200910: Financing Enterprises Assignment 2: Numerical problem-solving Word limit: 1200–1500 words (excluding reference list and appendix) Weighting: 20% Due date: 5pm AEST Monday 17 August (Week 10)...

Assignment 2: Numerical problem-solving

Word limit:1200–1500 words (excluding reference list and appendix)

Weighting:20%

Due date:5pm AEST Monday 17 August (Week 10)

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Assignment overview

This assignment is a Mandatory Submission which means that in order to pass this unit of study, you must submit this assignment.

This individual assignment requires the analysis of the financial position and performance of the assigned companies for two financial years (2017 and 2018). For the sake of this assignment, imagine you are a financial analyst working for the Elite Banking Corporation. You need to determine whether the companies are eligible for a loan from the bank. This involves answering the following five questions in your own words (i.e. do not simply 'cut and paste' information from the annual report or another relevant source). You must apply critical thinking concepts when explaining and justifying your choices.

This assignment supportsunit learning outcomes 2 and 4.

Assignment details

To meet the requirements of this assignment, work your way through the following steps:

Step 1: Access the data and calculate the ratios

Go to e-resources on WSU Library and select 'D' from the alphabetical list. Once selected, pickDatAnalysis Premiumdatabase. Once you are in the database, go to the search engine on the top right corner and enter each of the following company's ASX code:

·Farm Pride Foods Limited (ASX code: FRM).

·Select Harvests Limited (ASX code: SHV).

Watch the videoHow to obtain data for your assignment(Links to an external site.)by Dr Walid Bakry (2018), from which you can learn how to obtain the data for the ratios and calculate the ratios.Note:An example of another company is used in this video, however, you will still follow the steps discussed.

Once you've watched the video, complete the following steps:

1.For each company, the displayed page summarises general information about the company—including the sector and industry it operates within, total market capitalisation of the firm, latest closing share price and so on. Both firms are operating in the same sector and industry group (food, beverage and tobacco) and same industry (food products).

2.On the left-hand side, select 'Financial Data'. The displayed page shows annual and interim information for your assigned company (in the view bar, make sure you choose annual and not interim data). On this page under the heading Financial data is a menu with tabs to select. You will see the first three tabs that display the company's summarisedannual financial statements(Profit and loss, balance sheet and cash flow statement). Additional information, such as the number of shares outstanding at end of period, is also given in these statements for different years.

3.The figures shown on the 'Financial Data' page are rounded figures and are not to be used in the calculation of ratios. To access the raw figures, select the relevant time period from the ‘year range’ drop down bars, then select ‘go’. Once the figures appear, select download spreadsheet. This will download an Excel file that contains all the relevant financial statements i.e. profit and loss statement, balance sheet and so on.

4.In the downloaded Excel file, you will see a sheet titled 'Revenue Expense'. This is where you can locate the cost of goods sold (COGS) for each company for the different years. For some companies, the COGS is the 'materials and other input costs'.

5.For more detailed information about how to obtain the data required for your individual assignment, please watch the 'How to obtain data for the individual assignment' video again.

Step 2: Answer the following five questions

Based on the information you obtained for the companies, answer all of the following questions.

Question 1 (10%)

Analyse the sources of finance for each of the two companies in 2018, as compared to 2017. Use two capital structure ratios to support your answer and provide an explanation regarding the changes in the composition of the sources of finance for each enterprise.

Note:Ensure that you analyse in this question—don't just describe the ratio values.

Question 2 (15%)

For each of the two companies, analyse their ability to successfully manage their operating and total expenses in 2018, as compared to 2017. Use two margin ratios to support your answer and explain any change in the ability of each company to control costs.

Note:Ensure that you analyse in this question—don't just describe the ratio values.

Question 3 (10%)

Analyse the ability of management to manage their total assets for each of the two companies in 2018, as compared to 2017. Use one asset management efficiency ratios to support your answer and explain any change in each companies’ ability to use their total assets to generate sales.

Note:Ensure that you analyse in this question—don't just describe the ratio values.

Question 4 (15%)

Analyse the profitability of invested capital (assets) for each of the two companies in 2018, as compared to 2017. Based on your calculations and your answers to Questions 2 and 3, explain the main reason(s) for the change in the profitability for each company over the two years.

Note:Ensure that you analyse in this question—don't just describe the ratio values.

Question 5 (20%)

Given your answers and analysis in Questions 1–4, what is your final recommendation? An approval or denial of the loan to each and/or both firms? Discuss the basis for your recommendation.

The following lists some important information regarding answering the five questions:

1.Ratios must be selected from those identified in your prescribed eText (Bakry 2020). The use of ratios other than those identified in the textbook and discussed in class will not gain any marks.

2.Include all supporting calculations for any values shown in Questions 1 to 3 in the Appendix. This is not included in the word count.Note:Marks will not be awarded if no supporting ratio calculations are shown in the Appendix.

