Thorn Group Limited Investment Recommendation
Added on 2020-05-16
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Running head: FINANCE FOR BUSINESS - MASTERSFinance for business - MastersName of the universityName of the studentAuthors note
1FINANCE FOR BUSINESS - MASTERSTable of ContentsDescription of company:...............................................................................................................2Ownership and governance structure of company:...................................................................2Calculation of performance ratios:..............................................................................................3Two graphs with the description of results:................................................................................4Significant factors influencing the share price of Thorn Group:..............................................5Calculation of Beta values and expected rate of returns:..........................................................5Weighted average cost of capital:.................................................................................................5Debt ratios for the past two years:...............................................................................................7Dividend policy:.............................................................................................................................8Letter of recommendation:...........................................................................................................8References list:.............................................................................................................................10
2FINANCE FOR BUSINESS - MASTERSCompany Background:The company that has been chosen for the purpose of the report is Thorn Group Limited.The company had been established in the year of 1937 and had been Australia’s one of the topfinancial service providers. This corporate entity aims to provide a vast range of financialsolutions for the purpose of meeting up to the growing demands of niche consumer and that ofthe consumer markets. The core activities of the company range within the scope of developingworking capital and growth capital financial solutions for the small and medium sizedenterprises. It has been operating in a competitive market with Radio Rentals being a marketleader in terms of household goods and consumer leasing market (Thorn.com.au. 2018). A particular event in the history of the company that provides a picture into the companyis that the company became an ASX listed company in the year of 2006. However, thefundamental business of the company around which the business evolved is Radio Rentals,which opened its first store in 1937. Radio Rentals then gradually became a household name(Thorn.com.au. 2018).Ownership and governance structure of company:The names of the substantial shareholders that have been listed in the register of thecompany for the financial year ended, 31st May, 2016 are as follows:Investor Mutual Funds – the percentage of issued capital that the entity holds is 7.62%Vinva Investment Management Limited – the percentage of issued capital that the entityholds is 6.07%IOOF Holdings Limited – the percentage of issued capital that the entity holds is 5.94%
3FINANCE FOR BUSINESS - MASTERSThere have been no substantial shareholders, who hold more than 20% of theshareholdings (Thorn.com.au. 2018). The main people of the organization are as follows:The chairman – Joycelyn MortonThe Board of Director – the directors of the company are Andrew Stevens, PeterHinley, David Foster, Oycelyn Morton, Jamed Marshall and Stephen KulmarCEO – James MarshallNone of the shareholders had the same surname as any of the substantialshareholders. Moreover, all the substantial shareholders have been corporateentitiesPerformance Ratio Computation:TrendParticulars`20132014201520162013201420152016Net Profit/(Loss) after Tax (NPAT)A28021281513059320059100.0%100.5%109.2%71.6%Total Assets (TA)B221356252450376467445894100.0%114.0%170.1%201.4%Ordinary Equity (OE)C155373171620189488197533100.0%110.5%122.0%127.1%Total LiabilitiesD6598380830186979248361100.0%100.0%231.3%307.3%Return on Assets (ROA)E=A/B12.66%11.15%8.13%4.50%100.0%88.09%64.20%35.54%Return on Equity (ROE)F=A/C18.03%16.40%16.15%10.15%100.00%90.95%89.52%56.31%Debt RatioG=D/B0.2980.3200.4970.557100.00%107.41%166.62%186.86%
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