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Introduction

Describe the profile of your industry, including nature of the business, industry, and the industrys position within the Australian market.

• You should look at the macroeconomic factors that have the biggest impact on the largest part of the population and the economy, such as unemployment rates, economic outputs, and inflation. Importantly, how these factors affect your industry.
• You should identify the main players of the industry and their market shares (i.e., the firm total revenues divided by the industrys total revenue during the same period - take the average of the last five years).

Strategy analysis

You are required to conduct strategy analysis for your industry which includes:

• Industrys key success factors, risks, and growth.
• The profitability of your industry using the five forces framework.
• SWOT Analysis (i.e., Strengths, Weaknesses, Opportunities, and Threats).

Financial Analysis

You are required to analyse and compare the financial health of your assigned industry for five years (20172021). You will be provided with three industry classifications. You can choose any one of the industry classifications and make sure that you have at least 10 companies for industry comparison. For the chosen companies, estimate the industry average for the following ratios which will be then used as benchmarks in analysing you company:

• Profitability analysis: calculate the industry average of ROE and ROA for 5 years and take the average of the five years.
• Operating management evaluation: calculate the industry average of EBIT margin and EBITDA Margin for 5 years and take the average of the five years.
• Investment management evaluation: calculate the industry average of Assets turnover and working capital to salesfor 5 years and take the average of the five years.
• Financial management evaluation: calculate the industry average of financial leverage (total assets to shareholders equity) and Interest coverage ratio for 5 years and take the average of the five years.

Detection of Earnings Manipulation

You are required to detect earnings manipulation for your industry using the Beneish M-score model. Specifically, choose a large firm and a small firm in your industry and estimate the M-score of each firm for five years (2017 2021) and comment on the quality of their financial statements. The score can be then compared with your chosen company in the group assessment. (Hint: You may use Total assets to identify large and small firms).

Prospective analysis

Based upon your findings in previous parts, you are required to answer the following question: What is the outlook for the industry?

Conclusion

Briefly summarise your findings and your overall view of the industrys current performance and future prospects.