Risk and Return for Portfolios 3 Question 2 4 The role of finance manager on cooperate governess in a finance sector company in Australia

Financial management
Course Bachelor of Business / Bachelor of Accounting
Unit Financial Management
Unit Code FINM202
Type of Assessment Assessment 3 – Group Report

TABLE OF CONTENTS
Question 1........................................................................................................................................3
Risk and return for portfolios......................................................................................................3
Assumption..................................................................................................................................3
Analysis.......................................................................................................................................4
Question 2........................................................................................................................................4
The role of finance manager on cooperate governess in a finance sector company in Australia.
.....................................................................................................................................................4
Principal 1....................................................................................................................................5
Principal 2....................................................................................................................................6
Principal 3....................................................................................................................................6
Principal 4....................................................................................................................................6
Principal 5....................................................................................................................................6
References........................................................................................................................................8

Question 1
Risk and return for portfolios
Table presenting calculation of operating and financial risk through leverage assessment
Particular Company A Company B
Operating Leverage .084/.088 .050/.095
(% Change in Sales/ % Change in EBIT) 0.95 0.52
Return on Equity 5.6/4.9 7.1/6.3
(Net cash available to equity / Shareholder's Equity) 1.14 1.13
Financial Leverage 5.8/4.9 9.3/6.3
(Total Debt / Total Equity) 1.18 1.48
Working Notes
Particular Company A Company B
% Change in Sales (11.6-10.7)/10.7 (14.6-13.9)/13.9
(Sale of the year 2017- Sales of the year 2016)/
Sales of the year 2016 0.084 0.050
% Change in EBIT (6.2-5.7)/5.7 (8.1-7.4)/7.4
(EBIT of year 2017- EBIT of year 2016)/ EBIT
of year 2016 0.087 0.095
Cash Available to Equity 6.2-0.6 8.1-1
(EBIT - Interest- Taxes) 5.6 7.1
Assumption
 It has been assumed that no debt has been repaid in the year 2017. Thus the figures of
debt and interest are same as the year 2016.
 It has been assumed that cash available to equity shareholder is equal to EBIT reduced by
interest.