX200, and you will be very familiar with many of these (for  example, the big 4 banks). Take this opportunity to know more about the company.  Research your company well and analyse with critical thinking. It is the ability that will help  you every single step in your finance career, and when you start trading yourself.

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