Dear Tutor,

I need some help with my Accounting assignment.

Let you know that company A is Michael Hill (MHJ), and company B is Blackmores (BKL)

I have already attached three documents:

1) ACCT7101 Assignment task

2) Copy Ratio Template needs to be fill from annual report each company A (MHJ) and B (BKL)

3) Copy Rubric Assignment to guide us to get a good score on that assignment

I am looking forward someone can help me. Thank you.

ACCT7101 Accounting - Individual Assignment Financial Analysis and Business Decision Making Due Date for Submission 4pm Friday 7th October 1016 (Weight: 20% of Final Grade - Total 40 marks) Aims of this assignment This assignment aims to develop your a) ability to understand and analyse financial reports, b) skills to compare financial information of two listed companies, and c) capacity to evaluate financial information and synthesise financial and non-information to make business decisions. This assignment is to be completed on an individual basis Your submitted assignment must be entirely your own work. You may seek guidance from lecturers, tutors or fellow students to clarify concepts or the application of concepts to company financial statements in general. Advice that is clearly associated with the assignment tasks cannot be sought or provided. Plagiarism is the submission of work or ideas which are not your own but for which academic credit is claimed. It is important that you review the University's policy on plagiarism. The originality of your assignment will be assessed by the Turn-it-in system. Information from the course profile relating to plagiarism is reproduced below. Plagiarism The University has adopted the following definition of plagiarism: Plagiarism is the act of misrepresenting as one's own original work the ideas, interpretations, words or creative works of another. These include published and unpublished documents, designs, music, sounds, images, photographs, computer codes and ideas gained through working in a group. These ideas, interpretations, words or works may be found in print and/or electronic media. Students are encouraged to read the UQ Student Integrity and Misconduct policy (http://ppl.app.uq.edu.au/content/3.60.04-student-integrity-and-misconduct) which makes a comprehensive statement about the University's approach to plagiarism, including the approved use of plagiarism detection software, the consequences of plagiarism and the principles associated with preventing plagiarism. 1 ACCT7101 Accounting - Independent Assignment Assignment overview You have been randomly assigned two ASX listed companies (Company A and Company B). See the file \"Companies allocated to students\" under the Assessment tab on Blackboard to find your companies. Obtain each of your company's annual reports for the 2014 and 2015 financial years from the company's website or www.asx.com.au. The annual reports contain the chairperson's report, directors' report and financial statements (Balance Sheet, Income Statement, Statement of Cash Flows and notes to the accounts). The financial statements include comparative figures from the prior year therefore you will have data for three financial years: 2013, 2014 and 2015. Research the financial press and other sources of available information to familiarise yourself with the industry in which your allocated companies operate and with company specific factors that may have or will effect either company's performance. Two business scenarios Company are described below. Scenario 1 relates to Company A only and Scenario 2 involves Company A and Company B. Knowledge of the industry, company specific context and their financial data will be important inputs that inform the decision that you recommend in relation to each scenario. Scenario 1 Company A has submitted an application to the Global Bank for a loan. The amount of the loan is equal to 35% of total shareholders' equity at the end of the 2015 financial year. The purpose of the loan is to fund expansion of Company A's operating capacity. The loan term sought is 10 years and the loan would be secured against company property. Assume you are a branch Global Bank lending officer who assesses loan applications. The lending officer must make a recommendation to the head office lending manager advising whether the loan application from Company A should be accepted or rejected. Scenario 2 Both Company A and Company B have offered Hawaiian Holdings Limited, a listed investment company (LIC), a private placement of ordinary shares. The amount of share offer is equal to 30% of total shareholders' equity of each company at the end of the 2015 financial year. The purpose of an increase in equity for each company is to raise funds to finance an expansion of operating capacity. Assume you are an investment manager at Hawaiian Holdings who evaluates private equity placements. Hawaiian Holdings can afford either of the two private placements but cannot accept both offers. The manager must make a recommendation to the board of directors advising whether to accept Company A's offer to sell to Hawaiian Holdings a new issue of ordinary shares and reject Company B's offer, or accept Company B's offer to sell to Hawaiian Holdings a new issue of ordinary shares and reject Company A's offer or alternatively reject both offers. 2 ACCT7101 Accounting - Individual Assignment Assignment tasks Before commencing work on the tasks below refer to the marking rubric for the criteria and standards that will be applied in the assessment of your assignment. See Blackboard. 