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HI5002 Finance for Business Assignment

   

Added on  2020-05-16

27 Pages5793 Words84 Views
Running Head: Finance For Business1Project Report: Finance for business

Finance For Business2ContentsIntroduction.......................................................................................................................31.Company description...............................................................................................32.Ownership governance structure.............................................................................33.Performance ratios...................................................................................................44.Changes in stock price.............................................................................................65.Significant factors....................................................................................................76.Calculation of CAPM and beta values.....................................................................77.WACC calculations.................................................................................................88.Debt ratios................................................................................................................99.Dividend policy........................................................................................................910.Recommendation and Conclusion.........................................................................10References.......................................................................................................................11Appendix.........................................................................................................................13

Finance For Business3Introduction:Financial management is an effective way to manage and evaluate the money of a business. Financial management of a company makes it easy for the company to evaluate the performance of the company, new projects of the company, position of the company etc. It accomplishes the objective of the company and assists the company to make various better decisions. Financial management is an application of financial evaluation. In financial evaluation, the investment opportunity of an organization is evaluated and it is investigated that whether the company would be able to perform well in the market. Further, this study assists every person who is linked with the company to evaluate that how the company is performing in Australian market?1.Company description:AEON metals limited company is operating its activities into Australian market. This company has engaged in tenement and prospect exploration of various minerals. This company has explored and developed various projects into Australian market. The main project of the company is “Walford Creek Base Metal Project” which has explored one of thebiggest mineral projects of the company (FT, 2018). This company is presenting itself very well in the market. The financial performance and the activities of the company are quite attractive. Further, the market position of the company is also great. 2.Ownership governance structure:More to it, the financial performance and the position of the company has been evaluated and for it, the annual report of the company has been evaluated and the main people of the company have been analyzed. To evaluate that how many people are directly and indirectly involving in the BOM of the company and managing the operations and making decision about the activities of the company (Brammer, Brooks and Pavelin, 2006). This structure is maintained by every company to measure, evaluate and make changes in the operations, activities, investment proposal and position of the company. Following is the details of the company:Substantial stakeholders:Accoridng to the study on the top investors of the company, it has been evaluated that the HSBC is the main stakeholder of the company which has around 21.4% share in the total stocks of the company. In addition, it has been evaluated that 2nd largest stockholder of the

Finance For Business4company is BLISS INVESTMENTS which has 6.76% in the total stocks of the company. at the same time, 4.6% stocks of the company is held by SLW minerals corporation pty limited. It explains that there is only 1 company which has more than 20% stocks of the company and on the other hand, there is only 2 companies which has more than 5% stocks of the company. (Annual Report, 2017)Main people:At the same time, annual report of the company has been evaluated to recognize the chief people of the company. It explains that the main people of the company are Mr. ThomasJoseph Mann, Mr. John Leslie Goody, Mr. Edgar George Newman, Mr. Hamish Collins, Mr. Paul Harris, Mr. Ivan Wong and Mr. Stephen Lonergan. They all are managing the business and the financial activities of the company. Further, it has been evaluated that none of them are having more than 5% stake in the ownership of the company. 3.Performance ratios:Further, for evaluating the financial position and performance of the company, ratio analysis study has been done. For performance ratio analysis, annual report of the company has been investigated and the financial figures of the company have been measured. ROE, ROA and debt ratios have mainly are calculated to evaluate the financial performance of the company (Brigham and Houston, 2012). Following are the calculations:Return on assets (ROA):Return on assets of the company has been evaluated to recognize the performance of the company. Return on assets takes the concern of total assets and the net profit after tax. The calculations are as follows:

Finance For Business5A.Return on assets=NPAT/ total Assets(8242)/57076-14.440%The return on assets of the company is -14.40% which explains that the company is suffering from loss. Return on equity (ROE):Return on equity of the company has been evaluated to recognize the performance of the company. Return on equity takes the concern of total equity and the net profit after tax. The calculations are as follows:B.Return on Equity=Net profit after tax/ ordinary equity(8242)/48379-17.04%The return on equity of the company is -17.04% which explains that the company is suffering from loss.Debt ratios:Debt ratios of the company have been evaluated to recognize the performance of the company and the capital structure of the company. Debt ratios take the concern of total equityand the total liabilities. The calculations are as follows:C.Debt Ratios = Total Liabilities/ total assets51740/19683826.29%The debt ratios of the company are 26.29% which explains that the company is managing the good assets and liability combination. Further, the below calculations have been done:EBIT / TA * NPAT / EBIT * TA/ OE = NPAT / OE(1953/57076)*(-8242/1953)*(57076/48379)=(-8242/48379)-17.04%-17.04%(Morningstar, 2018)

Finance For Business6TA/OE:The phenomenon of TA/TE explains that the total of assets and equity directly makes an impact over the return on assets and return on equity. Further the study explains that the total assets and total equity plays main part in evaluating the return on assets and return on equity. Following is the equation of TA and TE which explains about the relationship f TA/TE with ROA and ROE.TA/TE = (NPAT/ Total assets)/(NPAT/TE)TA/TE =Total assets/TEROA and ROE:ROA and ROE explains about the performance of the company and it explains that how the ROA and ROE are significantly related. Further, it has been found that the ROE is always greater than ROA due to the double accounting entry rule system which depicts that the total assets is the total of total liabilities and shareholder equity of an entity. It explains that the Return on assets of the company is bit lower. 4.Changes in stock price:Further, the study has been done over teh stock price of the company to evaluate the performance of the company. It explains that how much movement the stock price of the company has. More to it, the study has been done over AORD prices to compare both the prices. Through the study, it has been found that there is huge difference among the prices. Following is the graph of the AORD and AML:(Yahoo Finance, 2018)

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