Assignment:
Select ONE MAIN public-listed company and ONE RELATED public-listed company as
reference. Additionally, for the MAIN company you chose, you are to select 2 financial years to analyse.
[Note: There is NO NEED to select 2 consecutive financial years. You may select any 2 financial years of your choice to analyse as long as they add color to the assignment guides and questions below.]
You are to analyse the MAIN company’s annual report, focusing mainly on the income statement, balance sheet and if needed the cashflow statement, as well as the relevant notes to the financial statement in the annual report.
Guidance:
Your analysis could cover, among other things, the following:
[Note: This is only a brief list of suggestions and is by no means exhaustive. Other than point 1 & 2 below which must be in your analysis, the other points depend on whether they are relevant to the financial statements.]
- Understanding the company. What is their business model? Do they only have 1 business segment? Where do they do their business in? Who are their consumers/customers? Have their business evolve over the years?
- Apply, calculate and comment on some of the financial ratios you have learned during this course on the MAIN company and the RELATED it company.
- You could compare how the ratios changed for the 2 financial years and also compare how the ratios differs for the MAIN and RELATED company.
- Revenue (top-line) and cost growth for the MAIN company. Is revenue growing as a faster rate than operating and/or cost? Why or why not? What was/were the main driver(s) for the growth in revenue and operating cost? Do you think that the growth will continue in the future?
- Does the MAIN company have any debt obligations? Is it in a good position to meet this debt obligation?
- Does the MAIN company seem to be holding excess cash, receivables, inventories or other unproductive assets?
- For the MAIN company, did the company made or plan to make any major investment? [This could be in either of the financial year that you chose]. How is this showing in the balance sheet and/or income statement?
- Did the MAIN company have any (frequent) “non-recurring” items in its income statement? What were these and how did they affect the income statement?
Submission
Your report cover page should include the name and years of the MAIN and RELATED companies. Screenshots of the relevant Income statements, Balance sheets, Cashflow as well as Notes to Financial statements should be shown in the Appendix. Additionally, the calculation of ratios need not be shown in your main report but should be shown in the Appendix.
Marking rubric:
| A+, A, A- | B+, B | B-, C+, C | D+, D | F | |
| Understanding | Demonstrates | Demonstrates | Demonstrates | Demonstrates | Does not |
| financial | a very good | a good | a basic | a weak | demonstrate |
| terms (20) | understanding | understanding | understanding | understanding | any |
| of the terms. | of the terms. | of the terms. | of the terms. | understanding | |
| of the terms. | |||||
| Performing | Able to | Able to | Able to | Able to | Unable to |
| financial | provide | provide good | provide | provide | provide |
| analysis (40) | excellent | analysis of | adequate | adequate | adequate |
| analysis of | the financial | analysis of | analysis of | analysis of | |
| the financial | statements. | the financial | the financial | the financial | |
| statements. | The use of | statements. | statements. | statements. | |
| The use of | financial | The use of | The use of | The use of | |
| financial | tools and | financial | financial | financial | |
| tools and | calculations | tools and | tools and | tools and | |
| calculations | are with few | calculations | calculations | calculations | |
| are without | minor errors. | are with some | are with | are with | |
| errors. | minor errors. | errors. | many errors. | ||
| Evaluation of | The | The | The | The | The |
| financial | evaluation | evaluation | evaluation | evaluation | evaluation |
| statements | accurately | accurately | accurately | accurately | does not |
| (40) | reflects the | reflects the | reflects the | reflects the | accurately |
| financial | financial | financial | financial | reflect the | |
| status of the | status of the | status of the | status of the | financial | |
| company. | company. | company. | company. | status of the | |
| There is an | There is a | There is some | There is | company. | |
| excellent | good basis for | basis for the | insufficient | ||
| basis for the | the | evaluation. | basis for the | ||
| evaluation. | evaluation. | evaluation. |
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