1. Company background research (12 marks) Review Company A's and Company B's annual reports, articles in the financial press and other sources of information. Write a short response to each item below to build background knowledge of each company and their industry. a) Describe the operating activities of each company noting similarities and differences between Company A and Company B. (4 marks) b) Identify two economy wide factors, two industry factors, and two specific factors that could impact on the financial performance and position of Company A and two specific factors that could impact on the financial performance and position of Company B. (4 marks) c) Explain significant achievements or challenges that have affected the performance of Company A and Company B in the last two years. (4 marks) 2. Financial ratio analysis (4 marks) Calculate financial statement ratios for the 2015, 2014 and 2013 years for Company A and Company B. Use the Excel template provided on Blackboard under the Assessment tab to present the analysis in a table. Obtain data for the ratios from the financial statements and notes to the accounts. You may add to this template (calculate additional ratios). See further instruction in the template. 3. Lending decision (12 marks) Write a business memorandum to the Global Bank head office loan manager from the branch bank lending officer in Scenario 1. The memorandum must address the following points below. a) Evaluate and discuss you assessment of the ability of Company A to repay the loan and interest. Make a recommendation to accept or reject the loan application from Company A and justify that recommendation. Use knowledge that you have acquired in your company research from Q1 and refer to relevant ratios calculated in Q2. (4 marks) b) Briefly discuss Company A's net cash flows from operating, investing and financing activities and the trends evident over the last three years. Explain how this analysis is consistent with your accept or reject recommendation. (4 marks) 3 ACCT7101 Accounting - Individual Assignment c) Choose one ratio that relates information from the Statement of Cash Flows with the Balance Sheet or Income Statement. Discuss the conceptual interpretation of this ratio with reference to literature (accounting texts excluding Carlon et al. or journal articles). Describe trends in this ratio for Company A and how this information supports your recommendation to accept or reject the loan application. (4 marks) 4. Investment decision (12 marks) Write a business memorandum to Hawaiian Holdings Limited's board of directors from the investment manager in Scenario 2. The memorandum must address the points below. a) Use the most relevant financial ratios to analyse and compare trends in profitability and risk of Company A and Company B for the 2015, 2014 and 2013 years. Discuss your assessment of relative profitability and risk of both companies. (4 marks) b) Recommend whether Hawaiian Holdings should invest in Company A or Company B or alternatively reject both offers. Justify the recommendation based on the evaluation of risk and profitability of each company and other relevant background information obtained from the annual reports and other sources. Use knowledge that you have acquired in your company research from Q1 and refer to the relevant ratios calculated in Q2. (4 marks) c) Explain with reference to literature (accounting texts other than Carlon et al. or journal articles) the meaning of the price earnings (PER) ratio and earning per share (EPS). Describe three year trends in these ratios for Company A and discuss its relevance to the investment decision. (4 marks) Assignment administration Format Submit your work as a single PDF document. Include your student number and name as a header to the document. Your written responses to Assignment tasks 1, 3 & 4 are limited to a maximum of 4 pages (Times Roman 11 point type, 1.5 line spacing and minimum, 2 cm on each margin). Any submitted text exceeding this limit will not be assessed. Attach the Excel table of financial ratios for Assignment Task 2 as the 5th-6th pages of the document (excluded from page limit). Attach a Reference List as the 7th page of the document. All sources used must be referenced using a consistent academic reference style (e.g. Harvard Style of referencing). See Blackboard for information on the UQBS preferred format. To reference from an annual report use the ASX Code of the company, year of the annual report and page number, e.g. MHJ 2015, p.23). 4 ACCT7101 Accounting - Individual Assignment Submission Submit your assignment before or on the due date. Follow the instructions below. a) Submit the assignment electronically as a PDF to the Turn-it-in link in the course Blackboard, under the \"Assessment\" tab, then under \"Turn-it-in Assignment Submission Folder Semester 2 2016\". Follow the submission instructions. The title of your assignment in the \"Turn-it-in Submission Page\" must be the ASX code of your assigned Company A. Do not add anything else in the title. For example, Michael Hill Ltd title would be: MHJ. b) The assignment can be submitted once only. Once submitted your assignment cannot be modified and re-submitted. However, before submitting the assignment you can test it for text matching through a draft submission in the \"Draft Turn-it-in Assignment - To Test Originality\" folder. Late submission An assignment submitted after the due date and time for which no extension has been granted prior to the due date will incur a late submission penalty. The penalty is applied at the rate of 5% of the total available marks for the assignment (i.e. 2 marks out of 40 marks) for each calendar day or part thereof that the assignment remains overdue. Extension of due date Requests for granting an extension to the due dates must be made in writing and signed (not via email) to the Course Coordinator at least 24 hours prior to the submission date. The request must contain documentation satisfactorily supporting the request. If an extension is approved, the new agreed date for submission will be noted on the application together with the Course Coordinator's and the student's signatures and a copy returned to the student. Assessment criteria The criteria and standards that will be applied in the assessment of this assignment are available on Blackboard (under the \"Assessment\" tab). Review the rubric before you commence work to ensure you understand the requirements of the assessment and how it will be assessed. Feedback on the assessment of your assignment will be available via Turn-it-in. 5 ACCT 7107 Accounting Financial Ratio Analysis Name Student ID Instructions 1. Enter your name and student number in the coloured cells above. 