Assessment Task

Drawing on your understanding of financial accounting concepts and financial statements analysis, write a 1,500-word case study report analysing, evaluating and comparing the financial performance and position of two comparative businesses using the annual reports provided in the Assessments area of the subject site. This assessment task will provide you with the opportunity to apply the knowledge and skills acquired in the subject.  It is a practical task, involving the use of real-world accounting information. This is intended to consolidate your knowledge and skills relating to how investment opportunities are assessed.

Context

Financial  statements  analysis  is  the  process  of  reviewing and  analysing  a  company's  financial statements, which include the balance sheet, income statement, cash flow statement and statement of changes in equity. This process helps individuals and organisations make informed decisions about investing,  lending  and  managing  their   resources.  Some of  the  most common  uses  of  financial statements  analysis   include:  evaluating  a  company's  financial  health,  assessing  profitability, identifying financial trends, assessing credit worthiness and making informed investment decisions.

This assessment task provides you with an opportunity to evaluate the knowledge you have acquired and apply the skills you have developed to undertake the analysis of financial statements published by companies in their annual reports. This employs techniques that a financial analyst uses to evaluate investment decisions for companies that are listed on a stock exchange.

Instructions

In this assessment task, you will assume the role of a financial market analyst and analyse the financial statements of two Australian Securities Exchange (ASX) listed companies in the same industry, offering recommendations to an investor on which company’s shares to invest in. To be successful in this assessment task, you are required to follow the steps below.

1)    Read and understand the topics covered in Modules 3 and 4.

2)    Retrieve, read and analyse the following additional information provided in the Assessments area of the subject site:

• Annual Reports — Your case study report will be based on the reports of these two nominated companies.

• Assessment 2 Financial Analysis Template (MS Excel file) — This file contains in-built formulae to compute a variety of financial ratios required for completing the assessment task.

3)    Based on the information contained in the financial statements (and the Notes to the Financial Statements) of the annual reports, conduct financial analyses of the two companies using the following tools:

• Ratio  analysis — The  analysis  should  consider  financial  ratios  within  each  of the following categories: liquidity, profitability, efficiency, capital structure and market performance  (also  known  as  investment  ratios).  Your  financial  analysis  should highlight and discuss key movements in all categories of ratio analysis over the latest two financial years. You should note that in calculating some of the ratios, such as return  on  equity  (ROE)  and  return  on  assets  (ROA),  you  may  need to  get  some information from a third annual report. For instance, if the two years of analysis are 2024 and 2023, calculating the ROE and ROA for 2023 may require some information from the  balance  sheet  of  2022.  It  is  your  responsibility  to  download  (from the company’s  website  or  GoogIe)  the  2022  annual   report  to  extract  the   required information.

• Comparative analysis - This analysis requires you to compare your evaluation of each company over the given two-year period with a view to determining whether you would advise investment in one or both of these companies, or neither of them.

4)   You are required to use the Assessment 2 Case Study Report Template (MS Word file) provided in the Assessments area of the subject site to:

•     summarise and present your analyses

•     recommend to the client what position to take in relation to the two companies.

Case Study Report Structure and Format

Your 1500-word case study report should follow industry standards and be structured as shown in detail below:

Executive Summary- In this brief section (200-250 words), you are required to summarise your entire report. As a minimum, you will need to discuss the purpose of your report, the methodology you have used and the key findings of your report. The executive summary is not included in the word count.

Table of Contents - This section is not included in the word count.

1.    Introduction (around 150 words) - Provide a description of the task, the tools and methods that will be applied, and how the report is organised.

2. Analyses of Companies (around 200 words) - Using the headline financial information about the companies in their annual reports, present an overview of their overall financial performance in the period of analysis. This should include:

•    financial highlights

•    industry outlook

• macroeconomic outlook.

Tables and figures are not included in the word count.

3.    Ratio Analyses (around 550 words) - Calculate and tabulate various financial  ratios from the financial statements in the annual reports to derive insights on the financial performance and positions of the companies. You are required to calculate, analyse and evaluate the ratios falling under the following categories:

•    Liquidity

•    Profitability

•    Efficiency

•    Capital structure

•    Market performance

Tables and figures are not included in the word count.

In this section, include a Comparative analysis (around 300 words) that discusses and compares the investment prospects in each company using your analysis and the qualitative information available in the annual reports or in the news media.

4. Conclusions, Recommendations and Overall Assessment (around 300 words) - Comment on the business  performance of the companies, as revealed by the analysis you have undertaken. Recommend what position the client should take after reviewing these investment opportunities.

5.    References - A minimum of six (6) academic and related references (e.g. journal articles, book chapters, conference  papers) and at least two (2) non-academic and related references  (e.g. company websites and annual reports,  newspaper articles,  government websites, consultant reports, etc.) are required to support the discussions in your case study report. Please make sure your references are current. All references should be in the current APA style. Using Wikipedia, Investopedia and similar sources should be avoided. This section is not included in the word count.

Read the assessment rubric, which is an evaluation guide with criteria for grading your assessment. This will indicate what features a successful Case Study Report should exhibit.

A case study template is also provided in the Assessment area on MyLearn for your reference.

Referencing

It is essential that you use current APA style for citing and referencing the sources that you use.

Please see more information on citing and referencing guidelines on the Academic Success webpage.