Posted: February 3rd, 2015

Corporate Finance

Paper, Order, or Assignment Requirements

 
Higher Colleges of Technology

DMC, 2014/2015

BUS 4183 Corporate Finance

Project Assignment

The project for this module is financial ratio analysis which will provide students with an opportunity to develop a profound understanding of this issue and to engage in applied research.

• Students will work on the assignment collaboratively in pairs.

• Marks will be awarded identically to all group members
• Marks will be given for the quality of your analysis, as well as communication and exposition of the content.
• Make use of academic references, which, I expect to include journal papers
• Make sure you refer to the appropriate reference in the main text as well as in the List of References section
• Read the Chapters on Financial ratio analysis in the textbook
• Provide a cover sheet for your assignment with the name(s) of the student(s) and title of the essay.
• Use Times New Roman 12 pt. font
• Apply a word count to your assignment
• You are required to produce and submit a written report/essay (max. 2,000-2500 words, excluding list of references)
• To check for plagiarism, you are also required to submit an electronic copy via on blackboard

Financial ratio analysis project

The financial statement dataset used for ratio analysis is available in an excel file on blackboard. The dataset contains annual balance sheet, income and cash flow statements information on a number of local and international companies from 2009 to 2013. All values are in millions of local currencies.

Students are required to perform ratio analysis to identify the determinants of the performance of the companies using the appropriate ratios within the Dupont model framework. Students are required to use time series analysis (over time). The appropriate set of ratios should be used and analysed. Students should consult the appropriate resources such as the literature on “performance, Dupont and financial ratio analysis”.

Since successful financial ratio analysis is as much an art as it is a science, students must use common sense and sound judgment throughout the analysis. The purpose of this assignment is to provide students with the opportunity to:

• Ensure having the required skills in financial analysis
• Analyse the performance of firms;
• Practice communication skills, both in writing (through word processing) and in speaking (through intra-group discussion);
• Enhance teamwork skills;
• Familiarise with the literature on financial ratio.

I have been asked in the past for some clarification on the outline for the ratio analysis project. There are a variety of ways to organise the narrative. Here is a suggested (but not required) outline:

1. Use Excel in calculating the appropriate financial ratios. I expect that you report the ratios in the narrative. Use can support the table with graphs. I also expect you to use comparison analysis across time

2. Introduce the project i.e. describe what you are going to do and why.

3. Start with a discussion of the profitability family of ratios and their general trajectory over time. Only discuss individual ratios if their trajectory is different from the family to which you have assigned them.

4. Next you may wish to discuss (speculate on) how the companies got to the place they are in for the profitability family of ratios (retrospective analysis)

5. After you have done the retrospective analysis, you use the Dupont ROE model. This is where you discuss the potential determinants of the companies’ profitability.

6. Groups are encouraged to exchange their results for the sake of comparison

7. Students are required to include reporting and interpreting two market ratios that were not studied in the class.

8. Conclude the report with the answer to the questions:

• Overall judgment of the general financial condition of the companies?
• Sources of strength and weakness?