2. Enter the ASX code of Company A and Company B in the appropriate coloured cells below. 3. Enter absolute amounts from the financial statements in the relevant coloured cells below. 4. Enter a formula to calculate the annual ratio and format the cell as a % or number to two decimal places. 5. Data in cells D13:F17 is for demonstration only. Delete and enter company data. 6. Hide rows 4 to 9 after completion. Select each company and fit one page. Copy to your word document. Ratio Category Company A Formula Current assets Current liabilities 2015 Absolute $ Values 34,848 29,600 2014 Absolute $ Values 66,900 57,643 2013 Absolute $ Values 45,800 26,000 Ratio 1.18 Ratio 1.16 Ratio 1.76 Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Current ratio Quick ratio Highly liquid current assets Current liabilities (EXCLUDES INVENTORY AND PREPAID ASSETS) Cost of sales Average inventory Inventory turnover Liquidity 365 Inventory turnover Average days in inventory Net Credit Sales Average net receivables Receivables turnover 365 Receivables turnover Average days receivables Profit after tax Average OSE equity Return on ordinary shareholders' equity Profit after tax Average total assets Return on assets Gross profit Sales revenue Gross profit rate/margin Profitability Profit after tax Net Sales Profit margin Net operating cash flow Net Sales Cash return on sales Net Sales Average total assets Asset turnover Profit before interest & tax Interest expense Times interest earned Solvency Total liabilities Total assets Debt to total assets Earnings per share (EPS) Given Share price EPS Price-earnings ratio Market Ratio Category Company B Formula Ratio Ratio Ratio Absolute $ Values Absolute $ Values Absolute $ Values Ratio #DIV/0! Ratio #DIV/0! Ratio #DIV/0! Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Current assets Current liabilities Current ratio Quick ratio Highly liquid current assets Current liabilities (EXCLUDES INVENTORY AND PREPAID ASSETS) Cost of sales Average inventory Inventory turnover Liquidity 365 Inventory turnover Average days in inventory Net Credit Sales Average net receivables Receivables turnover 365 Receivables turnover Average days receivables Profit after tax Average OSE equity Return on ordinary shareholders' equity Profit after tax Average total assets Return on assets Gross profit Sales revenue Gross profit rate/margin Profitability Profit after tax Net Sales Profit margin Net operating cash flow Net Sales Cash return on sales Net Sales Average total assets Asset turnover Profit before interest & tax Interest expense Times interest earned Solvency Total liabilities Total assets Debt to total assets Earnings per share (EPS) Given Share price EPS Price-earnings ratio Market Assignment Assessment Rubric Question 1 (a) Fail: 1 Pass: 2 Descriptions are incomplete. No similarities Descriptions are sound. A similarity or difference identified. or differences identified. Description of Company A and B - similarities and differences Question 1 (b) Economic, industry and company specific factors that could affect financial performance or position. Question 1 (c) No factors were identified or factors identified are not related to Company A or B. At least two factors were identified including appropriate references. No achievements or challenges were identified. At least one achievement or one challenge was identified for Company A and Company B from the most recent annual report. Achievements or challenges that have affected financial performance in the last year. Financial ratios More than 7 different ratios that have errors Maximum of 7 different ratios that have errors in their in their calculation. calculation. Scenario 1.1 - Company A 1) Ratios chosen are not the most relevant to evaluate the ability of the company to repay the loan and interest. Evaluaton of the ability to repay the loan and interest. Scenario 1.2 - Company A Analysis of cash flows from operating, investing and financing activities. Scenario 1.3 - Company A 1) The appropriate ratios to evaluate ability to repay loan and interest were chosen. 2) A comparison of appropriate ratios is provided with an explanation of the effect on 2) Ratios are described without the ability to repay loan and interest. comparison. Cash inflows and cash outflows from Major cash inflows and cash outflows from operating, investing operating, investing and financing activities and financing activities and their changes were identified from not correctly identified. the Statement of Cash Flows for three years. Incorrect ratio was chosen for the analysis or the ratio was correctly chosen but its Analysis of a ratio relating information from Statement of meaning or interpretation is incorrect. Cash Flows with the Balance Sheet or Income Statement. The ratio was correctly chosen and its meaning and changes correctly interpreted, but no reference provided. Assignment Assessment Rubric Evaluation of profitability and risk from ratio analysis. Fail: 1 Ratios chosen are not the most relevant to evaluate the profitability and risk of investment in Company A or Company B. Ratios are described without comparison with previous years or between Company A and Company B. Pass: 2 The approprite ratios to evaluate profitability and risk relating to investment in Company A and/or Company B were chosen. A comparison of the ratios is provided with an interpretation how changes in the ratios over three years affect the assessment of profitability and risk. Scenario 2.2 - Companies A & B 1) A decision was not made. A decision was made and justified by the conclusion formed from the an analysis of ratios. Scenario 2.1 - Companies A & B Decision to invest (or not) based on ratio analysis and other relevant information. 