For this assignment you will write a firm analysis report. The assignment will cover the topics: bond valuation, share valuation, capital structure policy, dividend policy and working capital management

Task 1: Company Selection & Introduction (1 Page) 5 marks

Your task in the first part of the assignment is to select a publicly traded company, listed in the Australian Stock Exchange market, or New Zealand stock exchange market. The selected company must have outstanding bonds as well as shares. The companys shares have been paying dividends for at least 5 years. Information on listed companies and their outstanding securities is available on public investing websites, such as investing.com, or Yahoo Finance.[1]The list of suggested companies (but are not limited to) is provided in Table 1.

Once you have found a company of your interest that fulfils all selection criteria, provide an overview of the company details, an overview of the firms outstanding bond(s), including coupon rates and maturity dates, company shares and dividend payments in the last 5 years.

Task 2: Company Financials (2-3 pages) 25 marks

Provide an overview of the companys operations, financial situation, working capital management, and the major opportunities and challenges in the coming years. This is to understand how the company got to where it is today and what may occur in the future. You can find the companys financial statements, for example,in DatAnalysis Premium, Yahoo Finance, or investing.com.

Task 3: Bond Analysis (1-2 Pages) 20 marks

In this part of the assignment, you will analyse one of the firms outstanding bonds. Firstly, compute the yield on this bond. To simplify your calculations of the current required rate of return of the companys bond, assume that the last coupon payment has just been made. Secondly, estimate the bonds price one year from now (assuming that interest rates remain constant), and provide commentary.

Task 4: Share Analysis (2-3 Pages) 25 marks

In this part of the assignment, you will analyse your companys shares. Firstly, provide a graph and comment on the companys stock price changes in the previous five years. Explain what factors have caused the stock price to develop as it did and link this investigation to your analysis in Task 2 of the assignment. Secondly, provide an overview of the firms dividend payments during the previous 5 years. If your company paid dividends more often than once a year, sum up all dividends to find the total yearly dividend. Using the dividend discount model, estimate the return that investors currently require for holding your companys stock. You can assume that the firms dividends will continue to grow indefinitely at the same rate as the average dividend growth rate in the previous five years, or you can make alternative assumptions on the future dividend payments, as you see fit.

Task 5: Dividend policy (1-2Pages) 15 marks

In this part of the assignment, you will provide an overview of the companys payout policy in recent years. Which percentage of the companys earnings was distributed to investors as dividends? Which percentage of earnings was reinvested in the company? Did the company engage in dividend smoothing? Did the company do any share repurchases in recent years? (One way to find out about share repurchases is to investigate any changes in number of outstanding shares on the companys balance-sheets between different years). Why do you think the company made these decisions?

Task 6: Conclusion (1 Page). 5 marks

Write a brief conclusion of your assignment. Would you recommend investors to invest in the securities of this company? Why? Link back to all previous parts of your analysis in this assignment.

[1] To find out whether a company that you are interested in has bonds outstanding, type the name of your company in the search bar on investing.com, and a dropdown menu will appear showing all outstanding securities of this firm (there should be shares as well as bonds).

To find out whether a company you are interested in has been paying dividends, select the stock of your company on Yahoo Finance, and go to Historical Data, and select Show: Dividends Only. (Hint: firms that both pay dividends and have bonds outstanding are often mature, well-established firms)