Group Assignment [Groups can be 1 or 2 person Groups]
Due Week 6, Thursday 20th august 5pm
This guide is split into 5 Sections.
• Overview
• Submission Details and Issues that will Impact on Your Mark
• Assignment Questions and Marking Rubric
• Mark sheet
• APA Quick Reference Guide
Section 1: Overview
What is a Group?
• For campus students, the group means 1 or 2 students.
• For distant learning (FLEX) students, while a group of 1 is likely to be more practical groups of 2 are optional.
• Important Note 1: Students working as a group, only one member of the group will submit the assignment online by uploading it in Moodle.
The Task
There are 4 calculation-based questions and 2 theory questions assessing work covered in Weeks 1 to 5. All questions are from the prescribed textbook, Managerial Finance – Principles and Applications by Titman et al. (2016)
The Marksheet
• The Marksheet of this assignment is your coversheet.
• The names of the students in the group must be clearly indicated.
Marks are awarded for:
• Answers to calculation questions that include well-presented tables, accurate calculations, worksheets and related formulae.
• Answers to theory questions should be around 450 words [excluding in-text referencing, reference list and appendix items] and show supporting examples, diagrams and figures.
• Demonstrations of using your initiative and supporting your answers with interesting references to contemporary issues from newspapers, journals, professional publications, web resources i.e. extracts from podcasts, financial institutional websites etc.
• Proper referencing of all content including figures, tables and narrative using APA Reference system.
• Presentation must be 1.5 spacing, 14 pt Bold for Section Headings, 12 pt for content and Arial, Times Roman or Calibri Font.
References
TITMAN, S., MARTIN, T., KEOWN, A. J. & MARTIN, J. D. 2016. Financial management: Principles and Applications, Melbourne, Pearson Australia

Section 2: Submission Details
This online submission MUST BE submitted as a word document. PDF submissions will not be accepted.
Issues that will impact on your marks include:
• Where copying from other sources results in high % similarity, marks will be deducted as shown on the mark-sheet. Therefore, proper use of in-text referencing is important. Avoid direct quotes.
Turnitin will be used to check % similarity.
Do not copy the questions from the textbook as this will increase your % similarity.
Under extreme circumstances where high % similarity indicates copying from written works of other students in CQU, other universities or any other institutions world-wide, the assignment will be reviewed by the academic misconduct board. If percentage similarity exceeds 20%, marks will be deducted based on a progressive scale as determined by the course co-ordinator.
• Marks for each question are noted in Section 3 and totals 100 marks.
The assessment is worth 20% total assessment grade.
The final grade will be recorded on Moodle as a percentage of 20%.
• Penalty for late submission is 5% per calendar day including Saturday and Sunday.
Section 4: Assignment Questions and Marking Criteria / Rubric
Question 1 [Theory]: Understanding Financial Statements [Chapter 3 Study Questions 3.1, 3.2, 3.3, 3.4]
Develop your responses by reviewing peer-reviewed articles, professional publications and/or credible texts. Mark
Part 1 Describe the content and the importance of the balance sheet and the income statement. 15 Marks
Part 2 From the firm’s perspective, how are dividends different from interest payments?
Part 3 What is a firm’s net working capital, and what does it tell you about the liquidity of a firm?
Criteria
Measures of Excellence
HD D C P US F
Organisation, structure and presentation
The introduction sentence is clear and introduces the key concepts well. The ideas are arranged in an extremely logical, structured and coherent manner. Transition statements are clearly used as a guide from one section to the next. Arguments are logical, clear and convincing; establishing clear links between the literature, the argument, findings and conclusions.
Favourable attention has also been given to present material that supports the discussions i.e comparison of ideas, tables, and figures. Quality of writing at a very high standard. Paragraphs are cohesive. Sections flow. The use of headings and sub-headings is effective and enhances readability. Correct grammar, spelling and punctuation. Total response does not exceed 450 words [excluding references, tables or figures]. 5 4 3 2 1 0
Content / Knowledge
There is an excellent standard of analysis and appreciation and definitions of concepts. In particular, the essay demonstrates a balanced and insightful level of detailed knowledge of core concepts and is supported by research and examples. 5 4 3 2 1 0
Evidence / Support / Referencing
The student’s arguments are well researched and articulated.
Utilises current, appropriate and credible sources which strongly support the student’s’ argument and explanations. Referencing accurate – per APA Reference Guide. 5 4 3 2 1 0
Question 2 [Calculation-based]: The Income Statement [Chapter 3 Study Questions 3.2 and Study Problems 3.1, 3.2, 3.3]
(Refer to Example on page 46 of Textbook)
Construct an Income Statement. Use an Excel spreadsheet and/or tables to present your work. Show all workings. Mark
Part 1 At the end of its third year of operations, the Sandifer Manufacturing Company had:
• $4,500,000 in revenue;
• $3,375,000 in cost of goods sold;
• $450,000 in operating expenses, which included a depreciation expense of $150,000;
• a tax liability equal to 30% of the firm’s taxable income.