2) No additional information is provided. Scenario 2.3 - Company A Interpretation of earnings per share and market-to-book ratios and changes over three years. The ratios are calculated but no interpretation is given. The ratios are calcluated and described. The meaning of the ratios is explained but without a justified interpretation according to at least two relevant referenced sources of information. Assignment Assessment Rubric Question 1 (a) Good: 3 Descriptions are detailed. Similarities or differences identified. Very Good: 4 Descriptions are complete. Comparative analysis of similarities and differences in terms of their products/services, markets, and location. Description of Company A and B - similarities and differences Complete references are included. Question 1 (b) One relevant economic, one industry and one company specific factor was identified with appropriate references to sources of information for each factor. At least two different references are provided. In addition to the standard for "Good", an explanation of how these factors could affect the financial statements of Company A and Company B is provided. Most relevant achievements or challenges of Company A and Company B were identified from the most recent annual report or from other sources (complete references are provided). In addition to the standard for "Good", an explanation was provided on how the achievements and challenges have affected the last annual report and how they could affect the next annual report of each company. Financial ratios Maximum of 3 different ratios that have errors in their calculation. No errors in the calculation of ratios. Scenario 1.1 - Company A In addition to the standards for "Pass", a discussion comparing trends in the ability to repay loan and interest is included. 1) In addition to standards for "Good", an interpretation of general trends of Company A including a conclusion for the evaluation of the ability to repay loan and interest of Company A based on this interpretation is provided. In addition to standard for "Pass", changes in cash inflows and cash outflows of major items were analysed to explain changes in operating, investing and financing activities. A decision was made justified based on on conclusion. In2)addition to standard forand "Good", a discussion how the analysis of cash inflows and cash outflows is relevant to assessing the ability of Company A to repay loan and interest is provided and which supports (or not) the conclusion based on ratio analysis. In addition to the standards for "Pass", a conceptual interpretation of the meaning of this ratio ratio and its changes based on your review Analysis of a ratio relating information from Statement of of referenced relevant literature (as described in the assignment Cash Flows with the Balance Sheet or Income Statement. document) on the topic is provided. In addition to standard for "Good", the conceptual interpretation of changes in this ratio is applied to the changes of this ratio of Company A in the last three years explaining their effect on the decision to lend half of its equity to Company A. Economic, industry and company specific factors that could affect financial performance or position. Question 1 (c) Achievements or challenges that have affected financial performance in the last year. Evaluaton of the ability to repay the loan and interest. Scenario 1.2 - Company A Analysis of cash flows from operating, investing and financing activities. Scenario 1.3 - Company A Assignment Assessment Rubric Scenario 2.1 - Companies A & B Evaluation of profitability and risk from ratio analysis. Scenario 2.2 - Companies A & B Decision to invest (or not) based on ratio analysis and other relevant information. Scenario 2.3 - Company A Interpretation of earnings per share and market-to-book ratios and changes over three years. Good: 3 In addition to standards for "Pass", a discussion comparing the changes in the assessment of profitability and risk from investment in Company A and Company B over three years is provided with an explanation linked to most relevant items in the balance sheet and/or income statement affecting the comparison. Very Good: 4 In addition to standards for "Good", a conclusion for the evaluation of the profitability and risk of investment in Company A and Company B based on ratio analysis is provided. A decision was made and justified by the conclusion formed from the The same as the standards for "Good" but more than two sources of analysis of ratios including explanation of changes in profitability additional non-financial information relevant to the decision to invest or not and/or risk of investment in Company A or Company B based on are properly referenced and included. information from at least two additional sources of information (with appropriate references). In addition to the standards for "Pass", a justified interpretation according to at least two