ACCT7101 Accounting \u2013 Assignment
\nFinancial Report Analysis and Business Decision Making
\nDue Date for Submission: 13:00 Wednesday 10 May 2023
\nWeight: 25% of Final Grade
\nAims of this assignment
\nThis assignment aims to develop your
\na) ability to understand and analyse financial reports,
\nb) skills and knowledge to compare financial information of two listed companies, and
\nc) capacity to evaluate financial information and synthesise financial and non-financial
\ninformation to make business decisions.
\nThis assignment is to be completed on an individual basis.
\nYour submitted assignment must be entirely your own work. You may seek guidance from
\nlecturers, tutors or fellow students to clarify concepts or the application of concepts to the
\nfinancial statements in general. In addition, please look at the “Frequently Asked Questions
\n(FAQs)” document uploaded on Blackboard, which may have the clarifications you need.
\nAdvice that is clearly associated with the assignment tasks cannot be sought or provided.
\nPlagiarism is the submission of work or ideas which are not your own but for which academic
\ncredit is claimed. It is important that you review the University\u2019s policy on plagiarism. The
\noriginality of your assignment will be assessed by the Turn-it-in system. Information from the
\ncourse profile relating to plagiarism is reproduced below.
\nPlagiarism
\nThe University has adopted the following definition of plagiarism:
\nPlagiarism is the act of misrepresenting as one’s own original work the ideas, interpretations,
\nwords or creative works of another. These include published and unpublished documents,
\ndesigns, music, sounds, images, photographs, computer codes and ideas gained through
\nworking in a group. These ideas, interpretations, words or works may be found in print and\/or
\nelectronic media.
\nStudents are encouraged to read the UQ Student Integrity and Misconduct policy
\n(http:\/\/ppl.app.uq.edu.au\/content\/3.60.04-student-integrity-and-misconduct) which makes a
\ncomprehensive statement about the University’s approach to plagiarism, including the
\napproved use of plagiarism detection software, the consequences of plagiarism and the
\nprinciples associated with preventing plagiarism.
\nACCT7101 Accounting Assignment
\n2
\nAssignment overview
\nYou have been randomly assigned two ASX listed companies that operate in the same
\nindustry (Company A and Company B). See the file \u201cAllocation of companies to students\u201d
\nunder the Assessment tab on Blackboard to find your companies.
\nObtain each of your company\u2019s annual reports for the 2021, 2020, and 2019 financial years
\nfrom the company\u2019s website or www.asx.com.au. The annual reports contain the chairperson\u2019s
\nreport, directors\u2019 report and financial statements (Statement of Financial Position, Statement
\nof Profit or Loss, Statement of Changes in Equity, Statement of Cash Flows and Notes to the
\nFinancial Statements). The financial statements include comparative figures from the prior
\nyear, therefore, you will have data for four financial years: 2021, 2020, 2019 and 2018.
\nResearch the financial press and other sources of available information to familiarise yourself
\nwith the industry in which your allocated companies operate and with company specific factors
\nthat may have or will affect either company\u2019s performance.
\nTwo business scenarios are described below. Scenario 1 relates to Company A only and
\nScenario 2 involves Company A and Company B. Knowledge of the industry, company specific
\ncontext and their financial data will be important inputs that inform the decision that you
\nrecommend in relation to each scenario.
\nScenario 1
\nCompany A has submitted an application to the Bank of Brisbane for a loan. The amount of
\nthe loan is equal to 40% of total shareholders\u2019 equity at the end of the financial year 2021. The
\npurpose of the loan is to fund expansion of Company A\u2019s operating capacity. The loan term
\nsought is 10 years and the loan would be secured against company\u2019s property.
\nAssume you are a branch lending officer of the Bank of Brisbane who assesses loan
\napplications. The lending officer must make a recommendation to the head office lending
\nmanager advising whether the loan application from Company A should be accepted or
\nrejected.
