Comprehensive Financial Evaluation of Manhattan Corporation Limited

This report provides a detailed financial evaluation of Manhattan Corporation Limited, analyzing its governance structure, performance ratios, stock price changes, debt ratios, and dividend policies. The analysis includes calculations of key financial metrics such as Return on Assets (ROA), Return o...Read More

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Name:
Usman Ali Butt
Student ID:
VSS30407

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Contents
Introduction.......................................................................................................................3
Company description........................................................................................................3
Ownership governance structure......................................................................................3
Performance ratios............................................................................................................4
Changes in stock price......................................................................................................6
Changes in the stock price................................................................................................7
Calculation of CAPM and beta values..............................................................................8
WACC calculations..........................................................................................................8
Debt ratios.........................................................................................................................9
Dividend policy..............................................................................................................10
Recommendation and Conclusion..................................................................................10
References.......................................................................................................................11
Appendix.........................................................................................................................12

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Introduction:
Financial evaluation is a procedure to measure various financial projects, businesses,
budgets etc to evaluate the financial position of the organization. This process calculates the
viability of the project and helps the stakeholders of the company to reach over an improved
conclusion. Basically, this procedure is conducted by the professionals to examine that
whether the performance of the company is stable, profitable, solvent, liquid, adequate etc.
Financial evaluation could be done through various methods and theories to measure the
position of the company such as governance structure of the company, changes in the board
of directors of the company, performance ratios, stock price evaluation, correlation, beta, debt
ratios, dividend policies etc.
This report has been prepared to evaluate the financial performance and the changes
into financial structure of the MANHATTAN CORPORATION LIMITED in past few years.
For the report, various aspects related to internal and external financial position of the
company has been evaluated such as governance structure of the company, changes in the
board of directors of the company, performance ratios, stock price evaluation, correlation,
beta, debt ratios and dividend policies.
Company description:
MANHATTAN CORPORATION LIMITED explores, develops and evaluates the
mineral projects and the mines of Australia. Mainly the company performs its operations in
exploring the Uranium. The flagship project of the company is Ponton project which
approximately covers 520 square kilometres of exploration tenements. These mines are
situated in Gunbarrel Basin, Western Australia. The main office of the company is in Perth,
Australia. The financial position and the market position of the company is enhancing due to
its projects and the performance in the market (Bloomberg, 2018).
Structure of Ownership governance:
For evaluating the financial position of MANHATTAN CORPORATION LIMITED,
study has been conducted over corporate governance policies of the company. In this report,
the main stakeholders of the company who has more than 20% of stock of the company have
been evaluated and at the same time, main members of the company such as chairman, CEO,
board members etc of the company has been evaluated.

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Substantial stakeholders:
The main stakeholders of the company has been evaluated and it has been found that
Minvest Securities (NZ) limited is the main stakeholder of the company which held around
170.5% of total stock of the company (Reports, 2018). The given table holds the name of top
20 shareholders of the company who has invested their amount for the operations of the
company:
(annual report, 2017)
Main people:
More to it, chief people of the company have been found. The chief of the company
is Alan J Eggers who administers the entire operations of the company and he is the executive
chairman of the company. Marcello Cardaci and John A G Seton is the non executive director
of the company. Out of all the board of members and the chief members of the company does
not have equal to or more than 20% share on the stock of the company? More, it has been
found that the Alan J Eggers has 6.69% holdings in the company. The above evaluation

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express that most of the abetment of the company is from other companies and the
individuals.
Performance ratios:
Performance ratios are the part of financial evaluation of an organization. These ratios
take the concern of main financial figures of the company and evaluate the financial position
of the company on the basis of that figures. It helps the comany to compare the operations
and the profitability with other competitive company to evaluate the market position of the
company.
Return on asset:
Return on assets (ROA) is a performance measurement ratio which explain about the
total profit of the company which has been earn by the company in comparison with the total
asset of the company (Sherman, 2005). Below given table express about the return on assets
of MANHATTAN CORPORATION LIMITED:
A. Return on assets= NPAT/ total Assets
(2800)/3198
-87.555%
The above table depict that the ROA of the company is -87.55% which is expressing
about a bad position and the performance of the company. It explains that the company is
suffering from loss and the company should make changes into its policies to reach over a
profitability level.
Return on equity:
Return on equity (ROE) is a performance measurement ratio which explain about the
total profit of the company which has been earn by the company in comparison with the total
equity of the company. Below given table express about the return on equity of
MANHATTAN CORPORATION LIMITED:
B. Return on Equity=
Net profit after tax/
ordinary equity
(2800)/17629
-15.88%
(Morningstar, 2018)