referenced sources of information is provided. In addition to the standards for "Good", changes in the ratios over three years for Company A are interpreted and their relationship with profitability of the company explained. ACCT7101 Accounting - Individual Assignment Financial Analysis and Business Decision Making Due Date for Submission 4pm Friday 7th October 1016 (Weight: 20% of Final Grade - Total 40 marks) Aims of this assignment This assignment aims to develop your a) ability to understand and analyse financial reports, b) skills to compare financial information of two listed companies, and c) capacity to evaluate financial information and synthesise financial and non-information to make business decisions. This assignment is to be completed on an individual basis Your submitted assignment must be entirely your own work. You may seek guidance from lecturers, tutors or fellow students to clarify concepts or the application of concepts to company financial statements in general. Advice that is clearly associated with the assignment tasks cannot be sought or provided. Plagiarism is the submission of work or ideas which are not your own but for which academic credit is claimed. It is important that you review the University's policy on plagiarism. The originality of your assignment will be assessed by the Turn-it-in system. Information from the course profile relating to plagiarism is reproduced below. Plagiarism The University has adopted the following definition of plagiarism: Plagiarism is the act of misrepresenting as one's own original work the ideas, interpretations, words or creative works of another. These include published and unpublished documents, designs, music, sounds, images, photographs, computer codes and ideas gained through working in a group. These ideas, interpretations, words or works may be found in print and/or electronic media. Students are encouraged to read the UQ Student Integrity and Misconduct policy (http://ppl.app.uq.edu.au/content/3.60.04-student-integrity-and-misconduct) which makes a comprehensive statement about the University's approach to plagiarism, including the approved use of plagiarism detection software, the consequences of plagiarism and the principles associated with preventing plagiarism. 1 ACCT7101 Accounting - Independent Assignment Assignment overview You have been randomly assigned two ASX listed companies (Company A and Company B). See the file \"Companies allocated to students\" under the Assessment tab on Blackboard to find your companies. Obtain each of your company's annual reports for the 2014 and 2015 financial years from the company's website or www.asx.com.au. The annual reports contain the chairperson's report, directors' report and financial statements (Balance Sheet, Income Statement, Statement of Cash Flows and notes to the accounts). The financial statements include comparative figures from the prior year therefore you will have data for three financial years: 2013, 2014 and 2015. Research the financial press and other sources of available information to familiarise yourself with the industry in which your allocated companies operate and with company specific factors that may have or will effect either company's performance. Two business scenarios Company are described below. Scenario 1 relates to Company A only and Scenario 2 involves Company A and Company B. Knowledge of the industry, company specific context and their financial data will be important inputs that inform the decision that you recommend in relation to each scenario. Scenario 1 Company A has submitted an application to the Global Bank for a loan. The amount of the loan is equal to 35% of total shareholders' equity at the end of the 2015 financial year. The purpose of the loan is to fund expansion of Company A's operating capacity. The loan term sought is 10 years and the loan would be secured against company property. Assume you are a branch Global Bank lending officer who assesses loan applications. The lending officer must make a recommendation to the head office lending manager advising whether the loan application from Company A should be accepted or rejected. Scenario 2 Both Company A and Company B have offered Hawaiian Holdings Limited, a listed investment company (LIC), a private placement of ordinary shares. The amount of share offer is equal to 30% of total shareholders' equity of each company at the end of the 2015 financial year. The purpose of an increase in equity for each company is to raise funds to finance an expansion of operating capacity. Assume you are an investment manager at Hawaiian Holdings who evaluates private equity placements. Hawaiian Holdings can afford either of the two private placements but cannot accept both offers. The manager must make a recommendation to the board of directors advising whether to accept Company A's offer to sell to Hawaiian Holdings a new issue of ordinary shares and reject Company B's offer, or accept Company B's offer to sell to Hawaiian Holdings a new issue of ordinary shares and reject Company A's offer or alternatively reject both offers. 2 ACCT7101 Accounting - Individual Assignment Assignment tasks Before commencing work on the tasks below refer to the marking rubric for the criteria and standards that will be applied in the assessment of your assignment. See Blackboard. 