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Corporate Finance Report

FIN3CFI
Corporate Finance Report
Major Assignment – 30% of Total Assessment
Release Date & Due Date: Check the subject learning guide (SLG)
Note: Please read this document thoroughly with care. Do not rush! The
document sets out the task description, work expectation, preparation tips,
submission guide, and marking scheme for the assignment. The report should be
compiled professionally as if a management consultant completes it. The higher
your commitment, the better you will learn and gain more transferable knowledge
with you in the job market (beyond your grading concern!).
1. TASK OVERVIEW
Lecture 1 introduces the traditional and evolving roles of CFOs in public limited
companies – highlighting firms’ goals and the agency issues in corporate management.
Lectures 2 and 3 present the governance and management aspects of capital
investment decisions by incorporating risks and real options to ensure positive NPV.
Lecture 4-7 introduces the scope of financing opportunities and how to reach a capital
structure decision that optimizes firm value, while lecture 10 introduces the dividend
decision. Building on the concepts drawn from these lectures, this Corporate Finance
Report aims to expand your conceptual understanding, ability to apply and take
essential job market transferable knowledge by examining several financial
management decisions of a chosen company from the Australian market. The report
should –
 Identifying CFO’s tasks in the selected organization in the context of the traditional
and changing role of CFOs (highlighted in Lecture week 1, Global CFO Research,
and 2017 global corporate treasury survey1
).
 Conduct temporal analysis of the identified CFO functions listed in the task details
section in this document for your selected company.
 Present a ‘short and sweet’ discussion of the current practices of how CFOs
conduct these functions to contribute to the firm goal.
 Provide comments and suggestions in each section drawn from your analysis.
2. MAJOR TASK DETAILS:
BACKGROUND TASKS – KNOW YOUR SELECTED COMPANY
FIN3CFI is a subject with 200 plus students. Given that leaving the task of selecting
companies to students may create interruption with the schedule and unnecessary
email back and forth, the subject coordinator has already allocated a company form the
list of companies available in ASX. The selected company and the respective students’
details are available in LMS.
1 Available at https://www2.deloitte.com/content/dam/Deloitte/au/Documents/financial-services/deloitteau-fs-global-corporate-treasury-survey-report-2017-210817.pdf
Changing the assigned company is not allowed. However, for exceptional
circumstances where data availability is an issue (debt amount missing, no dividend
payment etc), students can request a change of the selected company to the subject
coordinator. Note that the email of such request should have an appropriate subject
heading with the company’s name from ASX-listed firms. However, the company’s name
should not be a company that has already been allocated to other students in the cohort.
Either way, the process must be completed by the end of week 5.
Students from Sydney and Vietnam campuses will be aided by respective lecturer to
finalize the company selection process by the end of week 5. The list of companies are
available at SY and VH LMS sites.
Before starting the Assignment, you should browse the company’s website to familiarise
yourself with the company and check the availability of financial and accounting data,
annal reports, and other information in the Data Analysis Premium platform for the
respective company.
Note that the Data
Analysis Premium
platform is accessible
through a university
library database.
Moreover, students
can also visit the
company website
and check for
investors’ relations or
the financial section
to download the
annual report.
Help kit:
Each student must
visit ‘Data Analysis Premium’ platform under Library at LTU website. Then,
-> Click Database
-> Click D
-> Click Data Analysis Premium
-> login (using LTU credentials)
Familiarise with prospective firms’ financial reports and other firm-related information.
3. REPORT STRUCTURE:
Each student should gather relevant financial and non-financial sources of information
about the selected company and assess its financial management policies and
practices.
COVER PAGE
The first page should contain a professionally suitable background image of the
company’s logo/ product/ services and mentions the following:
– Name of consultant (student) and consultant ID (student ID)
– Name of the selected company and its’ listed exchange(s).
– Release date of the consultant’s report.