\nScenario 2
\nBoth Company A and Company B have offered St. Lucia Investments Limited, a listed
\ninvestment company (LIC), a private placement of ordinary shares. The amount of share offer
\nis equal to 30% of total shareholders\u2019 equity of each company at the end of the 2021 financial
\nyear. St. Lucia Investments Ltd can afford either of the two private placements. The purpose
\nof an increase in equity for each company is to raise funds to finance an expansion of operating
\ncapacity.
\nAssume you are an investment manager at St. Lucia Investments Ltd who evaluates private
\nequity placements. St. Lucia Investments Ltd has limited funds available for investing
\ndecisions. The manager must make a recommendation to the board of directors advising
\nwhether to accept Company A\u2019s offer to sell to St. Lucia Investments a new issue of ordinary
\nshares and reject Company B\u2019s offer, or accept Company B\u2019s offer to sell to St. Lucia
\nACCT7101 Accounting Assignment
\n3
\nInvestments a new issue of ordinary shares and reject Company A\u2019s offer or alternatively reject
\nboth offers.
\nAssignment tasks
\nBefore commencing work on the tasks below, refer to the marking rubric for the criteria and
\nstandards that will be applied in the assessment of your assignment. See Blackboard.
\n1. Company background research (8 marks)
\nReview Company A\u2019s and Company B\u2019s annual reports, articles in the financial press and
\nother sources of information. Write a short response to each item below to build background
\nknowledge of each company and their industry.
\n(a) Describe the operating activities of each company noting similarities and differences
\nbetween Company A and Company B.
\n(b) Identify two common economy wide factors and two common industry factors that could
\nimpact on the financial performance and position of two companies. Also identify two specific
\nfactors which could impact the financial performance and position of company A and B,
\nrespectively. (In total, you should identify and analyse, at least, eight factors.)
\n2. Financial ratio analysis (8 marks)
\nCalculate financial statement ratios for the 2021, 2020 and 2019 years for Company A and
\nCompany B respectively. Use the Excel template provided on Blackboard under the
\nAssessment tab to present the analysis in a table. Obtain data for the ratios from the financial
\nstatements and notes to the accounts. You may add to this template (calculate additional
\nratios). See further instruction in the template.
\nAdditionally, use horizontal analysis to present the trend in sales revenue and net profit for
\nCompany A and B respectively, assuming 2019 as the base year.
\n3. Lending decision (12 marks)
\nWrite a business memorandum to the Bank of Brisbane head office loan manager from the
\nbranch bank lending officer in Scenario 1. The memorandum must address the following points
\nbelow.
\n(a) Evaluate and discuss your assessment of the ability of Company A to repay the loan and
\ninterest. Make a recommendation to accept or reject the 10-years term loan application
\nfrom Company A and justify your recommendation. Use knowledge that you have acquired in
\nyour company research from Q1 and refer to relevant ratios calculated in Q2.
\n(b) Briefly discuss Company A\u2019s net cash flows from operating, investing and financing
\nactivities and the trends evident over the last three years. Explain how this analysis is
\nconsistent with your accept or reject recommendation.
\nACCT7101 Accounting Assignment
\n4
\n(c) The use of estimates, cost, alternative accounting methods, the presence of atypical data,
\nand diversification of firms have been cited as factors that limit the usefulness of financial
\nstatement analysis. In your recommendation, please discuss the limitation of your financial
\nstatement analysis. Identify ratios and explain how one or more of the limiting factors can
\naffect the usefulness of that ratio.
\n4. Investment decision (12 marks)
\nWrite a business memorandum to St. Lucia Investments Ltd\u2019s board of directors from the
\ninvestment manager in Scenario 2. The memorandum must address the points below.
\n(a) Use the most relevant financial ratios to analyse and compare trends in profitability and
\nrisk of Company A and Company B for the 2021, 2020 and 2019 years. Discuss your
\nassessment of relative profitability and risk of both companies.