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The above table depict that the ROE of the company is -15.88% which is expressing
about a bad position and the performance of the company. It explains that the company is
suffering from loss and the company should make changes into its policies to reach over a
profitability level.
Debt ratios:
Debt ratio is a performance measurement ratio which explains about the total
liabilities of the company which has been maintained by the company in comparison with the
total assets of the company (Tucker, 2011). Below given table express about the debt ratios of
MANHATTAN CORPORATION LIMITED:
C. Debt Ratios =
Total Liabilities/ total
assets
77/3198
2.41%
The above table depict that the debt ratios of the company is 2.41% which is
expressing about a bad capital structure position of the company. It explains that the company
should enhance the level of the liabilities and should raise the funds through short term and
long term debt funds.
TA/OE:
TA/ TE also expresses about the performance ratios and the profitability position of
the company. This ratio expresses that the better the level of the resources of the company
would be the better the profitability position of the company would be as most of the part of
profits are spent by the companies to manage the resources (Tucker, 2011).
ROA and ROE:
Here, the ROE of the company is -15.88% and the ROA of the company is -87.55%
which explains that the ROE is lesser than the ROA of the company. The ROA is always
greater than ROE due to the reason that assets are always greater in an organization as the
asset is the combination of the liabilities and the equity of the company (Bromwich and
Bhimani, 2005).
Changes in stock price:

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More, the stock price of the company has been evaluated to identify the alternations in
the stock price of MANHATTAN CORPORATION LIMITED and all ordinary shares of the
ASX. The alternations have been presented in both the stock price as follows:
(Yahoo Finance, 2018)
Report:
The above graph epxlains that the stock price of MANHATTAN CORPORATION
LIMITED has been quite stable in last 2 years whereas the stock price of AORD has changed
various time but the level and the price of the stock has not been altered much. The
correlation factor of both the stock is 0.54636 which explains that the AORD was quite
volatile in nature and the stock of MANHATTAN CORPORATION LIMITED is stable in
nature (Damodaran, 2011). Further, it has been evaluated that the beta of the stocks are 2.22
which explains about the systematic risk of the company.
Calculation of
Correlation and Beta
Correlation 0.54636
Beta 2.22236
Changes in the stock price:

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It has been found that the stock price of an organization could be affected through any
internal and external position of the company such as the annual report, changes in the board
members, new project and significant deal, merger and acquisition etc make an impact over
the stock price of the company. At the same time, changes in the industry, currency changes
government changes, fiscal policy change etc also make an impact over the stock price of a
company (Bromwich and Bhimani, 2005). According to the analysis over the company,
annual report, dividend announcement, changes in the government policy, industry factors
and the environmental factors have affected the stock price of the company.
Calculation of CAPM and beta values:
Beta:
Through the calculations over the stock price, it has been evaluated that the beta of
the stocks are 2.22 which explains about the systematic risk of the company.
CAPM:
CAPM calculations of the company expresses that the required rate of return of the
company is 8.44%. Calculations are as follows:
Calculation of cost of equity (CAPM)
RF 4.00%
RM 6.00%
Beta 2.222
Required rate of return 8.44%
Explanation:
The above evaluation over MANHATTAN CORPORATION LIMITED explains that
the position and the level of the profits of the company are good and the various opportunities
are there in the market for the company. Thus, this company is a good option for the purpose
of investment (Davies and Crawford, 2011).
WACC calculations:
More to it, WACC of the company has been evaluated which is as follows:
Calculation of WACC
Price Cost Weight WACC