3.In Questions 1–4, an analysis is required and not just a description of the ratio. That means you need to explain how the ratio changed over time and the main reason(s) responsible for that change. You also need to discuss how these factors will impact your company’s financial position.

4.In calculating the ratios, 'operating revenue' located in the profit and loss statement (income statement), is the 'sales revenue'.

5.In calculating the ratios, ignore abnormals. You should only use figures before abnormals, such as ‘net profit after tax before abnormals’.

6.Ratios calculated by the Morningstar analyst and available in the database are not to be used as guidance for calculating your ratios. The analyst calculated some of the ratios using formulas different than the one covered in this unit.

7.The assignment does not require the obtainment of industry and/or peer group averages for any of the calculated ratios. The objective of the assignment is to compare each of the two companies’ financial performance over the specified two year period.

8.Includes any references you have used and cited. Make sure all answers are fully referenced using the Harvard referencing system and include a reference list at the end of your assignment. For guidelines on using the Harvard referencing system seeHarvard WesternSydU (PDF 2.4 MB)Links to an external site..

Note:The reference list is not included in the word count.

Assignment tip

View the marking guide under 'Assignment criteria' for a detailed breakdown of how your work will be assessed. This is an excellent place to start your preparations for this assignment.

Refer back to the marking guide frequently to make sure you are meeting the requirements.

Additional resources

·How to obtain data for your assignment(Links to an external site.)(Bakry 2018).

·Frequently asked questions (DOC 49 KB)


.

·In-text citation using the Harvard WesternSydU Style.(Links to an external site.)

Submission details overview

This assignment will be submitted via Turnitin. You will find the relevant submission point below.

Please allow a 24-hour turnaround for an originality report to be generated.

Assignment support

Don't forget that in addition to your OLAs who provide discipline-specific content advice, you can access the 24/7 draft writing service fromStudiosity.

Assignment criteria

1.Critical use and integration of evidence: Locate, collect, evaluate and use relevant information appropriately.

2.Use correct financial tools:To describe the problem and the solution path and addresses the requirements of Questions 1–4.

3.Addresses the requirements of Question 5, including showing use of critical thinking (CLO3.1).

4.References and paraphrases correctly. The use of the 'HarvardWesternSydU referencing style' is required.

5.Uses a professional level of English.

Your work will be assessed using the following marking guide:

Assignment 2 marking guide
Criteria	Fail	Pass 50-64%	Credit 65-74%	Distinction 75-84%	High Distinction 85-100%
Critical use and integration of evidence: Locate, collect, evaluate and use relevant information appropriately (15%)	Did not meet criterion.	Some evidence of critical consideration of relevant information, but poorly integrated.	Good evidence of critical consideration of relevant information, but may require better integration.	Very good evidence of critical consideration of relevant information and well integrated.	Critically chooses information and clearly integrates it to support the points being made.
Use correct financial tools:To describe the problem and the solution path and addresses the requirements of Questions 1–4 (50%)	Did not meet criterion.	Some appropriate selection of financial tools. Acceptable selection of financial tools. Could be better structured and/or the analysis and conclusions reached can be more persuasive.	Appropriate selection of financial tools. Acceptable structure. The analysis and conclusions reached are convincing.	Good to very good selection of financial tools. Good to very good structure. The analysis and conclusions reached are convincing.	Excellent selection of financial tools. Very good structure. Analysis and conclusions are argued in a very persuasive manner.
Addresses the requirements of Question 5, including showing use of critical thinking (CLO3.1) (20%)	Did not meet criterion.	Some ability in identifying logical connections and using evidence to create well-formulated ideas and arguments.	Satisfactory ability to identify logical connections and use evidence to create well-formulated ideas and arguments.	Very good ability to identify logical connections and use evidence to create well-formulated ideas and arguments.	Excellent ability to identify logical connections and use evidence to create well-formulated ideas and arguments.
References and paraphrases correctly. The use of the 'HarvardWesternSydU referencing style' is required (7.5%)	Did not meet criterion.	In-text citations, paraphrasing and/or reference list have a number of errors.	Satisfactory in-text citations, paraphrasing and reference list, possibly with a few errors.	Good in-text citations, paraphrasing and reference list, possibly with a few minor errors.	Excellent in-text citations, paraphrasing and reference list.
Uses a professional level of English (7.5%)	Did not meet criterion.	Writing style is unclear at times. There are a number of grammatical and/or spelling errors.	Writing style is coherent, with possibly a few grammatical and/or spelling errors.	Writing style is consistently coherent, with possibly a few grammatical and/or spelling errors.	Writing style is consistently coherent, with no grammatical and/or spelling errors.

References

Western Sydney U Lib 2017,In-text citation using the Harvard WesternSydU Style, 3 August, online video, viewed 7 June 2019,
https://www.youtube.com/watch?v=KX-w8gwMTbQ>.

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