BACKGROUND
You’re a group of investment analysts who work for a large investment consulting firm based in
Australia. There’s one big institutional investor from overseas that is interested in investing in the
Australian market. You’ve been asked to choose a listed company in Australia (in the industry you
think will have the most promising future for investment) then evaluate it and give your client
financial advice on whether or not she/he should include the share of that company in her/his
investment portfolio.
Required:
Create your group’s “business name” under which your group will be providing the financial
advisory services. Choose one listed company that your group will investigate/analyse for the
purposes of possible recommendation to your client. The group should obtain all information about
the selected company from this web site: www.asx.com.au.
3
Obtain a copy of the last two financial years (2016-2017 and 2017-2018) Financial Statements of
the chosen company (annual reports are accessible via company websites). Your group can
downloaded these documents from the suggested web site using the firm’s code (example, BHPfor BHP Billiton Company, etc.).
1.Description of the
companies Prepare a brief description of the selected company, outlining the
core activities, competitive advantages, and the market in which
it operates within and any factors in the company’s history which
you consider help present a “picture” of your chosen company.
5 marks
2.Calculation and
analysis of financial
ratios
Using financial data obtained from current financial statements of
your selected company for the given 2 years to calculate the
following ratios and present them in relevant charts or tables.
Provide analysis on the company performance and justify your
opinions using the data:
- Liquidity ratios
- Profitability ratios
- Market value ratios
5 marks
3.Graphs and
comparison of share
price movements
Using the information from the ASX website: www.asx.com.au
to prepare one or more graph displaying movements in the
monthly share prices over the last two years for the chosen
company that you are investigating.
Providing an analysis to compare the movements in the
companies’ share prices to the All Ordinaries Index. For instance,
whether your selected company price trend is more or less volatile
compared to the index? How closely it is correlated with the All
Ordinaries Index, above or below the index?
Do a research to identify the factors that affected the share price
movements of the company within 2 years.
5 marks
- Calculation cost of
equity - Go online to http://www.reuters.com/finance/stocks/ and type in the
code for your company into the Search Stocks field and click on the
magnifying glass button
Sample Solution