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Debt 77 4.90% 0.00435 0.00021
Equity 17,629 8.44% 0.99565 0.08408
17,706 Kd 8.43%
Calculation of cost of debt
Outstanding debt 77
interest rate 7%
Tax rate 0.3
Kd 4.90%
Calculation of cost of equity
(CAPM)
RF 4.00%
RM 6.00%
Beta 222.24%
Required rate of return 8.44%
Evaluation:
It expresses that the total cost of the company is 8.43% out of which total cost of
equity is 8.44% and the total cost of debt is 4.90%. It is suggested to the company to enhance
the level of debt to manage the cost and the risk of the company.
Debt ratios:
Optimal capital structure:
Optimal capital structure explains that an organization should set the limit of debt and
equity in such a way that the return and the risk of the company could be balanced. The
evaluation over the company explains that the debt level is quite lower and company should
enhance the level of the liabilities and should raise the funds through short term and long
term debt funds (Glajnaric, 2016).
Price
Debt 77

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Equity 17,629
17,706
2017 2016
Debt Ratios =
Total Liabilities/ total
assets Total Liabilities/ total assets
77/3198 34/5815
2.41% 0.58%
Gearing ratios:
Gearing ratios explain about the level of the company to manage the debt and the
capital of the company. It expresses that the borrowing has been enhanced by the company a
bit. But it is suggested to the company to enhance it to a great level. Annual report express
that directors are looking forward to enhance the level of liabilities.
2015 2016
Gearing ratios =
Total Liabilities/ Capital
employed
Total Liabilities/ Capital
employed
77/(3198-77) 34/(5815-34)
46.23% 0.59%
Dividend policy:
Further, the dividend policies of the company have been evaluated and it has been
found that this company is following the relevant dividend policies. Few % of the total profit
is given by the company to its shareholders as dividend amount. This policy enhances the
level of belief and attractiveness in the total stock of the company (Hillier, Grinblatt and
Titman, 2011).
Recommendation and Conclusion:
Thus, through the above analysis, it has been evaluated that the market and financial
position of MANHATTAN CORPORATION LIMITED is quite better. The new projects and
changes in the policies have helped the company to manage the better performance in the
market. Governance structure of the company explains that the BOD and the chief members
are performing better function, performance ratios express that the profitability position of

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the company have been worst and company should make few changes into its financial
position to make a better level and position, Further, the stock price evaluation express about
better changes in the stock price and its stability. The correlation and beta of the company is
also competitive. It depicts that the current investment must not be done in the organization,
it could offer huge losses to the investor.

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References:
Annual report. 2017. MANHATTAN CORPORATION LIMITED, viewed Jan 16, 2018,
http://manhattancorp.com.au/upload/documents/investor/annual/20170925_Manhattan2017A
nnualReportandFinancialStatements.pdf
Damodaran, A, 2011, Applied corporate finance,3rd edition, John Wiley & sons, USA
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
Glajnaric, M., 2016. The importance of dividend paying stocks. Equity, 30(2), p.6.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy.
McGraw Hill.
http://financials.morningstar.com/income-statement/is.html?
t=XBER:32U&region=deu&culture=en-US
Morningstar. 2018. MANHATTAN CORPORATION LIMITED, viewed Jan 16, 2018,
Reports. 2018. MANHATTAN CORPORATION LIMITED, viewed Jan 16, 2018,
http://manhattancorp.com.au/investor-relations/annual-reports
Sherman, S., 2005. Finance and fictionality in the early eighteenth century: Accounting for
Defoe. Cambridge University Press.
Tucker, J.W., 2011. Selection bias and econometric remedies in accounting and finance
research.
Yahoo finance. 2018. MANHATTAN CORPORATION LIMITED, viewed Jan 16, 2018,
https://finance.yahoo.com/quote/%5EAORD/history?
period1=1452882600&period2=1516041000&interval=1d&filter=history&frequency=1d

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Appendix:

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SUMMARY
OUTPUT
Regression Statistics
Multiple R
0.0087
92666

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R Square
7.7311
E-05
Adjusted
R Square
-
0.0019
06663
Standard
Error
1.7961
05768
Observatio
ns 506
ANOVA
df SS MS F
Signific
ance F
Regressio
n 1 0.12571
0.12
571
0.0389
6774
0.84359
2
Residual 504
1625.90
2
3.22
5996
Total 505
1626.02
8
Coeffici
ents
Standar
d Error t Stat
P-
value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
0.0913
80539
0.08003
1
1.14
1821
0.2540
7069
-
0.06585
0.248
615
-
0.0658
5
0.2486
15
X
Variable 1
2.2223
55884
11.2579
9
0.19
7402
0.8435
9217 -19.896
24.34
073 -19.896
24.340
73