1. Company background research (12 marks) Review Company A's and Company B's annual reports, articles in the financial press and other sources of information. Write a short response to each item below to build background knowledge of each company and their industry. a) Describe the operating activities of each company noting similarities and differences between Company A and Company B. (4 marks) b) Identify two economy wide factors, two industry factors, and two specific factors that could impact on the financial performance and position of Company A and two specific factors that could impact on the financial performance and position of Company B. (4 marks) c) Explain significant achievements or challenges that have affected the performance of Company A and Company B in the last two years. (4 marks) 2. Financial ratio analysis (4 marks) Calculate financial statement ratios for the 2015, 2014 and 2013 years for Company A and Company B. Use the Excel template provided on Blackboard under the Assessment tab to present the analysis in a table. Obtain data for the ratios from the financial statements and notes to the accounts. You may add to this template (calculate additional ratios). See further instruction in the template. 3. Lending decision (12 marks) Write a business memorandum to the Global Bank head office loan manager from the branch bank lending officer in Scenario 1. The memorandum must address the following points below. a) Evaluate and discuss you assessment of the ability of Company A to repay the loan and interest. Make a recommendation to accept or reject the loan application from Company A and justify that recommendation. Use knowledge that you have acquired in your company research from Q1 and refer to relevant ratios calculated in Q2. (4 marks) b) Briefly discuss Company A's net cash flows from operating, investing and financing activities and the trends evident over the last three years. Explain how this analysis is consistent with your accept or reject recommendation. (4 marks) 3 ACCT7101 Accounting - Individual Assignment c) Choose one ratio that relates information from the Statement of Cash Flows with the Balance Sheet or Income Statement. Discuss the conceptual interpretation of this ratio with reference to literature (accounting texts excluding Carlon et al. or journal articles). Describe trends in this ratio for Company A and how this information supports your recommendation to accept or reject the loan application. (4 marks) 4. Investment decision (12 marks) Write a business memorandum to Hawaiian Holdings Limited's board of directors from the investment manager in Scenario 2. The memorandum must address the points below. a) Use the most relevant financial ratios to analyse and compare trends in profitability and risk of Company A and Company B for the 2015, 2014 and 2013 years. Discuss your assessment of relative profitability and risk of both companies. (4 marks) b) Recommend whether Hawaiian Holdings should invest in Company A or Company B or alternatively reject both offers. Justify the recommendation based on the evaluation of risk and profitability of each company and other relevant background information obtained from the annual reports and other sources. Use knowledge that you have acquired in your company research from Q1 and refer to the relevant ratios calculated in Q2. (4 marks) c) Explain with reference to literature (accounting texts other than Carlon et al. or journal articles) the meaning of the price earnings (PER) ratio and earning per share (EPS). Describe three year trends in these ratios for Company A and discuss its relevance to the investment decision. (4 marks) Assignment administration Format Submit your work as a single PDF document. Include your student number and name as a header to the document. Your written responses to Assignment tasks 1, 3 & 4 are limited to a maximum of 4 pages (Times Roman 11 point type, 1.5 line spacing and minimum, 2 cm on each margin). Any submitted text exceeding this limit will not be assessed. Attach the Excel table of financial ratios for Assignment Task 2 as the 5th-6th pages of the document (excluded from page limit). Attach a Reference List as the 7th page of the document. All sources used must be referenced using a consistent academic reference style (e.g. Harvard Style of referencing). See Blackboard for information on the UQBS preferred format. To reference from an annual report use the ASX Code of the company, year of the annual report and page number, e.g. MHJ 2015, p.23). 4 ACCT7101 Accounting - Individual Assignment Submission Submit your assignment before or on the due date. Follow the instructions below. a) Submit the assignment electronically as a PDF to the Turn-it-in link in the course Blackboard, under the \"Assessment\" tab, then under \"Turn-it-in Assignment Submission Folder Semester 2 2016\". Follow the submission instructions. The title of your assignment in the \"Turn-it-in Submission Page\" must be the ASX code of your assigned Company A. Do not add anything else in the title. For example, Michael Hill Ltd title would be: MHJ. b) The assignment can be submitted once only. Once submitted your assignment cannot be modified and re-submitted. However, before submitting the assignment you can test it for text matching through a draft submission in the \"Draft Turn-it-in Assignment - To Test Originality\" folder. Late submission An assignment submitted after the due date and time for which no extension has been granted prior to the due date will incur a late submission penalty. The penalty is applied at the rate of 5% of the total available marks for the assignment (i.e. 2 marks out of 40 marks) for each calendar day or part thereof that the assignment remains overdue. Extension of due date Requests for granting an extension to the due dates must be made in writing and signed (not via email) to the Course Coordinator at least 24 hours prior to the submission date. The request must contain documentation satisfactorily supporting the request. If an extension is approved, the new agreed date for submission will be noted on the application together with the Course Coordinator's and the student's signatures and a copy returned to the student. Assessment criteria The criteria and standards that will be applied in the assessment of this assignment are available on Blackboard (under the \"Assessment\" tab). Review the rubric before you commence work to ensure you understand the requirements of the assessment and how it will be assessed. Feedback on the assessment of your assignment will be available via Turn-it-in. 5 ACCT 7107 Accounting Financial Ratio Analysis Name Student ID Instructions 1. Enter your name and student number in the coloured cells above. 