Accounting and Finance Project Report: Analysis of AMP Limited

Running Head: Accounting and Finance
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Project Report: Accounting and Finance

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Executive summary
The report has been prepared on various accounting and financial methods to measure
that whether the stock position and the financial performance of the company is better in the
industry or not. The report explains that few changes would help the business to improve the
overall performance and the stock level in the market.

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Contents
Part A:...............................................................................................................................4
Findings:...........................................................................................................................4
Decision process:..............................................................................................................4
Part B:...............................................................................................................................6
Introduction:.....................................................................................................................6
Debt and equity level:.......................................................................................................6
WACC:.............................................................................................................................6
CAPM:..............................................................................................................................7
Comparison of capital structure:.......................................................................................7
Financial ratios:................................................................................................................8
Changes in capital structure:.............................................................................................8
Material risk:.....................................................................................................................9
Conclusion:.....................................................................................................................10
References:.....................................................................................................................11
Appendix:.......................................................................................................................12

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Part A:
All the required calculations have been done in the attached spreadsheet and it has also
been added in the appendix area in the report file.
Findings:
According to the given case, Saturn Petcare Australia and New Zealand wants to
invest into a new project “Buddy” but before the investment, company wants to make sure
that whether it would be able to make enough funds from the business or would it be tough
for the business to manage the cost of the company on the basis of the available return.
Firstly, on the basis of normal estimated sales, the cash flow, NPV, payback and profitability
index of the company has been evaluated and it has been found that the project is quite
beneficial for the business as the NPV figures are positive and the profitability index and
payback are also favouring about the project.
Further, the scenario has been changed and the calculations have been done if the
sales would be improved by 5%. On the basis of the calculations, it has been measured that
the after tax cash flows of the business are $ 37,963,994. As well as, the NPV of the project
would be $2,478,046. Whereas, if the scenario has been changed and the calculations have
been done if the sales would be lowered by 5%. On the basis of the calculations, it has been
measured that the after tax cash flows of the business are $ 33,348,376. As well as, the NPV
of the project would be $ 5,93,865.
On the basis of evaluation on all the three scenarios, it has been found that the NPV of
the project would be positive and thus the investment must be done by Mr Quinlivan in the
Buddy project (Wilson & Gilligan, 2012). This project would also improve the stock price in
the market.
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Decision process:
Further, a different case of the company has been discussed where the company is
planning to upgrade the manufacturing planets. Two replacement options has been seen by

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the business and the capital budgeting process has been applied on both the projects to
measure that which option is better for the company. On the basis of project A, $ 16,732 net
profit has been realized by the project whereas the calculations of project B briefs that the
total return from the project B would be $ 69,135. It explains that the project B is better
choice for the purpose of investment.

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Part B:
Introduction:
The report has been prepared to identify the accounting and financial performance of
AMP limited. Amp limited is an Australian company which offers the financial services in
the Australian and New Zealand market. The capital structure, cost of capital, various risks
and financial ratios of the company has been studied in the report to identify the financial
position and performance of AMP limited.
Debt and equity level:
Debt and equity level of Amp has been studied firstly and it has been found that the
equity holds the 87% and debt of the company holds the 13% share in the total capital of the
company.
(Annual report, 2017)