This assignment aims to provide you with the opportunity to think and write as a professional financial analyst. It will test your ability to utilise corporate published financial information to assess a company’s financial and economic performance. You are expected to employ various appraisal techniques learned during the semester. This assignment also tests your critical thinking as you interpret financial ratios in the context of micro-and macro events.
You are required to prepare a financial commentary of no more than 2000 words which analyses the performance of a chosen company over a period of ten years. In your commentary, you are expected to consider the financial performance of the company, both over time and compared to other companies in the industry within which it operates. You will also report on the stock market performance of the company over the same ten-year period. You will consider whether this is reflective of the financial performance of the company, referring to relevant financial theory.
Instructions on Assessment
1) Choose a publicly listed company (listed on a stock market) and briefly describe the profile of your chosen company (to include the industry within which it operates, its target market, etc).
2) Analyse the company’s financial performance over the past 10 years using the tools you have learnt in the module (Please reference your data sources and include all workings in a supplementary excel file with all data used and excel formulae).
Hint you can use data on industry averages if it is available or you can construct your own averages from the available data using the company’s industry peers. For the latter case please use five peer firms to construct any average.
3) Comment on the real micro (firm related) and macro (systematic) factors/ events that may have impacted the financial performance of the company over the period of your analysis. Please use academic papers and professional reports to support your arguments.
4) Analyse the movement of your company’s stock price over the past 10 years: was the stock market performance (changes in the stock price) consistent with the company’s financial performance based on the financial analysis performed in the previous section?
5) Calculate and comment on the behaviour of Earnings Per Share (EPS) and the Price Earnings Ratio (P/E) for the company over the past ten years.
6) Comment on the implications of your findings on the market efficiency/inefficiency debate. Please reference academic papers and professional reports to support your arguments.
Please make sure to include the following in your submission
1 word document of your financial commentary
1 excel file that includes all the data and workings
Note: please signpost workings in the financial commentary.
You may include relevant graphs and charts (constructed using Microsoft Excel functions) to illustrate and support your arguments.
Mapping to Programme Goals and Objectives
• To provide a critical appreciation of the important topics in financial and business analysis.
• To understand, appraise and critique companies’ financial performance.
• To formulate and apply models and tools to derive inferences from publicly available business and financial information.
• To appreciate the importance of business and financial analysis in decision making.
• Identify contemporary professional practice in business and management and finance and understand how it is informed by theory and research.