Time Value of Money, Investment Appraisal and Analysing Companies’ Financial Management

Title: Time Value of Money, Investment Appraisal and Analysing Companies’ Financial Management (Part 1)

Grade: this part of the assignment represents 30% of your final grade (10% for each requirement) and you will be given a mark out of 30

Submission Date and Time: 16th of February 2023, 17:00

Submission format: via link on module moodle site

This is the second part of your individual assignment for the module and the objectives we are aiming to achieve with it are:

· Ensure you are able to identify and collect key companies’ operational and financial information to help you start the analysis of their performance

· Ensure you are able to collect, analyse and draw appropriate conclusions from published company information

· Assess your ability to calculate the cost of capital (debt, equity and weighted average) for a company using publicly available information

For this part of the assignment, all the analysis will be conducted on the SAME COMPANY you chose for the first part of the assignment. If you submit a file discussing a different company, that will be considered a non-submission and will be given a grade of 0/30.

Unlike the first part of the assignment, which was essentially to conduct calculations, in the first two requirements of this part of the assignment are about identifying and discussing relevant information of the company and only the final requirement will involve calculations.

As previously, I will not review drafts of your submission, but I will be available to answer any questions/doubts that you might have regarding the correct approach to address the assignment requirements. I can be contacted before/after classes, in my office hours or by e-mail

Requirement:

You are required to submit ONE word or pdf file answering the requirements of the three parts detailed below.

For this part of the assignment, considering you are being asked to essentially collect information from publicly available sources, your ability to correctly reference the sources of that information from which you collect the information is essential. As such, marks will be allocated for the following two elements: 1 – the accuracy of the information collection and its application/analysis; and 2 – the correct referencing using Harvard Referencing methodology.

Requirement 4 – Company Key Information

For the company you calculated the ratios for in the first part of the assignment, answer the following questions:

1. What is the main activity(ies) of the company?

2. What is the volume of trade of the company? (not trade of shares in the capital markets, but the company’s trade in its activity)

3. What is the market capitalization of the company?

4. Who are the company’s Chairman, CEO and Finance Director?

5. What is the company’s market share? (*)

6. How has that market share evolved over the last five years?

7. Who are the company’s main competitors?

8. What are the main products/brands of your company?

9. Is the company significantly dependent on a single product or not?

10. Who are the company’s auditors?

The answer to these questions does not require any explanation, simply presenting the answer with detail when appropriate (e.g., when identifying the main products, you should include the proportion of total sales each product represents) but what you need to include is a clear and detailed indication of where you found the information (e.g. can’t simply state “annual report” or “website”, but need to include page number and section of annual report and which website and the respective link next to the answer.

Any question for which you don’t find the answer, simply state that is the case, but you’ll need to include a list of three sources where you looked for the answer and could not find the answer.

(*) for market share, you’ll need to be specific as to what it refers to. As an example, when I looked for the market share of Ford Motor Company at some point in the past, I found 8.61%, 5.59% and 14.1% without much effort. You may ask, which is right and … they all are! They are UK, worldwide and USA markets shares, respectively. In answering this question, you need to clearly indicate what the market share you’re including in your answer refers to. If appropriate, including more than one market share, is perfectly fine and increases the quality of your submission.

Requirement 5 – Your company in the News

Identify and list 10 times in the last 12 months where your company was in the headlines (of the press, whether financial or otherwise), and write a brief report (no more than 1,000 words, excluding extracts) with an assessment of who you believe those headlines will impact the future performance of the business.

In the report include:

1. The headline and respective source (including link, if from a website, and clearly indicating the date of the news)

2. A brief extract (no required length) with the key idea(s) of the article

3. A brief assessment with your own views of how you think this will impact the future performance of the company.

While any source of information is acceptable to collect information about your company, part of your learning while at University is to be able to use academic and scientific sources of information rather than merely doing web searches. As such, in order to achieve full marks in this requirement, you need to provide evidence (through the referencing of the sources of news used) that you have used academic databases available through the library.

As an example, you find a piece of news indicating the company has announced that current CEO A. will be leaving and be replaced by CEO B. in 3 months’ time. Include these facts in answering part 1 and 2 and then discuss briefly that A. was generally considered a good/bad CEO, so the market expects that the new CEO will be worse/better thus leading to an expected deterioration/improvement of future performance.

Requirement 6 – Company Cost of Capital

Required: Calculate the Weighted Average Cost of Capital for your chosen company by using publicly available information.

In order to achieve full marks for this part of the assignment, you will to do following two elements correctly:

1. Use the correct formulas and present a reasonable WACC for your company, including all the prior calculations required to arrive at the WACC

2. Fully reference all sources of reference for the information collected in order to calculate the WACC