Case study-
Objective: To prepare an analyst report on a public listed dividend paying company.
Skills acquired:
• discipline knowledge;
• thinking skills;
• learning how to learn
Specifically, conduct research on a company and report on key areas of shareholder analysis, risk-return analysis and cost of capital.
Case study details-
You are to select a public listed dividend paying company from the country of your study location (e.g. Australia for the Bentley campus) and conduct a detailed analysis on it. You may not select Dominos as this is the company that will be used in the lecture.
The purpose of this assignment is to use your acquired knowledge from this unit to investigate the financial strength of a public listed company. Your research should cover the areas of:
• shareholder analysis;
• risk-return analysis; and
• cost of capital.
In each of the areas, you are to report your findings using the questions provided below as a guide. If the information is not from the company's annual report, you will have to provide details on
1. where you sourced the information; and
2. comment on how you have verified its reliability.
The report must be written completely by you. You are not to purchase or reproduce commercial stock reports.
Shareholder analysis-
• Who are the typical investors in this stock?
• Who are the marginal investors in this stock?
Risk-return analysis-
• What are the risks of this company? (Where is this risk coming from (market, firm, industry or currency)? How is the risk profile of the company changing?
• What return would you have earned investing in this company's stock?
• How much would you have under or out-performed the market in the short term?
• In your view, how much of the performance can be attributed to management?
Cost of capital-
• Calculate the company's cost of equity using various methods (at least 2); showing your calculations and detailing the source of your data.
• Calculate the company's cost of debt; showing your calculations and detailing your assumptions and the source of your data.
• Calculate the company cost of capital; showing your calculations.