The second page should include the table of content that is hyperlinked (preferably) with
various sections of the report to help navigate through the submitted PDF file during the
assessment process.
The third page should contain the executive summary (Maximum 150 words not counted
against the total word count). The executive summary highlights the report’s contexts,
findings, and significant inferences from the analysis.
MAIN BODY OF THE REPORT
a. Understating the firm and its industry
This section should provide a brief context to help the reader understand the bigger
picture about firm’s operation and its environmental dynamics. Key points to highlight
may include –
– Overview of the market, market shares of key players and your firm, key trends in
the past five years.
– A brief overview of the firm and its core businesses (critical products/services, %
contribution to revenues) with the comment on the firm’s business model, e.g., how
the firm makes a profit, what are the main sources of revenues and costs, and what
it tells about the company’s future.
– Brief comment on the key strategic/market/financial or other risks through the lens
of PEST (Political, Economic, Social, Technological) analyses.
b. Corporate governance
Contents in this section should provide a cohesive understanding of the firm’s corporate
governance practices. You should comment on the potential of the current governance
status to resolve agency problems. Key issues to highlight includes –
– Firm’s corporate governance practices with focus on board size, board
independence ratio, key committees, independence of key committees, CEO duality
(CEO is also chairman of the board), CFO board membership, etc.
– Firm’s compensation practices for the top management – salary, bonus, option
grant, ownership to top management (CEO and CFO) and elucidate its potential to
resolve (exacerbate) any agency conflict. Comment on the pay-performance
sensitivities of executive (CEO and CFO) compensation design.
– Status of director’s remuneration and audit fee over the years.
– Comment on whether the firm deviates from best corporate governance practices
set forth by Australian regulators. Does current practices help the firm in solving
agency problem?
c. Capital structure
Contents in this section should provide a cohesive understanding of the firm’s capital
structure and financing choice. Key issues to highlight includes –
– Firm’s capital structure practices during the past five years.
– Comments on how diversified firms’ long-term financing sources are.
– Whether firms have raised significant additional capital during the period. What are
the main sources of such capital, and how evolving are these sources?
– How does the issue of debt (if any) /bank loan affect the firm’s coverage ratio?
– whether any link can be established between the firm’s financing policy and its
shareholders’ wealth through higher(lower) EPS, market performance and stock
price reaction to the announcement of the new equity or debt issue or raising of
significant long-term bank loan.
d. Capital expenditure / investment management
Discussion in this section should provide an overview of the firm’s investment portfolio
strategy and its connection to improved market share and financial performance. Key
highlights should include –
– Firm’s capital investment practices using historical analysis of long-term investments
for the past five years.
– If there is any significant investment during the period, including investment in fixed
assets, restructuring through merger and acquisition, or divesture.
– How company’s investments in tangible vs. intangible assets are changing?
– The efficiency of investment – contribution to the cash flow stream, profitability, and
market performance and announcement effect (if any) of such investment decision.
e. Distribution decision
Discussion in this section should provide an overview of the firm’s distribution policy.
Key issues to highlight includes –
– Firm’s dividend decision using historical analysis of dividends, such as dividend
payout policy during the past five years.
– Firm’s dividend practice types – stock dividend and/or cash dividend, frequency –
annual vs. interim dividend, etc.
– Comment on the market reaction of dividend announcement using event study, i.e.,
calculating abnormal return for two dividend announcement events (preferably one
increase and one decrease)
– Comment on whether the market reaction is consistent with the nature of the
dividend announcement.
If your firms does not pay dividend in past five years, you have two options: (a) you can
state the facts and provide reasons justifying non-payment of such dividend (marks will
not be deducted for such cases); (b) you can choose another company and request a
change to confirm with subject coordinator or instance lecturer.
CONCLUSION
Concluding notes should provide an overall (maximum 150 words not to be counted
against the total word limit) comment on the firm’s financial management practices and
value relevance.
