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HI5002 Finance for Business Assignment

   

Added on  2020-05-28

13 Pages2829 Words35 Views
Running head: FINANCE FOR BUSINESSFinance for BusinessName of the universityName of the studentAuthors note

1FINANCE FOR BUSINESSTable of ContentsDescription of company:..................................................................................................................2Ownership and governance structure of company:.........................................................................2Calculation of performance ratios:..................................................................................................3Significant factors influencing the share price of Metallic Minerals:.............................................6Calculation of Beta values and expected rate of returns:................................................................6Weighted average cost of capital:....................................................................................................6Debt ratios for the past two years:...................................................................................................7Dividend policy:..............................................................................................................................8Letter of recommendation:..............................................................................................................8References and Bibliography list:..................................................................................................10

2FINANCE FOR BUSINESSDescription of company:Metallic Minerals Limited is a bauxite developer of Australia that has assets based inCape York Peninsula of Queensland. Currently, company is concentrating on development andproduction of its bauxite assets and is transitioning from exploration of minerals. It would helporganization in fulfilling the goal of becoming a sustainable, successful and profitable bauxitemine producer. Opportunities to unlock the value from noncore assets are being investigated bycompany that will help in generating revenue and increase production efficiency. Some of theoperations that are owned by company involve Urquhart bauxite project, HMS exploration, CapeYork regional bauxite and Urquhart point HMS project (metallicaminerals.com.au, 2018). It hasbeen indicated by Urquhart bauxite project that there will be potential for delivering strongfinancial returns with minimum capital expenditure. Organization has received approval fromCommonwealth and Queensland government for mining lease. It is also seeking approval fromgovernment regarding haul road. Cash reserves of company have been bolstered by availabilityof standby credit facility, conversion of options and completion of right issue(metallicaminerals.com.au, 2018). Ownership and governance structure of company:The board of directors of metallic minerals comprised of two non-executive directors,non-executive chairman and alternate non executive director. There are no substantialshareholders having higher than 20% of shareholders and the shareholder having higher than 5%of shareholdings is Jien mining Pty limited. It can be seen that there are no shareholders havingmore than 20% of shares and hence it can be concluded that company is a non-family company.

3FINANCE FOR BUSINESSMain people involved in governance firms are non-executive chairman, non executivedirector and alternate non executive director. Chairman of metallic minerals is Mr, Wang ruobing and he is the largest shareholder ofcompany through its Australian subsidiary. CEO of company is Steve Boulton that hasexperience in this position over past fifteen years. Other board members include Peter Turnbullwho is the non-executive director of company and he has enabled development of business on aglobal perspective and has considerable experience in commercialization and digital economy.John Haley is the chief financial officer and company secretary and Simon Slesarewich is chiefexecutive officer (metallicaminerals.com.au, 2018). It can be seen that surname of substantialshareholders do not have same surname as that of any members of board of directors. Yes, oneshareholder having highest number of shares is involved in the governance of metallic minerals. Calculation of performance ratios:The performance of metallic minerals has been evaluated by computation of keyperformance ratios such as return on assets, debt ratio and return on equity. Return on assets forcompany for four consecutive years is negative. Value is computed at -90.57% in year 2014 andthis has increased to 108.95% in year 2015 and -48.5% in year 2016 respectively. This negativevalue is indicative of the fact that assets are not utilized profitably for generating revenue. Return on equity for metallic minerals in year 2014 and 2015 stood at -95.10% and -86.81% respectively. This value has increased significantly in year -117.45% in year 2016 andhas reduced to -43.92% in year 2017. There has been improvement in return generated fromequity in sense of increasing utilization of shareholder equity. However, value of return

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