This project provides an opportunity to get hands-on experience applying corporate finance theory and models to real firms. You will get a chance to:
When picking a company, keep the following in mind:
Many of the required data, such as share prices and key ratios, can be found in Datastream (available in Sultanah Bahiyah library) or Thomson Eikon Reuters (available in the Trading room, COLGIS).
Annual reports can be downloaded from the Bursa Malaysia website.
After selecting a company, assess the board of directors, evaluating their independence and competence. Here are some useful resources:
Look for potential conflicts of interest between inside and outside stockholders. Large stockholders, such as the founder/CEO, family holdings, or government entities, may have interests that differ from those of smaller stockholders.
To identify the marginal investor, examine the largest 30 investors in your firm. The marginal investor is one who holds a large stake and actively trades. In some cases, another company may hold a significant portion of the firm, which can be considered a marginal investor.
Analyze the firm’s financial mix and assess whether it is under or over-leveraged. Consider the following:
Evaluate the firm’s cost of capital and determine the debt ratio that minimizes costs and maximizes firm value. Consider the following:
Analyze the firm’s dividend policy to decide whether it should return more or less to stockholders. Consider the following questions:
Assess the firm’s cash flows and decide if it should adjust its dividend policy:
| Learning Outcomes (LO) | Pass | Merit | Distinction |
|---|---|---|---|
| LO1: Record business transactions using double-entry book-keeping and extract a trial balance. | P1: Apply the double-entry system and record sales and purchases transactions in a general ledger. | M1: Analyse transactions and show progression from one trial balance to the next. | D1: Apply trial balance figures to show which financial statement they end up in. |
| LO2: Prepare final accounts for sole traders, partnerships, and limited companies. | P3: Prepare final accounts from given trial balances. | M2: Make adjustments like accruals and depreciation before preparing final accounts. | D2: Compare essential features of financial statements to analyse differences. |
| LO3: Perform bank reconciliations to ensure company and bank records are correct. | P5: Apply bank reconciliation process. | M3: Use deposit in transit and outstanding checks in reconciliation. | D3: Prepare accurate bank reconciliations using appropriate tools. |
| LO4: Reconcile control accounts and shift recorded transactions from suspense accounts. | P6: Explain the process to reconcile control accounts and clear suspense accounts. | M4: Demonstrate understanding of account types and their reconciliation. | D4: Produce reconciled accounts using appropriate methods. |
Submit your assignment through Moodle. Remember to include:
