HI5002: Finance for Business - Company Performance Analysis - Accounting Assessment Answer

Assignment Tasks
This assignment task is a written report and analysis of the financial performance of one selected listed company 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 a firm’s financial performance based on update financial statements of the selected company.

I. Introduction
Briefly introduction of you work: the purpose of assignment, the selected company, your findings and structure of your assignment

II. Financial Analysis of selected company
2.1. Description of one key product or service provided by the company Prepare a brief description of one key product or area of service offered by the selected company. Describe and comment on the importance of the product or service in maintaining the comparative advantages of the company.
2.2. Calculation and analysis of selected 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 requests a comprehensive analysis of two groups of financial ratios, including liquidity and capital structure of the company. Choose the relevant financial ratios for your analysis to meet your client’s requirement. Do a research to explain the trend of financial ratios of the selected company
through 3 years to your client. You need to provide charts and/or tables for analysis and justification.
2.3. Perform a non-current asset analysis: Analyse the non-current assets of the company through 3 years. Identify the depreciation method applied by the company and discuss how depreciation is treated to identify operating cash flow of a project involving buying a long term asset. Tips: try to do a little research about depreciation and CAPEX to enrich your comments and analysis.
2.4. Perform a scenario analysis with data provided
Assume that your selected company is considering a potential project with a new product that is expected to sell for an average price of $25 per unit and the company expects it can sell 450 000 unit per year at this price for a period of 4 years. Launching this project will require purchase of a $2 500 000 equipment that has residual value in four years of $500 000 and adding $ 800 000 in working capital which is expected to be fully retrieved at the end of the project. Other information
is available below:
Depreciation method: straight line
Variable cost per unit: $15
Cash fixed costs per year $450 000
Discount rate: 12%
Tax Rate: 30%
Do a scenario analysis with cash flows of the assumed project to determine the sensitivity of the project’s NPV to different scenarios that are defined in terms of the estimated values for each of the project’s value drivers. Please work on two scenarios corresponding to the worst- and best- case outcomes for the project. You need to provide your results in (a) relevant tables:

2.5. Identify and discuss any latest share or bond issuance by the selected company:
Do a research about the latest share or bond issuance taken by the company. The following questions should be addressed: when was the issuance, what was the amount of issuance, was it a private placement or public offering, who were the underwriter and trust bank for this issuance, what is the type of underwriting or selling arrangement, how much was the floating cost of the issuance, was it a successful issuance or not? Discuss on how the securities issuance affect the capital structure of the company
2.6. Calculate and discuss the PE ratios and share price movement of the selected company through 3 years Identify net profit and compute the PE ratio of the selected company through the 3 year time frame.

Go to ASX website to find out the share price data of the company for the recent 3 years, construct a graph where you display the PE movement and share price movement in the same arena and time frame. Comment on any convergence and divergence between the trend of the company’s profit and share price. Do further research to explain any case where there is a divergence between profitability and share price.

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