\n(b) Recommend whether St. Lucia Investments should invest in Company A or Company B or
\nalternatively reject both offers. Justify the recommendation based on the evaluation of risk and
\nprofitability of each company and other relevant background information obtained from the
\nannual reports and other sources. Use knowledge that you have acquired in your company
\nresearch from Q1 and refer to the relevant ratios calculated in Q2.
\n(c) Explain the meaning of the price earnings (PER) ratio and EPS. Describe three year trends
\nin these ratios for Company A and B and discuss their relevance to the investment decision.
\nAssignment administration
\nFormat
\nSubmit your work as a single PDF document. Include your student number and name as a
\nheader to the document.
\nYour written responses to Assignment tasks 1, 3 & 4 are limited to a maximum of 5 pages
\n(Times Roman 12 point, 1.5 line spacing and minimum, 2 cm on each margin). Any submitted
\ntext exceeding this limit will NOT be assessed.
\nAttach the Excel table of financial ratios for Assignment Task 2 as the 6th
\n, 7
\nth and 8th pages of
\nthe document (excluded from page limit).
\nAttach a Reference List as the 9th page of the document. All sources used must be referenced
\nusing a consistent academic reference style (e.g. Harvard Style of referencing). See
\nBlackboard for information on the UQBS preferred format (Writing Guide). To reference from
\nan annual report, use the ASX Code of the company, year of the annual report and page
\nnumber, e.g. COL 2021, p23).
\nACCT7101 Accounting Assignment
\n5
\nSubmission
\nSubmit your assignment before or on the due date. Follow the instructions below.
\n(a) Submit the assignment electronically as a PDF to the Turn-it-in link in the course
\nBlackboard, under the \u201cAssessment\u201d tab, then under \u201cAssignment: Financial Report Analysis
\nand Decision Making\u201d folder. Follow the submission instructions. The title of your assignment
\nin the Turn-it-in Submission Page must be the ASX code of your assigned Company A. Do
\nnot add anything else in the title. For example, Carsales Ltd title would be: CAR.
\n(b) When submitting the assignment, you can test it for text matching by submitting it and
\nreviewing the report. Up to the due date, you can resubmit your assignment at any time (if
\nyou make changes to it). The system simply deletes your earlier version and replaces it with
\nthe resubmitted version.
\nLate submission
\nAn assignment submitted after the due date and time for which no extension has been granted
\nprior to the due date will incur a late submission penalty. The penalty is applied at the rate of
\n5% of the total available marks for the assignment for each calendar day or part thereof that
\nthe assignment remains overdue.
\nExtension of due date
\nRequests for granting an extension to the due dates must be made at least 24 hours prior to
\nthe submission date. The request must contain documentation satisfactorily supporting the
\nrequest. Please refer to the ECP to understand the procedure for requesting an extension.
\nAssessment criteria
\nThe criteria and standards that will be applied in the assessment of this assignment are
\navailable on Blackboard (under the \u201cAssessment\u201d tab). Review the rubric before you
\ncommence work to ensure you understand the requirements of the assessment and how it will
\nbe assessed.
\nFeedback on the assessment of your assignment will be available via Turn-it-in.<\/p>\n
This is a university assignment for the course ACCT7101 Accounting. The assignment involves analyzing the financial reports of two randomly assigned ASX-listed companies operating in the same industry. The aim is to compare the financial information of the two companies, evaluate the financial information, and synthesize financial and non-financial information to make business decisions. The assignment has two scenarios, and the knowledge of the industry, company-specific context, and their financial data will be important inputs that inform the decision recommended for each scenario. The first scenario involves assessing a loan application from Company A, while the second scenario involves evaluating private equity placements from both Company A and Company B for a listed investment company. The assignment has several tasks, including company background research, financial ratio analysis, profitability analysis, liquidity analysis, and solvency analysis. The assignment has a weight of 25% of the final grade and must be completed on an individual basis, with the originality of the assignment assessed by the Turn-it-in system. Plagiarism is prohibited, and students are encouraged to read the University’s policy on plagiarism.<\/p>\n","protected":false},"excerpt":{"rendered":"
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