2. Enter the ASX code of Company A and Company B in the appropriate coloured cells below. 3. Enter absolute amounts from the financial statements in the relevant coloured cells below. 4. Enter a formula to calculate the annual ratio and format the cell as a % or number to two decimal places. 5. Data in cells D13:F17 is for demonstration only. Delete and enter company data. 6. Hide rows 4 to 9 after completion. Select each company and fit one page. Copy to your word document. Ratio Category Company A Formula Current assets Current liabilities 2015 Absolute $ Values 34,848 29,600 2014 Absolute $ Values 66,900 57,643 2013 Absolute $ Values 45,800 26,000 Ratio 1.18 Ratio 1.16 Ratio 1.76 Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Current ratio Quick ratio Highly liquid current assets Current liabilities (EXCLUDES INVENTORY AND PREPAID ASSETS) Cost of sales Average inventory Inventory turnover Liquidity 365 Inventory turnover Average days in inventory Net Credit Sales Average net receivables Receivables turnover 365 Receivables turnover Average days receivables Profit after tax Average OSE equity Return on ordinary shareholders' equity Profit after tax Average total assets Return on assets Gross profit Sales revenue Gross profit rate/margin Profitability Profit after tax Net Sales Profit margin Net operating cash flow Net Sales Cash return on sales Net Sales Average total assets Asset turnover Profit before interest & tax Interest expense Times interest earned Solvency Total liabilities Total assets Debt to total assets Earnings per share (EPS) Given Share price EPS Price-earnings ratio Market Ratio Category Company B Formula Ratio Ratio Ratio Absolute $ Values Absolute $ Values Absolute $ Values Ratio #DIV/0! Ratio #DIV/0! Ratio #DIV/0! Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Ratio Current assets Current liabilities Current ratio Quick ratio Highly liquid current assets Current liabilities (EXCLUDES INVENTORY AND PREPAID ASSETS) Cost of sales Average inventory Inventory turnover Liquidity 365 Inventory turnover Average days in inventory Net Credit Sales Average net receivables Receivables turnover 365 Receivables turnover Average days receivables Profit after tax Average OSE equity Return on ordinary shareholders' equity Profit after tax Average total assets Return on assets Gross profit Sales revenue Gross profit rate/margin Profitability Profit after tax Net Sales Profit margin Net operating cash flow Net Sales Cash return on sales Net Sales Average total assets Asset turnover Profit before interest & tax Interest expense Times interest earned Solvency Total liabilities Total assets Debt to total assets Earnings per share (EPS) Given Share price EPS Price-earnings ratio Market Assignment Assessment Rubric Question 1 (a) Fail: 1 Pass: 2 Descriptions are incomplete. No similarities Descriptions are sound. A similarity or difference identified. or differences identified. Description of Company A and B - similarities and differences Question 1 (b) Economic, industry and company specific factors that could affect financial performance or position. Question 1 (c) No factors were identified or factors identified are not related to Company A or B. At least two factors were identified including appropriate references. No achievements or challenges were identified. At least one achievement or one challenge was identified for Company A and Company B from the most recent annual report. Achievements or challenges that have affected financial performance in the last year. Financial ratios More than 7 different ratios that have errors Maximum of 7 different ratios that have errors in their in their calculation. calculation. Scenario 1.1 - Company A 1) Ratios chosen are not the most relevant to evaluate the ability of the company to repay the loan and interest. Evaluaton of the ability to repay the loan and interest. Scenario 1.2 - Company A Analysis of cash flows from operating, investing and financing activities. Scenario 1.3 - Company A 1) The appropriate ratios to evaluate ability to repay loan and interest were chosen. 2) A comparison of appropriate ratios is provided with an explanation of the effect on 2) Ratios are described without the ability to repay loan and interest. comparison. Cash inflows and cash outflows from Major cash inflows and cash outflows from operating, investing operating, investing and financing activities and financing activities and their changes were identified from not correctly identified. the Statement of Cash Flows for three years. Incorrect ratio was chosen for the analysis or the ratio was correctly chosen but its Analysis of a ratio relating information from Statement of meaning or interpretation is incorrect. Cash Flows with the Balance Sheet or Income Statement. The ratio was correctly chosen and its meaning and changes correctly interpreted, but no reference provided. Assignment Assessment Rubric Evaluation of profitability and risk from ratio analysis. Fail: 1 Ratios chosen are not the most relevant to evaluate the profitability and risk of investment in Company A or Company B. Ratios are described without comparison with previous years or between Company A and Company B. Pass: 2 The approprite ratios to evaluate profitability and risk relating to investment in Company A and/or Company B were chosen. A comparison of the ratios is provided with an interpretation how changes in the ratios over three years affect the assessment of profitability and risk. Scenario 2.2 - Companies A & B 1) A decision was not made. A decision was made and justified by the conclusion formed from the an analysis of ratios. Scenario 2.1 - Companies A & B Decision to invest (or not) based on ratio analysis and other relevant information. 