• Construct an Income Statement with the above data.
• What is the net profit of the firm for the year?
• Explain how net profit differs from gross profit and operating profit?
• Analyse the data and outcome. What information can we derive from Sandifer’s Income Statement? 15 Marks
Part 2 Continued from Part 1: Sandifer Manufacturing Company (from the previous problem) plans to reinvest $50,000 of its earnings back in the firm.
How much profit is left for the payment of a cash dividend to Sandifer’s shareholders?
Criteria
Measures of Excellence
HD D C P US F
Content / Knowledge
There is an excellent standard of analysis and the responses demonstrate an accurate appreciation of the key concepts, principles and / or formulae.
5 4 3 2 1 0
Evidence / Support / Referencing
The source of formulae, examples, figures and tables have been appropriately referenced. Referencing accurate – per APA Reference Guide.
5 4 3 2 1 0
Presentation Responses have been presented in a superior manner i.e comparisons, tables, and figures are neat, separators have been used to present numbers, workings are shown in a clear manner, headings have been used to categorise elements of the answers. Correct grammar, spelling and punctuation. 5 4 3 2 1 0

Question 3: [Calculation-based] Financial Analysis [Chapter 4 Study Questions 4.4 and 4.10; Study Problems 4.5 and 4.8]
Use an Excel spreadsheet and/or tables to present your calculations. Show all workings. Mark
Part 1 Liquidity Analysis Calculation: The King Carpet Company has $3, 000, 000 in cash and a total of $12,000,000 in current assets. The firm’s current liabilities equal $6,000,000 such that the firm’s current ratio equals 2. The company’s managers want to reduce the firm’s cash holdings to $1,000,000 by paying $500,000 in cash to expand the firm’s truck fleet, and using $1,500,000 in cash to retire a short-term note. Central to the decisions is the issue of liquidity.
• What does the term liquidity mean in the context of the firm’s financial condition?
• What financial ratios can you use to analyse and assess liquidity?
• If they carry this plan through, demonstrate the effect on the firm’s current ratio?
• How we can we determine whether The King Carpet Company is more or less liquid than other firms?
15 Marks
Part 2 Profitability Analysis Calculation: The Allen Corporation had sales in 2015 of $65 million, total assets of $42 million and total liabilities of $20 million. The annual interest rate on the company’s debt is 6%, and its tax rate is 30%. The operating profit margin is 12%.
• Compute the firm’s 2015 operating profit and net profit.
• How would you determine if the frim was achieving reasonable profit margins?
• Calculate the firm’s return on assets and return on equity (hint: you can assume that interest must be paid on all of the firm’s liabilities) and describe what aspect of the firm’s performance you are measuring.
Criteria
Measures of Excellence
HD D C P US F
Content / Knowledge
There is an excellent standard of analysis and the responses demonstrate an accurate appreciation of the key concepts, principles and / or formulae.
5 4 3 2 1 0
Evidence / Support / Referencing
The source of formulae, examples, figures and tables have been appropriately referenced. Referencing accurate – per APA Reference Guide.
5 4 3 2 1 0
Presentation Responses have been presented in a superior manner i.e comparisons, tables, and figures are neat, separators have been used to present numbers, workings are shown in a clear manner, headings have been used to categorise elements of the answers. Correct grammar, spelling and punctuation. 5 4 3 2 1 0
Question 4: [Calculation-based] Time Value of Money [Chapter 5 Study Problems 5.3 and 4.8]
Use an Excel spreadsheet and/or tables to present your calculations. Show all workings. Mark
Part 1 Future Value Calculation: ‘Saving for your first house’ - You are hoping to buy a house in the future and recently received an inheritance of $50,000. You intend to use your inheritance as a deposit on your house.
• If you put your inheritance in an account that earns 7% interest compounded annually, how many years will it be before your inheritance grows to $75 000?
• If you let your money grow for 10.25 years at 7% compounded annually, how much will you have?
• How long will it take your money to grow to $75 000 if you move it into an account that pays 3% compounded annually?
• How long will it take your money to grow to $75 000 if you move it into an account that pays 11% compounded annually?
• What does all this tell you about the relationship among interest rates, time and future sums?
20 Marks
Part 2 Present Value: Sarah Wiggum would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found a managed fund that will earn 4% annually.
• How much will Sarah have to invest today?
• What if Sarah has a finance degree and learned how to earn a 14% annual return? How soon could she then retire?
Criteria
Measures of Excellence
HD D C P US F
Content / Knowledge
There is an excellent standard of analysis and the responses demonstrate an accurate appreciation of the key concepts, principles and / or formulae.
