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Finance Assignment Solved

   

Added on  2020-12-29

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Finance

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY ..................................................................................................................................11. Operations and comparative advantage of two companies.....................................................12. Comparison of performance ratios of two companies............................................................33. Analysis of monthly share prices movements of two companies...........................................54. Identification of significant factors which may affected share prices of both the companies85. Calculation of Beta values and expected return using CAPM model.....................................9Dividend policies......................................................................................................................10Recommendation letter.............................................................................................................11CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12

INTRODUCTIONFinance is the field which is concerned with investments and their allocations over atime. In this project report, this field is focused on financial performance of two companies. As agroup of investment analysts of large investment consulting company named as ABL,recommendations of suitable investment is provided in this report. These recommendations aredeveloped by using various aspects such as operations, performance using key ratios, share pricemovements and significant factors. The main aim of this project report is to makerecommendation for a big institutional investor. In order to which two companies that is TPGTelecom Limited and Domino's pizza enterprises limited are chosen. Beta, ratios and expectedreturns are ascertained to determine which of these two companies are appropriate to invest in.The first company deals in food industry whereas the second company operates intelecommunication industry. Comparison between these two organisations are performed in thisreport (Ben-David, Graham and Harvey, 2013). MAIN BODY 1. Operations and comparative advantage of two companiesInvestment analysis is a process in which two or more companies are compared in orderto determine which organisation can provide more profit. In order to conduct the investmentanalysis, the first company which is selected is TPG Telecom Limited. TPG is a Australian basedInformation technology company operates in telecommunications industry. This company isconsidered as the largest mobile virtual network operator and second largest internet serviceprovider in Australia. TPG provides retail telecommunications services to residential and smallbusiness consumers. Main products and services provided by these companies are internetaccess, networking, OEM services, mobile phone service and accounting software. TPG is listedon Australian stock exchange and is a force in Australian telecommunications industry. Mainaim of this company is to provide communication services which are reliable, fast and costeffective. Client list of this company includes residential users, small and medium enterprises,large corporate enterprises and wholesale customers. There are various acquisitions in the history of this company which has resulted inmaking strong backbone of this company. Some of these major events in the journey of TPGincludes acquisition of iiNet in august 2015, reverse takeover of SP Telemedia Limited in April1

2008, acquisition of PIPE Networks in march 2010 and TPG becomes Singapore's fourth mobileoperator in December 2016. Comparative advantages of TPG can include low purchase prices,higher operating margin and unregulated monopoly (Comparative advantage of TPG, 2018).Domino's Pizza Enterprises Limited is the second company which is selected in order tocompare and ascertain the best company in terms of investment. This company is considered asthe largest chain of pizza in Australia in terms of store numbers and network sales. Thiscompany deals in food and beverages sector. Various segments of this company includesAustralia, New Zealand, Europe and Japan. Activities and operations of this company mayinclude manufacturing and distributing numerous range of pizza and other beverages. Events and factors which affect the picture of Domino's can include various innovations.In the year of 2009, this company launched an application for iPhone's operating system. In year2011, an online ordering website was introduced as well as an application for Android. Inpreceding years, innovations such as GPS Driver tracker, autonomous delivery vehicle andcamera units resulted as number one chain of pizza in several countries. Due to the power ofgame changer, Domino's hit millions of Facebook fans which reflects popularity among youngclients. Domino's Pizza enterprises is listed on Australian stock exchange. Comparativeadvantages of this company may include pricing power, smart business model, growing returnsand growing stores (Comparative advantage of Dominos Pizza enterprises, 2015). From the perspective of investment, comparative advantages of TPG are more satisfyingas this company has acquired various companies and the level of their profitability is also high.TPG operates in telecommunications industry which is much more profitable and growing sectorthan food and beverages industry. When compared these two companies based on theircompetitive advantages, TPG is recommended to be more profitable. Other comparativeadvantages such as unregulated monopoly allows TPG to earn more revenue and build a strongposition in the market. Domino's pizza enterprises is a company which is also listed onAustralian stock exchange. Comparative advantages which reflects benefits of investment in thiscompany can include their massive growth in terms of innovation and huge client base. Whencompared these two companies based on their competitive advantages, TPG is recommended tobe more profitable.2

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