Posted: January 13th, 2016

Performance evaluation: Analyse the historical (for the last 5 years) performance of a listed company and present your findings in the form of a report, which will cover both qualitative and quantitative performance elements in a logical cohesive forma

itle: Commonwealth Bank Financial Analysis
Assignment Topic:
1. Performance evaluation: Analyse the historical (for the last 5 years) performance of a listed company and present your findings in the form of a report, which will cover both qualitative and quantitative performance elements in a logical cohesive format.
The qualitative component of your discussion should include BRIEF background information on the company including how they are placed within the industry, and a BRIEF overview of the recent stock price movements for the company. The quantitative component should include an initial analysis of trends in the items contained in the profit and loss statements and balance sheets, followed by an analysis of important ratios measuring different aspects of the company performance:
• Current ratio
• P/E ratio
• Net Profit Margin ratio
• Return on Total Assets
• Debt ratio
• Inventory Turnover (wherever relevant).
Your analysis should highlight the important changes within these ratios over this period and identify the reasons for these changes. Your analysis should include the strengths and weaknesses of the company (i.e. benchmark your chosen firm against industry averages). Taking into account the quantitative and qualitative analysis you are then required to make a recommendation on whether it will fall into one of the following two categories:
1A. Invest in the company
1B. Do not invest in the company.
2. Stock (Equity) Valuation exercise: You are required to calculate the value of a share of the listed company used in the performance evaluation part above, using the dividend discount model. Assume the company chosen from above has a 5% dividend growth rate and the required rate of return is 10%. Go to www.asx.com.au and find the latest share price. Compare that stock value with the current stock market price. Are there any differences? You are required to explain these differences