FIN5FMA Assignment Questions

 

 

FIN5FMA Assignment Questions

 

Assignment accounts for 30% of the unit grade. Each student has been allocated one Australian company. This information is available in the unit website. You must collect relevant information from DatAnalysis database and prepare the report with maximum 2000 words. You should attach the workings and any additional evidence in the appendix. The material presented in the appendix is not counted towards the words limit. You can also upload the excel work file. Assignment should be submitted on or before Friday 2 October 2020.

Answer the following questions in relation to the company allocated to you.

Part I

  • Briefly describe the profile of your company (include in your discussion: nature of the business, industry and age of your company). (2 marks)

 

 

  • (i) Identify the directors’ ownership at the balance sheet date in 2015 and 2019.

(2 marks)

(ii)  Identify the top 20 shareholders of your company and calculate the percentage of shares owned by each of them at the balance sheet date in 2015 and 2019.

                                                                                                                                            (2 marks)

(iii)    Briefly discuss how CEO’s remuneration in 2018 or 2019 was determined.  Discuss

your view on whether CEO’s remuneration was determined to reduce conflicts

between shareholders and management.                                                                                                                                                                                           (4 marks)

                                                                                       (2 + 2 + 2 + 4 = 10 marks)

 

Part II

(a) Calculate long-term debt/total assets and long-term debt/equity ratios over the last five years for the company allocated to you. If the company allocated to you do not have long-term debt, contact your lecturer

(B.Balachandran@latrobe.edu.au) by email.

(2.5 marks)
(b) Compare your firm’s long-term debt/total assets and long-term debt/equity ratios with your firm’s industry average and discuss the findings. (2.5 marks)
(c) Identify a matching firm in your firm’s industry with similar size as your firm (use 2019 total assets to choose a matching firm. If your firm does not have data for the financial year end in 2019, use the latest year available). Compare your firm’s long-term debt/total assets and long-term debt/equity ratio with your matching firm and discuss the findings. (3 marks)
(d) Briefly discuss the term “Optimal Capital Structure”. Does your company have an optimal debt/equity ratio? Use calculations on business risk in your analysis. Justify your answer. (3 marks)
(e) Identify one dividend change (interim or final) announcement (note: compare interim to interim to identify changes in interim dividend or final to final to identify changes in final dividend using “dividend history from the DatAnalysis Premium Database” for the company allocated to you. Identify interim announcement date from half yearly report. Identify final announcement date from preliminary final report.  
(i) Calculate

•          the three-day return earned by your firm for the period from the day before the announcement day to the day after the announcement date; and

•          the two-day return earned by your firm for the period from the day of the

(1 marks)

1

 

 

announcement to the day after the announcement date  
(ii) Calculate the market return for the corresponding periods in (i). (0.5 marks)
(iii) Calculate the excess return: (i) – (ii) (0.5 marks)
(f) Compare and discuss the relevant theory for the findings of the market reaction to dividend changes in (e(iii)). In your discussion, include signalling hypothesis, free cash flow hypothesis, and the clientele hypothesis. (4 marks)
Presentation of the report, citation and references 3 marks

(20 Marks)