HA1022 Principals of Financial Markets Group Assignment
In groups of 3-4, students should choose firstly an industry and secondly two (2) ASX listed companies in this same industry upon which to undertake a fundamental analysis.
Fundamental Analysis seeks to identify factors that are likely to influence directional changes in the value of a company and hence its share price. These factors may be macro or micro in context.
Requirements. The assignment comprises two related sections:
a) Conduct a Top Down analysis of the overall economic environment and consider how forecast changes in economic fundamentals will impact on the performances of companies in the industry your group has chosen. Consider questions including, but not limited to: What is the current interest rate? What is the current value of the $AUD? What is current GDP? What is the inflation rate? What business cycle is the economy currently operating in?
b) Conduct a Bottom Up analysis of companies’ current financial situation. Consider accounting ratios and measures of a firm’s performance, how these need to be compared to the industry and company history,
? All of the required information for calculation and often the actual ratio/number can be found on various websites on the internet.
? http://www.investsmart.com.au/
Note: When your group is performing the fundamental analysis take a less is more approach. Select a few key performance measures then define each measure; explain what the measure is supposed to show and then what it is showing for the industry/your companies.
Refer to both your textbook and information available on the internet. This assignment involves research to finding the information and then analysing this resulting information.
When writing the report, imagine that your audience are people that know nothing about finance or the financial markets. At each stage you will need to carefully explain what do are analysing and why. Do not think that just because your lecturer will know what this ratio means that you do not have to define it.
You should also give a brief introduction of the industry and the history, mission statement of your chosen companies. Your paper should conclude with a summary of your findings and recommendations for each of your companies. Word length is 2500 (+/- 10%).
Please refer to the marking guide and rubric below for the structure and mark allocation for requirements and breakdown of marks for your assessment.
1. Executive summary 2 marks
2. Introduction 3 marks
3. Top-down analysis 5 marks
4. Bottom-up analysis 5 marks
5. Summary and recommendations 3 marks
6. Referencing 2 marks
Total 20 marks
Group Report
Fail Pass Credit Distinction High Distinction
Executive Summary (2 marks) No executive summary
included
Limited evidence of a summary of the entire report.
Some evidence of a summary which summarises the entire report Clear evidence of a summary which summarises the entire report Clear evidence of a summary which summarises the entire report as well as including recommendations
Introduction and description of appropriate industry and relevant companies
(3 marks) No introduction or description of companies included in report. Inappropriate choice of organisations/poorly described. Identified and described two organisations within the same industry with some clarity and relevance and have included at least one of the requirements of introducing the industry, history and mission statement of chosen company. Identified and described two organisations within the same industry with some clarity and relevance and have included at least two of the requirements of introducing the industry, history and mission statement of chosen company. Identified and described two organisations within the same industry clearly and have included at least two of the requirements of introducing the industry, history and mission statement of chosen company. Identified and described two organisations within the same industry clearly and have included all of the requirements of introducing the industry, history and mission statement of chosen company.
Top down analysis (5 marks) No top down analysis conducted or identification of relevant economic indicators impacting on the environment of the industry. Limited evidence of top down analysis of the economic environment. Have included discussion on one relevant economic
fundamental relevant to the industry Some evidence of top down analysis of the economic environment. Have included discussion on two relevant economic fundamentals relevant to the industry and companies identified Clear evidence of top down analysis of the economic environment. Have included discussion on three relevant economic fundamentals relevant to the industry and companies identified Clear evidence of top down analysis of the economic environment. Have included discussion on three relevant economic fundamentals relevant to the industry and companies
identified as well as a discussion which is critically evaluated and analysed
Bottom up analysis (5 marks) No bottom up analysis conducted relevant to the companies financial position. Limited evidence of bottom up analysis of the 2 chosen companies. Have included at least 2 accounting ratios or financial measures of performance for each company (4 total) that are relevant to the companies chosen. Discussion on the purpose of the measure ,how this measure compares to the industry and the history of the company Some evidence of bottom up analysis of the 2 chosen companies. Have included at least 3 accounting ratios or financial measures of performance for each company (6 total) that are relevant to the companies chosen. Discussion on the purpose of the measure, how these measures have been compared to the
industry and the history of the company Clear evidence of bottom up analysis of the 2 chosen companies. Have included at least 4 accounting ratios or financial measures of performance for each company (8 total) that are relevant to the companies chosen.
Good attempt at discussion on the purpose of the measure, how these measures have been compared to the industry and the history of the company Clear evidence of bottom up analysis of the 2 chosen companies. Have included at least 5 accounting ratios or financial measures of performance for each company (10 total) that are relevant to the companies chosen.
In-depth and insightful discussion on the purpose of the measure, how these measures have been compared to the industry and the history of the company
Summary and
Recommendations
(3 marks) No summary or recommendations Predictable conclusions
and recommendations that relate to the companies chosen. Some evidence of original thought and insight Good evidence of original thought and insight. Summary has incorporated main points of discussion from main body of work. Excellent evidence of original thought and insight. Evaluation of the companies was insightful, relevant and clear.
Summary has incorporated main points of discussion from main body of work.
Referencing (2 marks) Poorly presented, no apparent structure. No use of Harvard referencing style. References were not related to the topics discussed. Only 0 or 1 reference given. Limited attempt at formatting references. References were related to the companies and topics discussed throughout the report. At least 3 references were given Clear systematic referencing using Harvard style of all sources. At least 4 relevant references given from good sources Clear systematic referencing using Harvard style of all sources. At least 5 relevant references given from good sources Clear systematic referencing using Harvard style of all sources. At least 6 relevant references given from good sources