| Country : | Australia |
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Assignment Task:
Overview
This assignment is to apply the concepts and theories in the corporate finance class and perform critical analysis for a company you picked using real market and financial data.
Task
From a list of the S&P/ASX 300 index member companies (see the Excel spreadsheet attached), pick a company (your company) and answer the following questions. To support your analysis, you could obtain information about these public firms from the following (non-exclusive) sources.
1. Australian securities exchange: https://www.asx.com.au/
2. Yahoo finance: https://au.finance.yahoo.com/
3. Google finance: https://www.google.com/finance
4. Company website, including annual reports disclosed.
If you use any data in the analysis, you should keep a copy of these data for verification purposes. However, you do not need to attach the data in your submission. Whenever possible, please relate your discussion to the specific situation of your firm – a general statement may not be sufficient. This is an essential requirement of the assignment. Whenever possible, the format of your answer should be structured -- take the answer as a very short essay: there is a key point to start with, followed by some supporting evidence or arguments. You should keep you answer brief, but to the point.
1. Provide the following information about your company: (5 marks)
a. Name, ticker symbol, industry, and business description (2 marks)
b. What makes you become interested in this company (3 marks)
2. Use the information disclosed (for example, in the latest annual report) to discuss the following questions related to capital structure: (12 marks)
a. Provide a summary for the capital structure of your firm. This may include (but not limited to): level of total debt, level of total equity, and the debt equity ratio. Is there any source of financing other than the debt and equity? For example, convertible debt? (4 marks)
b. Compare the capital structure of your firm with at least one other peer firm in the same/similar industry. Propose your explanations for the observed difference. (4 marks)
c. Suppose your firm is considering increasing the leverage by borrowing more debt, discuss the implication of this potential change with respect to the following: (4 marks)
i. Tax saving
ii. Bankruptcy risk
iii. Managerial incentive
iv. Risk taking
3. Use the information disclosed to discuss the following questions related to payout policy (if your firm does not have any form or payout, answer question c., otherwise, answer a. and b.): (7 marks)
a. Describe the payout policy of your firm. For example, is there any payout to the shareholder? In what form? (cash/stock dividend, repurchase, others). (3 marks)
b. What kind of signal your firm is sending to the market by its payout policy? (4 marks)
c. If you firm does not have any form of payout, evaluate this policy from the signalling theory and agency cost perspective. Propose changes of payout policy, if you think it is necessary. (7 marks)
4. Use the information disclosed to discuss the following questions related to merger and acquisition (M&A): (7 marks)
a. Has your firm been involved in any M&A deals in recent years? If so, describe at least one deal and discuss whether, in your opinion, synergy has been generated. If there is no recent M&A deal, propose a potential target or acquirer firm for your firm, and explain why this potential deal could generate synergy.
b. From the perspective of as an investment banker trying to evaluate the possibility of taking over your firm, discuss the potential obstacles (takeover defence) for the potential bidder. This may include any anti-takeover provision in the firm, or any other features or arrangement that could make the takeover difficult or even impossible. (4 marks)
5. Use the information disclosed to discuss the following questions related to corporate governance: (9 marks)
a. Describe the board structure, such as the board size and the ratio of independent directors of your firm. Is there any way you could suggest to “improve” the board structure? (3 marks)
b. Provide a summary for the directors’ compensation. Discuss your findings. In particular, do you find the compensation at the right level? Why? Does the compensation scheme, in your opinion, provide good incentive for efforts? Explain. (3 marks)
c. Describe the role of the board in your firm. Do you think the current board members are well-suited to perform these roles? (3 marks)
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