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Describe the economic and industry environment

Assignment Help Financial Accounting
Reference no: EM132297155

Assessment Task

Select a company from the list below:

COMPANY NAME

SYMBOL

GICS INDUSTRY GROUP

Bluescope Steel Limited

BSL

Materials

Ramsay Healthcare

RHC

Health Care

AGL Energy Limited

AGL

Utilities

Qantas Airways Limited

QAN

Transportation

Computershare Limited

CPU

Software & Services

Notify the lecturer in charge of the title of the company you have selected by 15 March 2019.

Company selected - Qantas Airways Limited

Required:

Suppose you work for an S&P/ASX20 company which is exploring opportunities to acquire a business. Chief Executive Officer (CEO) is seeking your recommendation whether the company you selected would be a worthy target for acquisition. You have been asked by CEO to write a report addressing the industry outlook, risk profile, cost of capital and dividend policy and make recommendations.

A) Industry and market outlook
Describe the economic and industry environment for the industry in general and the selected company in particular. Critically evaluate and comment on the key factors that affect the company's attractiveness for investment.

B) Risk analysis
Outline and comment on the risk (both systematic and unsystematic risk) profile of the company. Determine the beta for the firm using raw data. Discuss the issues associated with estimating beta.

C) Cost of capital and capital structure
Determine the cost of capital for each source of finance as well as the weighted average cost of capital for 2018. What does the WACC suggest for the company? Provide an evaluation of the company's capital structure policy and recommend an appropriate capital structure policy for the company. Do you find the capital structure risky for the company? Justify your answer.

D) Dividend policy
Analyse the company's dividend practices and the use of internal funds over the 2009-2018 period. Describe the dividend pattern and policy followed.

E) Share price performance

Analyse changes in the of share price over the past 10 years, and based on your analysis discuss the performance of the company over the past 10 years.

Format of the assignment
• An assignment coversheet (ensure group members' full names and student numbers are correctly written, and the part each student completed specified)
• A table of contents
• An introduction
• The body of the assignment
• References
• 12-point Arial or Times New Roman font with a 1-inch margins on all sides.
• Double-spaced
• All pages following the cover page should have a page number.
• Appropriately cite reference for original work, author(s) etc. Citation and referencing must conform to Harvard/APA 6 referencing system.

Verified Expert

Qantas Airways Limited has a beta value of -0.20 which indicates low-risk level as compared to the market risk. The negative beta reflects the least risk of the company against the competitors in the market. The market has a higher risk level which can be estimated from the high fluctuation in monthly returns over the last twenty-four months.

Reference no: EM132297155

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Reviews

len2297155

5/1/2019 2:04:09 AM

The company selected is qantas. just need to do part b- Risk analysis must include a line graph showing share return and market return. Submission instructions: 1. Maximum word length: 2000 words, excluding graphs, tables and references. 2. Submit via LEO using Turnitin. 3. Submit Excel files for each task via LEO Assignment. This assignment is to be completed in groups of up to four students. Students are required to choose the group members and submit the names and student IDs of their group members to the lecturer-in-charge

len2297155

5/1/2019 2:03:16 AM

LO6 Capital Structure and Payout PolicyDisplays above-average grasp of raising debt and equity capital for the firm in terms of their impact on the firm’s financial structure and risk. Demonstrates exceptionally insightful, interesting and fully supported arguments. A highly-structured and comprehensive response to the task. Extensive and relevant research.

len2297155

5/1/2019 2:03:05 AM

ILOs Criteria LOs 2 and 3 Risk and Return Level 5 (HD) Displays extraordinary high-level understanding of risk and return relationships to the valuation of financial assets Demonstrates exceptionally insightful, interesting and fully supported arguments. A highly-structured and comprehensive response to the task. Extensive and relevant research.

len2297155

5/1/2019 2:02:32 AM

C Cost of capital & capital structure Determine the cost of capital for each source of finance as well as the weighted average cost of capital for 2018. What does the WACC suggest for the company? Provide an evaluation of the company’s capital structure policy and recommend an appropriate capital structure policy for the company. Do you find the capital structure risky for the company? Justify your answer. 25 D Dividend policy Analyse the company’s dividend practices and the use of internal funds over the 2009-2018 period. Describe the dividend pattern and policy followed. 15 E Share price performance Analyse changes in the of share price over the past 10 years. Discuss the performance of the company over the past 10 years based on your analysis. 10 Conclusion & recommendations 5 Total 100

len2297155

5/1/2019 2:02:25 AM

Maximum marks Introduction and purpose of analysis 5 A Industry and market outlook Describe the economic and industry environment for the industry in general and for the selected company. Critically evaluate and comment on the key factors that affect the company’s attractiveness for investment. 15 B Risk analysis Outline and comment on the risk (both systematic and unsystematic risk) profile of the company. Determine the beta for the firm using raw data. Discuss the issues associated with estimating beta. 25

len2297155

5/1/2019 2:01:54 AM

Format of the assignment • An assignment coversheet (ensure group members’ full names and student numbers are correctly written, and the part each student completed specified) • A table of contents • An introduction • The body of the assignment • References • 12-point Arial or Times New Roman font with a 1-inch margins on all sides. • Double-spaced

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