FNCE2003 Business Analysis for Investment - Case Study Assignment Help

This assignment aims to check on understanding of the concepts covered in topics from 2- 7 in the Business Analysis for Investment (FNCE2003) unit. This is   

• answer all the questions in parts A and B;
• Answer all the questions in the assignment, and don't forget to provide detailed calculations/justifications where necessary.
• Submit the answer script and the Assignment Cover Sheet, don't forget to mention question numbers correctly.

• The modules covered in this assignment include the following:
  • Financial Reporting Standards o Understanding Income Statements o Understanding Balance Sheets o Understanding cash flow statements o Financial Analysis Techniques & Applications o Financial Reporting Quality
  • Evaluating Quality of Financial Reporting

PART A: General Questions

Question 1

ABC Corp. began operations in November 2021 and sells imported furniture on a retail basis. In December 2021, it sold furniture for $350,000, of which $150,000 was on credit. The cost of the furniture that ABC sold was $200,000, and the supplier delivered this in December. However, the supplier has granted credit terms, according to which ABC paid $75,000 in December 2021 and is obligated to pay the remaining amount in January 2022. In addition to purchasing and selling furniture in December, ABC paid $20,000 in cash for salaries. In addition, ABC incurred a utility expense of $15,000 and an advertisement cost of $20,000 in December, which will be paid in January 2022. In December, creditors were paid $60,000 for the furniture purchased and sold in November 2021 (show workings). 

1. How much was ABC's net cash flow for December 2021?                  
2. How much was ABC's net profit for December 2021?                                

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Question 2

The following numbers appeared in the annual report of ABC, Inc. for the fiscal year 2020 (in millions of dollars):

The firm has no preferred stock. For fiscal 2020, what is the amount of other 

comprehensive income?                                                                                                    

Question 3

SonyaGas Ltd. had 1,365,000 average ordinary shares outstanding during all of 2021. In 2021, SonyaGas also had 85,500 options outstanding, with an exercise price of $34 each. The average stock price of SonyaGas in 2021 was $64. This company also had 25,000 shares of preferred stock outstanding ( $1.25 dividend per share) for the entire year, each convertible into 15 shares of common stock. The dividend paid to common shareholders during the period was $500,000. The company has 1,750 bonds with a $100 par value per bond and 9% annual interest, convertible into 4 ordinary shares per bond. SonyaGas had a net income of $2,850,000 for the year. The corporate tax rate is 32%. Calculate the following for SonyaGas for 2021(round the figures to avoid decimals):

1. What is the basic EPS share for 2021?                                             
2. Calculate the weighted average number of shares outstanding for 2021 if all dilutive securities are converted into ordinary shares at the

                beginning of the year? Show all workings.                                                           

1. What is the diluted EPS for 2021?                                                

Question 4

As a fresh graduate who joined the industry recently, you are tasked with collecting data from available sources to establish the purpose for the analysis of Adani Power Ltd. You have collected the annual report published for the financial year 2020/2021. Reading through the Auditors' Report, you found something uncommon for most listed firms (Please refer to the annual report in the Assessment folder on Blackboard). 

• From the analyst's point of view, is audit opinion important?
• What is your view on the audit opinion of Adani Power Ltd?
• Does the audit opinion affect your intended analysis?                                                                                

Question 5

Following the consolidated results presented in the annual report of CSL, global Biotech company, 2021, answer the following questions:  

• What is your assessment of the performance of the company over the years?
• What more external information do you need to draw a reasonable  conclusion about the firm's performance, and why such information is necessary for an analysis? 

PART B: Company-specific Questions

This part of the project requires you to conduct a financial statement analysis of a publicly listed company. Each group will be assigned one of the following companies to complete this part (Please refer to the list under Assessments on Blackboard):  

• Wesfarmers Limited (Stock Code: WES)
• Woolworths (Stock Code: WOW)

*Students who complete the assignment individually can choose one of the above firms. 

An essential element of this project is identifying and obtaining relevant, publicly available information. Therefore, you should ensure that you are able to access sufficient information for the assigned company. For your convenience, I have provided links to the relevant annual reports on Blackboard. You are required to answer all the questions in Part B.

Question 1 

What is the industry to which your company belongs? What is the view of the management of the company about the future outlook and performance of the company?                                                                 

Question 2

Identify two (2) pieces of non-financial information not included in the principal financial statements that you think would be important to someone considering whether to invest in your company. Discuss your reasons for believing this information would be necessary in making an investment decision

Assume that, as a credit analyst, you are evaluating the company. Using the most appropriate ratios for the most recent financial year, 2020/2021, evaluate whether one should provide a loan to this company. [Use at least 4 ratios]. 

Question 4

Assume that you want to buy stock of this company. Use the most appropriate efficiency and profitability ratios for the last financial year from the annual report and use these data to evaluate whether this company is a suitable candidate for investment purposes. [Use at least 6 ratios for each category

Assume that you are also considering investing in the stock of BHP Billiton. You have limited funds to invest, and therefore, you can invest in either company (BHP Billiton or your allocated company). Compare your company's financial statements and performance with BHP Billiton's. If you were deciding to invest in one of the two companies, which company would you choose? Discuss. [In evaluating and comparing the companies, use appropriate ratios and other analyses. Provide clear justification for why you believe your approach to evaluation is appropriate for investment decision purposes.   [Use at least 4

ratios].                                                                                                                          

Learning outcomes associated with the assignment

Completion of this report will bring together the key concepts covered in this unit and assess the following unit learning outcomes:

1. Describe and apply the basic techniques of financial statement analysis.
2. Identify and utilise value-relevant information from the financial statements.
3. Apply established requirements for analysing financial statement information for forecasting, valuation and risk analysis purposes.