10 8 6 4 2 0
Evidence / Support / Referencing
The source of formulae, examples, figures and tables have been appropriately referenced. Referencing accurate – per APA Reference Guide.
5 4 3 2 1 0
Presentation Responses have been presented in a superior manner i.e comparisons, tables, and figures are neat, separators have been used to present numbers, workings are shown in a clear manner, headings have been used to categorise elements of the answers. Correct grammar, spelling and punctuation. 5 4 3 2 1 0
Question 5: [Calculation-Based] Risk and Return [Chapter 7 Study Questions 7.2, 7.3 and 7.6; Study Problems 7.1 and 7.2 ]
Use an Excel spreadsheet and/or tables to present your calculations. Show all workings. Mark
Part 1 Calculating rates of return: On 12 December 2007, the ordinary shares of Qantas Airways Ltd (QAN) were trading for $5.75.
One year later, the shares sold for $2.24. During that period, Qantas paid dividends totalling $0.35.
• What rate of return would you have earned on your investment had you purchased the shares on 12 December 2007 and sold them on 12 December 2008?
• Describe, in your own words, the concept of a realised of return.
• How do cash dividends affect the realised rate of return from investing in ordinary shares?
• Why is volatility in an investment’s rate of return a reasonable indication of the risk of an investment? 20 Marks
Part 2 Calculating rates of return: The S&P/ASX 200 share price index represents a portfolio which comprises the 200 largest companies listed on the Australian Securities Exchange. On 12 December 2007, the index had a value of 6615.2 and on 12 December 2008 the index had a value of 3510.4.3. If the average dividend paid on the shares in the index is approximately 4% of the value of the index at the beginning of the year, what is the rate of return earned on the S&P/ASX 200 index?
What is your assessment of the relative riskiness of the Qantas Airways investment (analysed in the previous problem) compared to investing in the S&P/ASX 200 index (recall from Chapter 2 that you can purchase managed funds that mimic the returns on the index)?
Criteria
Measures of Excellence
HD D C P US F
Content / Knowledge
There is an excellent standard of analysis and the responses demonstrate an accurate appreciation of the key concepts, principles and / or formulae.
10 8 6 4 2 0
Evidence / Support / Referencing
The source of formulae, examples, figures and tables have been appropriately referenced. Referencing accurate – per APA Reference Guide.
5 4 3 2 1 0
Presentation Responses have been presented in a superior manner i.e comparisons, tables, and figures are neat, separators have been used to present numbers, workings are shown in a clear manner, headings have been used to categorise elements of the answers. Correct grammar, spelling and punctuation. 5 4 3 2 1 0

Question 6: [Theory] Risk and Return [Chapter 8 Study Questions 8.3, 8.5, 8.6 and 8.7]
Unpack the question and develop your responses by reviewing journal articles, professional publications and/or credible texts. Mark

Part 1 Describe the relationship between the expected rate of return for an individual investment and the expected rate of return for a portfolio of several investments. 20 Marks
Part 2 Portfolio diversification is affected by the volatility of the returns of the individual investments in the portfolio as well as the correlation among the returns. Explain this statement.
Criteria
Measures of Excellence
HD D C P US F
Organisation, structure and presentation
The introduction sentence is clear and introduces the key concepts well. The ideas are arranged in an extremely logical, structured and coherent manner. Transition statements are clearly used as a guide from one section to the next. Arguments are logical, clear and convincing; establishing clear links between the literature, the argument, findings and conclusions.
Favourable attention has also been given to present material that supports the discussions i.e comparison of ideas, tables, and figures. Quality of writing at a very high standard. Paragraphs are cohesive. Sections flow. The use of headings and sub-headings is effective and enhances readability. Correct grammar, spelling and punctuation. Total response does not exceed 450 words [excluding references, tables or figures]. 5 4 3 2 1 0
Content / Knowledge
There is an excellent standard of analysis and appreciation and definitions of concepts. In particular, the essay demonstrates a balanced and insightful level of detailed knowledge of core concepts and is supported by research and examples. 10 8 6 2 1 0
Evidence / Support / Referencing
The student’s arguments are well researched and articulated.
Utilises current, appropriate and credible sources which strongly support the student’s’ argument and explanations. Referencing accurate – per APA Reference Guide. 5 4 3 2 1 0
Section 4:
Mark Sheet for Assignment 1
This is your cover sheet. Submit together with your responses.
Ensure all names are recorded. Only groups of 1 or 2 will be accepted.
Name: _________________________ Campus: __________ Student ID: _________
Name: _________________________ Campus: __________ Student ID: _________
Question Max Marks Mark Less % for
Un-referenced Material Total Mark
1 15
2 15
3 15
4 20
5 15
6 20
Total 100
Converted to 20