2) No additional information is provided. Scenario 2.3 - Company A Interpretation of earnings per share and market-to-book ratios and changes over three years. The ratios are calculated but no interpretation is given. The ratios are calcluated and described. The meaning of the ratios is explained but without a justified interpretation according to at least two relevant referenced sources of information. Assignment Assessment Rubric Question 1 (a) Good: 3 Descriptions are detailed. Similarities or differences identified. Very Good: 4 Descriptions are complete. Comparative analysis of similarities and differences in terms of their products/services, markets, and location. Description of Company A and B - similarities and differences Complete references are included. Question 1 (b) One relevant economic, one industry and one company specific factor was identified with appropriate references to sources of information for each factor. At least two different references are provided. In addition to the standard for "Good", an explanation of how these factors could affect the financial statements of Company A and Company B is provided. Most relevant achievements or challenges of Company A and Company B were identified from the most recent annual report or from other sources (complete references are provided). In addition to the standard for "Good", an explanation was provided on how the achievements and challenges have affected the last annual report and how they could affect the next annual report of each company. Financial ratios Maximum of 3 different ratios that have errors in their calculation. No errors in the calculation of ratios. Scenario 1.1 - Company A In addition to the standards for "Pass", a discussion comparing trends in the ability to repay loan and interest is included. 1) In addition to standards for "Good", an interpretation of general trends of Company A including a conclusion for the evaluation of the ability to repay loan and interest of Company A based on this interpretation is provided. In addition to standard for "Pass", changes in cash inflows and cash outflows of major items were analysed to explain changes in operating, investing and financing activities. A decision was made justified based on on conclusion. In2)addition to standard forand "Good", a discussion how the analysis of cash inflows and cash outflows is relevant to assessing the ability of Company A to repay loan and interest is provided and which supports (or not) the conclusion based on ratio analysis. In addition to the standards for "Pass", a conceptual interpretation of the meaning of this ratio ratio and its changes based on your review Analysis of a ratio relating information from Statement of of referenced relevant literature (as described in the assignment Cash Flows with the Balance Sheet or Income Statement. document) on the topic is provided. In addition to standard for "Good", the conceptual interpretation of changes in this ratio is applied to the changes of this ratio of Company A in the last three years explaining their effect on the decision to lend half of its equity to Company A. Economic, industry and company specific factors that could affect financial performance or position. Question 1 (c) Achievements or challenges that have affected financial performance in the last year. Evaluaton of the ability to repay the loan and interest. Scenario 1.2 - Company A Analysis of cash flows from operating, investing and financing activities. Scenario 1.3 - Company A Assignment Assessment Rubric Scenario 2.1 - Companies A & B Evaluation of profitability and risk from ratio analysis. Scenario 2.2 - Companies A & B Decision to invest (or not) based on ratio analysis and other relevant information. Scenario 2.3 - Company A Interpretation of earnings per share and market-to-book ratios and changes over three years. Good: 3 In addition to standards for "Pass", a discussion comparing the changes in the assessment of profitability and risk from investment in Company A and Company B over three years is provided with an explanation linked to most relevant items in the balance sheet and/or income statement affecting the comparison. Very Good: 4 In addition to standards for "Good", a conclusion for the evaluation of the profitability and risk of investment in Company A and Company B based on ratio analysis is provided. A decision was made and justified by the conclusion formed from the The same as the standards for "Good" but more than two sources of analysis of ratios including explanation of changes in profitability additional non-financial information relevant to the decision to invest or not and/or risk of investment in Company A or Company B based on are properly referenced and included. information from at least two additional sources of information (with appropriate references). In addition to the standards for "Pass", a justified interpretation according to at least two referenced sources of information is provided. In addition to the standards for "Good", changes in the ratios over three years for Company A are interpreted and their relationship with profitability of the company explained