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Assignment : Finance for Business

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Added on  2020-05-16

Assignment : Finance for Business

   Added on 2020-05-16

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Running head: FINANCE FOR BUSINESS - MASTERSFinance for business – MastersName of the studentName of the universityAuthor note
Assignment : Finance for Business_1
FINANCE FOR BUSINESS – MASTERS 1Table of Contents1.Company description.................................................................................................22.Ownership governance structure................................................................................23.Key ratios of Mobile Embrace...................................................................................24.ASX Information........................................................................................................45.Recent announcement................................................................................................66.Stock field..................................................................................................................77.WACC (weighted average cost of capital).................................................................78.Optimal debt structure................................................................................................99.Dividend policy..........................................................................................................910.Recommendation..................................................................................................10Reference.........................................................................................................................11
Assignment : Finance for Business_2
FINANCE FOR BUSINESS – MASTERS 21.Company descriptionMobile Embrace operates in Australia as the mobile marketing and mobilepayment company. It operates mainly through 2 segments, they are – Convey and 4thScreen Advertising Australia. The 4th Screen segment provides the services related tomobile media development and design. It also offers solutions related to mobileadvertising or marketing, infrastructure for m-payments and engages customers throughtablets and mobiles. On the other hand, Convey segment provides m-commerceplatform and trading desk for mobile media. The company is based in East Sydney ofAustralia (Mobile Embrace 2017).2.Ownership governance structurei)Substantial shareholders Greater than 20% of shares – no shareholder is there who is holding greater than20% of sharesGreater than 5% of shares – Waughdoc Pty Ltd holding 22,176,639 shares that is5.01% of shares.ii)Name of key persons Chairman – Drew KeltonBoard members – apart from chairman and CEO the board members are –David Andrew HainesChristopher ThorpeCEO – Neil WilesIt is recognised that none of the key persons are holding more than 20% or 5%of shares and therefore will not be considered as substantial shareholders. 3.Key ratios of Mobile Embracei.Return on assets (ROA) = (NPAT / Total Assets)Return on Equity (ROE) = (Net profit after tax / Ordinary equity)RatioFormula2017201620152014Return on assetsNAPT / Total asset0.0260.0720.0950.130
Assignment : Finance for Business_3
FINANCE FOR BUSINESS – MASTERS 3Return on equityNPAT / Ordinary equity0.0380.1230.1350.148Debt ratio = Total liabilities / Total assetsRatioFormula2017201620152014Debt ratio Total liabilities / Total assets0.3050.4180.2950.120EBIT/TA * NPAT/EBIT * TA/OE = NPAT/OEEBIT/TA * NPAT/EBIT * TA/OE = 10,35,812/603,65,057 * 15,95,677/10,35,812 *603,65,057/419,77,943 = 0.038NPAT/OE = 15,95,677 / 419,77,943 = 0.038Hence, from above calculation it can be proved that –EBIT/TA * NPAT/EBIT * TA/OE = NPAT/OEii.Phenomenon of TA/OE variableIt equation stands for the total assets of the company against its owners equity. Itis based on various factors like the industry status, economic status and revenue earningcapacity of the company. If the total asset goes up it will reduce the return on asset. Onthe contrary when the total asset goes down it will increase the company’s return on theasset (Halili, Saleh and Zeitun 2015). There is no ideal average for the total asset toowner’s equity ratio. However, the high ratio states that the company is stable and willbe considered sustainable for long term.iii.Reasons for higher ROE as compared to ROAROE or return on equity is net income that is returned as the percentage of theowner’s equity. It measures the profitability of the company through revealing theamount of profit the company generates with shareholders invested money. On the otherhand, ROA or the return on assets indicates the profitability of the company ascompared to the total assets. It gives the idea regarding the efficiency of themanagement to use its assets for generating earnings.It is calculated by dividing the netincome of the company by its total assets and is shown in percentage form. ROE higher
Assignment : Finance for Business_4

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