APPENDICES
Appendix to main report (in PDF and word document) should include:
– Notes on any earning quality issues, reporting anomalies – how you handled them.
– References – Keep it minimum and follow APA formatting styles.
Appendices should include all information/calculations supporting the main text of the
research report and should be submitted as an excel file. It should include:
– Financial analysis/data that support the report’s contents – numbers, suggestions, or
observations.
– Formatted historical investment and financing statements, income statements, cash
flow statements, etc.
4. ADDITIONAL FORMATTING NOTES:
• The report should be ‘short and sweet.’
• The main body should be around 15002 words + maximum 10% tolerable limit.
• A4 page with a 1.5-space and Times New Roman font size of 11.
• Ideally should match the format of a professional management consultant report with
creative use of visualization techniques. Use graphs, figures, pie charts, histograms,
tables, etc and apply your formatting knowledge to give the report an impressive
look and economize the word count.
• Avoid providing redundant information, i.e., a table and a graph stating the same.
• Appendices may contain additional detailed analysis, including reasons behind the
presented analysis/result in the main report, and all the calculations used in the
report must be shown.
• Materials presented in appendices will not be considered for marking purposes. You
are expected to present a ‘professional, fair, and accurate’ report. Markers will
consult the appendices to check the authenticity and correctness of the information
presented in the main text of the report. The absence of such support in the
appendices will count against the mark.
5. WRITTEN REPORT (SOFT COPY):
• Only the soft copy (PDF – preferred / Word Document file) of the written report will
be acceptable for submission via the link in the Assignment section available on LMS.
The link for submission will be available in LMS one week before the submission
deadline. Email a Word version of the report to connectmystudents@gmail.com for
reference only. Ensure that the email’s subject line follows prior instructions (FIN3CFI
– Student ID – Assign Submission).
• For academic integrity and training of future management consultants who will show
confidence and independence, Turnitin will be used to report text matching. The
students will be able to resubmit the report as many times as they wish until the
report’s due date. Note that the TurnItIn text-matching report shows the percentage
of each team’s work matching with other sources, including the work of other students
in the cohort, past and present students at La Trobe, and other online materials.
TurnItIn matching percentage of more than 25% will result in the rejection of the
submission.
• In the case of two matched reports (no determination will be made about the original
document) and following the academic integrity module, both students will be equally
penalized (or both reports will be rejected).
• During high traffic, Turnitin will take time to generate the matching report. You may
want to submit the final report early (before the actual deadline) to allow sufficient
time for LMS to generate the Turnitin report.
• Special consideration will not be accepted for this task except for students suffering
from COVID-19 within 15 days prior to the submission date for the task or for students
who have received special consideration from the university on other valid grounds
at the start of the semester.
2 Excluding table, graphs, image, flow chart. Please utilize table, graphs, image, flow chart without
duplication and to economise word count.
6. MARKING RUBRIC:
3
Professionally written executive summary – 150 words 05
Industry and business description – 250 words
• Industry background
• Firm’s description and core business
• Company’s business model
• Key risks and opportunities
10
Corporate governance stats – 350 words
• Corporate governance practices – board structure, committee
independence, and CEO duality.
• Compensation practices and potential agency concerns.
• Board remuneration and audit fee
• Divergence from best practices of corporate governance.
20
Capital structure practices – 300 words
• Financing sources and changing patterns of financing.
• Historical analysis of leverage
• The effect of leverage on accounting and market performance
20
Capital expenditure / investment practices – 300 words
• Historical analysis of capital expenditure
• Changing the nature of investment (tangible vs. intangible
assets)
• Investment efficiency & the performance effect of investment
20
Distribution practices – 300 words
• Historical analysis of dividend policy
• Types of dividends and evolving trends.
• Announcement effect
20
Conclusion – 150 words 05
TOTAL 100
END OF THE DOCUMENT
3 This will be converted into 30% of overall marks in this unit.

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