COMM1140 Financial Management Group Assignment Brief Term 2 | UNSW Sydney

Assignment: 

All Australian businesses are currently facing uncertain trading conditions. High inflation and labour shortages have created sudden cost pressures and forced businesses to pass on cost increases to their customers. Additionally, rising interest rates pose a growing risk to businesses that have accumulated high levels of debt and increase the likelihood of a global recession occurring in the next 12 months.You are a UNSW Commerce graduate in 2022 who quickly found employment in Felicity Trust, financial services company that specialises in providing loans to large Australian businesses. Yourmanager has asked you to prepare a presentation to help Felicity Trust decide whether it should continue lending money to your assigned company . This is the first task your manager has asked you to complete independently, and you want to ensure that you impress! Luckily, you took notes when the task was assigned to you, which should be strictly followed to complete this task.The notes are as follows:

Question 1:

Present a description of the business and the nature of its operations. This should focus on providing a short explanation of the business’s history, how it generates revenue, and who forms its customer base

Question 2: 

Present a financial statement analysis of the financial performance and financial position of the company

Question 3:

Identifyone risk from reading the reports prepared by key management personnel(i.e., Board Chair and/or CEO) in the 2023 annual report that may impact the company’s future financial performance and/or financial position. You should explain clearly how the risk you identify could affect the ratios discussed in Question 2 above

Question 4:

Using two Firm Multiples and two Equity Multiples of three similar companies to your assigned company

1. Compare your allocated company with 3 similar companies and determine which one is the most similar. For the company that is most similar, provide supporting evidence and references of the comparison and state any assumptions (if any) you are making for this comparison.
2. Calculate a range and mid-point (average) valuation of your allocated company's outstanding equity (both the market capitalisation value and market share price) based on the 3 similar companies. Provide evidence of data collected with proper referencing and calculations to substantiate your valuation.
3. Based on the comparison in part (a), explain from part (b) the reasons for the width of the range in valuation and why you think the mid-point valuation is accurate or not. Provide Evidence and the sources of the evidence that support your explanation. Based on this explanation, give a simple but educated guess about the percentage you would adjust up or down the midpoint valuation to something more reasonable. What would that new mid-point valuation be?

Question 5:

Present a short description of whether you would recommend Felicity Trust to continue providing loans to your assigned company in the short term. You should clearly describe how and why you came to this decision.