COMM1140 Financial Management Assessment

Assignment:

All Australian businesses are currently facing uncertain trading conditions. High inflation and labor shortages have created sudden cost pressures and forced businesses to pass on cost increases to their customers. Additionally, rising interest rates pose a growing risk to businesses that have accumulated high levels of debt and increase the likelihood of a global recession occurring in the next 12 months.

You are a UNSW Commerce graduate in 2022 who quickly found employment in Felicity Trust, a financial services company that specialises in providing loans to large Australian businesses. Your manager has asked you to prepare a presentation to help Felicity Trust decide whether it should continue lending money to your assigned company. This is the first task your manager has asked you to complete independently, and you want to ensure that you impress! Luckily, you took notes when the task was assigned to you, which should be strictly followed to complete this task.

The notes are as follows:

Question 1: Present a description of the business and the nature of its operations. This should focus on providing a short explanation of the business’s history, how it generates revenue, and who forms its customer base (5 Marks);

Question 2: Present a financial statement analysis of the financial performance and financial
position of the company (35 Marks);

Question 3: Identify one risk from reading the reports prepared by key management personnel
(i.e., Board Chair and/or CEO) in the 2023 annual report that may impact the company’s future
financial performance and/or financial position. You should explain clearly how the risk you identify
could affect the ratios discussed in Question 2 above (10 Marks);

Question 4: Using two Firm Multiples and two Equity Multiples of three similar companies to your
assigned company (30 Marks):

1. Compare your allocated company with 3 similar companies and determine which one is
   the most similar. For the company that is most similar, provide supporting evidence and
   references of the comparison and state any assumptions (if any) you are making for this
   comparison. (10 marks)
2. Calculate a range and mid-point (average) valuation of your allocated company’s
   outstanding equity (both the market capitalisation value and market share price) based
   on the 3 similar companies. Provide evidence of data collected with proper referencing
   and calculations to substantiate your valuation. (10 marks)
3. Based on the comparison in part (a), explain from part (b) the reasons for the width of the
   range in valuation and why you think the mid-point valuation is accurate or not. Provide
   evidence and the sources of the evidence that support your explanation. Based on this
   explanation, give a simple but educated guess about the percentage you would adjust up
   or down the mid-point valuation to something more reasonable. What would that new midpoint valuation be? (10 marks)

Question 5: Present a short description of whether you would recommend Felicity Trust to continue providing loans to your assigned company in the short term. You should clearly describe how and why you came to this decision. (5 marks)

Are you struggling to keep up with the demands of your academic journey? Don't worry, we've got your back! Exam Question Bank is your trusted partner in achieving academic excellence for all kind of technical and non-technical subjects. Our comprehensive range of academic services is designed to cater to students at every level. Whether you're a high school student, a college undergraduate, or pursuing advanced studies, we have the expertise and resources to support you.

To connect with expert and ask your query click here Exam Question Bank