Recent Question/Assignment

FINA 1051 BUSINESS AND FINANCIAL ENVIRONMENT.

COURSEWORK – 2013/14.

You are required to select an industry / market which interests you. For example, you could choose the oil sector, energy supply, construction, mobile phones, leisure, or retailing, etc. You should then select any TWO companies that operate in your chosen industry/market. These do not need to be Malaysian-based companies [though it may be easier from the viewpoint of currency, accounting policies, regulations, etc if they are Malaysia registered companies].

You are then required to:

[a] Analyse the type of market structure in which the two companies operate and consider the implications of the degree of competition within the industry.
[15 marks]

[b] Identify and explain the significance of the following within that industry:
[i] Factors that determine the level of demand / sales
[ii] Branding of products and market segmentation
[iii] Innovation and new product development.
[iv] Regulation b y government.

[20 marks]

[c] Obtain copies of the Annual Report and Accounts of the two companies that you have selected and now READ CHAIRMAN’S REPORT, CHIEF EXECUTIVE’S REPORT, DIRECTORS’ REPORT. From these you should be able to identify and explain what have been the main objectives of each company in the recent past and near future.

[15 marks]

[d] Now you need to turn to the company financial statements. You will need to examine the Income Statement, Position Statement [Balance Sheet], and particularly the Cash Flow Statement as well as referring as necessary to the accompanying ‘Notes to the Accounts’

You need to identify what types of financing each company uses [e.g. equity or debt, long or short maturing, etc] and to consider how the company makes use those funds [assets] and the effect that has on company performance. So you then need to calculate some accounting ratios and analyse some trends. Specifically you need to calculate:
• Operating profit margins
• Return on capital employed
• Earnings per ordinary share
• Current price/earnings ratio, dividend yield, and dividend cover.
• Current ratio
• Gearing and interest payment cover.

[25 marks]

[e] Finally, you need to identify which macro-economic factors [e.g. exchange rates, inflation, etc] have an impact on the performance of the two companies and explain what those impacts are.

[25 marks]
Total 100 marks

Word limit : 2 500 words + / - 10% [excluding appendices, footnotes and bibliography]

Note:
YOUR ASSIGNMENT RESPONSE SHOULD BE IN THE FORM OF A BUSINESS REPORT ADDRESSED TO AN EXISTING SHAREHOLDER IN ONE OF THE COMPANIES THAT YOU HAVE SELECTED.

Assume that this shareholder is reconsidering the decision to invest in the shares of the company.