Your task is to analyse the historical (for the last five 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.

Please note: If you are working for a company listed on the stock exchange, use this opportunity to

complete the exercise on that company. Otherwise, feel free to value a competitor or a company that

interests you. However, note that the company you select must be listed on a stock exchange and have

a history of paying dividends.

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 major items contained in the profit and loss statements and balance sheets, followed by an

analysis of the following important ratios measuring liquidity, profitability, capital structure and market-

value aspects of the company performance:

Liquidity: Current ratio

Profitability: Net profit margin ratio and Return on total assets

Capital structure: Debt ratio and Interest cover ratio

Market value: Price-earning (P/E) ratio.

Your analysis should highlight the important changes within these ratios over this period and identify

the reasons for significant changes. Since these financial ratios are limited to the particular organisation,

it is also useful to compare these ratios to other businesses in the same industry or by using industry

averages.

You are also required to calculate the value of a stock (share) of the listed company selected above,

using the Constant Dividend Growth Rate model. Go to your relevant stock exchange site (e.g.

www.asx.com.au if using an Australian listed company) and find the latest share price. Assume the

company chosen above has a 4% dividend growth rate and the required

rate of return is 9%. Compare that stock value with the current stock market price. Are there any

differences? You are required to explain these differences.

Analyse and interpret the ratios and the other data with reference to the theoretical concepts

introduced in this subject to evaluate the company’s operations and performance. Discuss limitations if any. Taking into account the quantitative and qualitative analysis, you are then required to make a

recommendation on whether to:

Invest in the company

Do not invest in the company.

Please note: In order to start this assignment you will need to extract the financial statements

(comprising five years information) of your chosen publicly listed company.

We recommend you familiarise yourself with the IBISWorld database available under the ‘Research’

drop-down menu in the header on the student learning portal. This tool provides the financials, financial

ratios and company information plus industry averages for a broad range of companies.

Include referencing so that you clearly acknowledge your sources of information. All your references

must be from credible sources such as books, peer-reviewed journals, magazines, company documents

and recent articles. Students are highly encouraged to use peer-reviewed journal articles as this may

contribute towards a higher grade. Your assignment mark will be adversely affected if you use poor

references.