my company are
Dexus FP Units Stapled Securities |
Capitacom Trust
|
MARKING GUIDE FOR FINA6000 ASSESSMENT 3 – CASE ANALYSIS NAME OF STUDENT and ID: PART Marks to Award Feedback to Student Part (a) (10 marks) Profitability Ratios (4 marks) Investment Ratios (6 marks) Mark Awarded Part (b) (10 marks) Components of capital structure should be obtained from the Balance Sheets of the two companies. Students expected to determine the proportions of each component of capital e.g. ordinary shares, preference shares if any, and debt. (4 marks for correct items of capital) (4 marks for correct proportions of capital) (2 marks for explaining how the capital structure has changed) Mark Awarded Part (c) (5 marks) Explanation of differences in capital structures of same sectors but on different stock exchanges (support with arguments from academic literature) Mark Awarded Part (d) (10 marks) (6 marks for cost equity) (4 marks for other cost of capital such as debt and preference shares) Mark Awarded Part (e) (5 marks) WACC for company on ASX (2.5 marks) WACC of company of Singapore Exchange (2.5 marks) Part (f) (10 marks) DISCOUNTED CASH FLOW TECHNIQUE Estimation of dividend growth rate (Australian company) (3 marks) Estimation of dividend growth rate (Singapore company) (3 marks) Valuation of Australian company (2 marks) Valuation of Singapore company (2 marks) Mark Awarded Part (g) (4 marks) Critical evaluation of the appropriateness of using the Constant Growth Dividend Valuation Model Mark Awarded Part (h) (6 marks) Making the Investment Decision: Quantitative information (4 marks) Qualitative Information (2 marks) Mark Awarded Part (i) (5 marks) Check how well the report has been introduced – introduction must tell the reader the focus of the report. Mark Awarded Part (j) (10 marks) Must make an overall assessment of the amount of critical thinking displayed. Mark Awarded Part (k) (15 marks) An overall analysis of how well the student is analysing and applying the knowledge of financial statement analysis, capital structure, risk & return and valuation of shares. Mark Awarded Part (l) (5 marks) Evaluation of academic writing, Report layout and Grammar, sentence construction and expressions. Students should demonstrate expert use of high quality, credible and relevant research sources. Mark Awarded Part (m) Effective Communication (5 marks) Is the report expertly presented, logical, arguments presented well supported by evidence. There must be a clear flow of ideas and arguments. Mark Awarded TOTAL = 100% 1 1 1 FINA6000 Assessment Brief 3 Brief Case Analysis Page 1 of 9 ASSESSMENT BRIEF Subject Code and Name FINA6000: Managing Finance Assessment Assessment 3 - Case Analysis Individual/Group Individual Length (1500 words (+/- 10%) Learning Outcomes b) Analyse financial information and evaluate financial performance of a business. c) Apply time value of money to the valuation of a variety of cash flows, securities and projects leading to sound investment and financing decisions. d) Analyse risk and return associated with investments. e) Apply various capital budgeting techniques to investment decision making. Apply various capital budgeting methods in investment decision making within a business f) Analyse the cost of capital and explore its link to the capital structure of an organisation. g) Analyse working capital and payout policies and their impact on the liquidity position of a business. Submission By 11:55pm AEST/AEDT Sunday of Module 5.2 (Week 10) Weighting 25% Total Marks 100 marks Context: The ability to analyse financial performance of companies, calculating costs of capital and valuing stocks (shares) is fundamental to investors and investment advisors. Financial managers are also interested in knowing the value of their companies’ stocks as the primary goal of a firm is the maximisation of shareholder value. Given the background of the advent of the COVID-19 pandemic and the reaction of the stock markets globally, it is pertinent to involve students in an exercise that allows them to carry out fundamental analysis of stocks using the corporate finance knowledge. This assessment focuses on two economies, Australia and Singapore, small open industriliased economies and it concentrates on the top 30 companies by market capitalisation that are listed on the countries’ securities exchanges. Testing the students’ ability to perform financial statement analysis in order to evaluate historical financial performance of companies. FINA6000 Assessment Brief 3 Brief Case Analysis Page 2 of 9 Determining the capital structures of companies in similar sectors but in two different countries and explaining why they could be differences in capital structure. Calculating the cost of capital and the weighted average cost of capital (WACC) of companies. Performing valuation of equities and using quantitative and qualitative factors to make a sound investment decision. Assessing students’s ability to prepare a professionally prepared report. Instructions: To complete this assessment task you must consider the following: You are expected to prepare a report based on the following case. The Case Analysis requires students to apply their knowledge of key finance concepts such as financial statement analysis, risk and return, capital structure, valuation of shares and dividend policy to an analysis of two companies in the same sector but one is listed on the Australian Securities Exchange (ASX) and another is listed on the Singapore Securities Exchange (SGX). Your facilitator will allocate to you two companies drawn from top 30 companies by market capitalisation that are in the ASX100 index as of 1 December 2019 and top 30 companies by market capitalisation that are in the Straits Times Index of the same date. (The table with the list of companies is at the bottom). You need to answer the following questions: (a) Using five latest annual reports up to 31 December 2019 perform a comparative financial statement analysis of the two allocated companies. You are expected to calculate the Profitability and Investment ratios. (10 Marks) (b) Using information from the latest five annual Balance Sheets, examine the capital structure of the two companies and comment on how the capital structure has changed over the 5 years. (10 Marks) (c) Provide a well reasoned argument why there could be differences in the capital structures of the two companies and yet they belong to the same sector. Support this with academic literature. (5 Marks) (d) For the period 30 April 2019 to 31 May 2020, collect daily closing stock prices of the two companies you allocated. Using this data and any other relevant data determine, (i) the cost of equity of the two companies. (6 Marks) (ii) determine the cost of capital of other sources of capital of the companies, making reference to the lastest annual report. (4 Marks) (e) Determine the weighted average cost of capital (WACC) of the two companies using the latest capital structure and the costs of capital determined above. (5 Marks) (f) Peform a valuation of the two companies’shares using the Constant Growth Dividend Discount Valuation model.