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FINC6001 Finance: Theory to Applications
Group Project
Weighting: 30 Marks (worth 30% of the total assessment)
Assessment Due Date: Friday 21 Apr 2023 at 10:00am
I. INTRODUCTION AND GUIDELINES
The assessment a group assignment, which means that you will work in groups. This project
is based on the analysis and interpretation of annual report. You are required to analyse the
financial statements published by the two chosen companies listed on the Australian
Securities Exchange (ASX). The analysis will be both numerical and written in the form of a
report.
• The written report should be no more than 2,500 words with normal-sized margins,
1.5 line spacing and size 12 Arial or Calibri Font. Please number the pages of your
report.
• All assignments must include a list of references in academic form using the APA
7th method.
• The report must be submitted as a .pdf document. The Excel spreadsheet must be
submitted as a .xlsx workbook. The Excel spreadsheet should contain all the
calculations used to generate the values in your report. The Excel spreadsheet will not
be explicitly graded but must be submitted at the same time as the report to verify your
calculations.
• The group leader must submit two files electronically. Failure to submit both files will
result in penalties - late penalties will apply until both files are submitted. They also
need to ensure that all files submitted can be opened and read in Canvas.
II. REPORT STRUCTURE
Your report must contain the following information:
1. Executive Summary
2. Introduction
3. Body of the Report
4. written financial statement analysis.
5. critical evaluation based on the calculations and analysis of requirements 2 to 5.
6. other relevant information found in the annual report that was not a part of the
financial statements or analysis. (requirement 6)
4. Critical evaluation of the limitations of financial statement analysis conducted.
5. Conclusion and Recommendation
6. References
Note: Remember that all calculations conducted in requirements should be provided in
excel form and submitted.
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III. TASK OBJECTIVES
• Apply theory in practice.
• Conduct an analysis of financial statements.
• Interpret non-financial information from the annual report.
• Enhance communication skills in writing.
IV. BACKGROUND AND REQUIREMENTS
You are a member of analyst teams who provide investment recommendations to clients. You
have been approached by a client who wishes to start investing in the ASX equity market.
The client wishes to make an investment in a company in the retail sector and is interested in
the following two companies: Nick Scali Furniture Ltd and Temple & Webster Group Ltd. She
wants to know which company is a better investment option for her. You are required to write
a report to give your recommendation. Your interpretation and recommendation must be
justified with reference to the calculations and analysis results.
You are required to complete the followings:
1. Obtain the financial statements of Nick Scali Furniture Ltd and Temple & Webster Group
Ltd for the previous three years - 2020, 2021 and 2022. Note: Financial statements are
contained within the annual reports.
2. Prepare a 3-year trend analysis for the income statement for both companies.
3. Perform the relevant ratio analysis for the financial statements for 2020, 2021 and 2022.
4. Your analysis needs to address:
• each company individually; and
• both companies through a comparison.
5. Assume that the companies will not alter the payout ratio reported in 2022 for the next five
years. After the five years, the ROE will no longer grow and maintain the same value. The
cost of equity is 5% for both companies. Calculate the expected stock price.
6. Discuss how information not recorded in the financial statement can explain the difference
between the expected and actual market price of the stocks.
7. Write a report which brings all the above analyses together by summarising and
interpreting the analysis results.
8. You also need to critically evaluate the limitations of your analysis and what effect this may
have on your recommendations.
Note: Your report needs to contain a critical evaluation, rather than mere description of the
analysis results.
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MARKING CRITERIA
Criteria Excellent Satisfactory Poor Marks Marks/item
75 – 100 % 50 – 74 % 0 – 49 % Total 0 – 49 %
A. Format,
content and
structure of the
Report
A1: The format of report is correct,
and the structure fully complies
with the required guidelines.
A2: Effective answers supported
by excellent references.
A3: Excellent flow of ideas and/or
arguments from one section to
another.
A1: The formatting and layout of
the report are acceptable.
A2: Most referencing is
acknowledged. Multiple references
used but often ineffective.
A3: The content of the report and
the flow from one section to
another exists, but only
adequately.
A1: The formatting and layout is
poor indicating the submitted work
has been hastily done.
A2: Inappropriate or no references.
A3: Little or no structure. Aimlessly
rambles from topic to topic
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• A1: 2
• A2: 1
• A3: 1
B. Application of
ratio analysis
(items 2, 3, 4)
B1: All the relevant ratios are
accurately selected.
B2: 75% - 100% of the calculation
of ratios is without errors.
B1: Most of the relevant ratios are
accurately selected.
B2: 50% - 74% of the calculation of
ratios is without errors.
B1: The relevant ratios selected
are minimal or non-existent.
B2: Less than 50% of the
calculation of ratios is without
errors.
8 • B1: 4
• B2: 4
C. Expected
stock price and
interpretation
(items 5 and 6)
C1: 75% - 100% of the analysis is
done correctly.
C2: All the relevant calculations
are accurate.
C3: All the discussion on
explanations for the difference in
stock prices are valid
C1: 50% - 74% of the analysis is
done correctly.
C2: Most of the relevant
calculations are accurate.
C3: Most of the discussion on
explanations for the difference in
stock prices are valid
C1: Less than 50% of the analysis
is done correctly.