TASK 1
SEMINAR 1 - OUTLINE
- Identify what Accounting is & why it is important
- Explain Financial Reporting - common financial statements & what they report to users
- Compare Structures - sole traders, partnerships & companies.
- Examine how companies are structured and why we use them
- Introduce the Stock Exchange - what is it; how does it work (All Ords; industry categories etc.); how are share prices determined?
COMPANY ALLOCATION:
Each student will be allocated a company that will be the main focus of their research throughout the semester and their major assignment. Each student in the class will be allocated a different company from the list available.
(See ASSESSMENT tab on iLearn for a complete list of company options).
IN CLASS TASK #1: THE AUSTRALIAN SECURITIES EXCHANGE
SET UP AN ACCOUNTING FOLDER ON H-DRIVE:
Each class you will be completing in-class tasks and work towards your assignments. To ensure you don't lose any of your work, we suggest to save everything onto your H-Drive which accessible from any computer on campus (as well as Off-Campus Connect).
a) Open your H-Drive from the list of drives on the computer.
b) Set up a folder titled "ACCT71-600"
c) Set up sub-folders for the content, tasks, assignments etc.
d) Save your work each class.
Go to the ASX website: www.asx.com.au
Go to the ‘Products' tab and select ‘shares'.
Answer the following questions from information found on the website.
(HINT: You may find the menu on the left, the glossary and search functions useful.)
1) What is the ASX?
2) What types of securities are traded on the ASX?
3) Approximately how many companies are listed on the ASX?
4) What is the All Ordinaries Index?
5) What are shares and why do people invest in shares?
6) What is the minimum investment you can make if you want to buy shares on the ASX?
7) What is a dividend?
8) What are the risks associated with investing in shares?
9) As a shareholder in a listed company, what rights do you have?
10) What is an ASX ticker code?
11) The ASX is divided into 13 GICS sectors. What does GICS stand for and what are the 13 sectors?
12) To be listed on the ASX companies must follow rules. One of these rules is to keep the market informed. What does this mean and why is it important? Give an example of something a company should report on immediately to keep the market informed?
ONCE YOU HAVE BEEN ALLOCATED A COMPANY:
13) Find the ASX ticker code for your company.
14) Go to the company website and look for information for investors/shareholders. See if you can find the latest Annual Report. If you can't find this information on the website, Google ‘(your company name) annual report'.
15) Briefly read through the Annual Report and list the activities your company is involved in. Even if you are familiar with the company, you may be surprised.
16) What is your company's reporting date (the date that appears on the financial statements)?
The Library link on iLearn can lead you many of the other Bond University resources available to help you with your research.
Some useful resources can be found by clicking on the Library tab (from pop up menu on right) then select:
- Search & find
- Electronic resources
- Fields of study
- Business - you will see a list of the various resources available.
We strongly recommend the following resources for this subject:
o The Australian Bureau of Statistics
o DatAnalysis Premium
o Factiva
o FinAnalysis
o IBISWorld Industry Research ReportsTASK 2 - COMPANY ANNOUNCEMENT GRAPHS
1. Select the two competitors of your company - those chosen by your group members.
2. Gather the following data series for a six week period for your company and its two competitors (three companies in total).
a) Take note of the actual announcement date from task 1..
(Note: usually, it will NOT be 30 June or 31 December - that is the end of financial period date, not the date that the company announced its financial results).
b) Look at the calendar and count THREE weeks BEFORE and THREE weeks AFTER the announcement date. Take note of those two dates. You can use a little more data if you like, but not less.
(For example: if I were to analyse the last profit announcement for Woolworths, I would look at the date of actual announcement, which was 25th August 2016. Then I would calculate three weeks before and three weeks after that date, which would mean the two data points are 4th August 2016 and 15th September 2016).
Now I would have a SIX-WEEK time period for which to collect the following data:
i. Closing Share Price for your company (for the total SIX WEEKS you calculated above).
ii. Closing Share Price for TWO selected competitors (for the total SIX WEEKS you calculated above).
iii. All Ordinaries Market Index (All Ords: XAO) (for the total SIX WEEKS you calculated above).
- Historical share prices can be accessed from:
i. Datanalysis (library electronic resources)
ii. Bloomberg.
iii. Yahoo Finance (All Ordinaries) https://au.finance.yahoo.com/q/hp?s=%5EAORD
c) For each of the above data series, download into Excel files.
** Note: You should have a total of AT LEAST SIX WEEKS of data (minimum).
You are better to collect more than less data **
3. Use the following formulas to assist in your analysis.
1. Select the two competitors of your company - those chosen by your group members.
2. Gather the following data series for a six week period for your company and its two competitors (three companies in total).
a) Take note of the actual announcement date from task 1..
(Note: usually, it will NOT be 30 June or 31 December - that is the end of financial period date, not the date that the company announced its financial results).
b) Look at the calendar and count THREE weeks BEFORE and THREE weeks AFTER the announcement date. Take note of those two dates. You can use a little more data if you like, but not less.
(For example: if I were to analyse the last profit announcement for Woolworths, I would look at the date of actual announcement, which was 25th August 2016. Then I would calculate three weeks before and three weeks after that date, which would mean the two data points are 4th August 2016 and 15th September 2016).
Now I would have a SIX-WEEK time period for which to collect the following data:
i. Closing Share Price for your company (for the total SIX WEEKS you calculated above).
ii. Closing Share Price for TWO selected competitors (for the total SIX WEEKS you calculated above).
iii. All Ordinaries Market Index (All Ords: XAO) (for the total SIX WEEKS you calculated above).
- Historical share prices can be accessed from:
i. Datanalysis (library electronic resources)
ii. Bloomberg.
iii. Yahoo Finance (All Ordinaries) https://au.finance.yahoo.com/q/hp?s=%5EAORD
c) For each of the above data series, download into Excel files.
** Note: You should have a total of AT LEAST SIX WEEKS of data (minimum).
You are better to collect more than less data **
3. Use the following formulas to assist in your analysis.
a) Calculate the returns for each company and the market (All Ords Index) as per the formula below. (Note: Excel transforms the returns into percentages).
RetDay1 = [(P1 - P0) / P0] and
Mar RetDay1 = [(M1 - M0) / M0]
(If a dividend has been paid during your analysis period, use this formula instead:
[(P1 - P0 + D1) / P0]).
b) Calculate the cumulative residuals for each company (see Sample Spreadsheet above):
i. Subtract the return on the market index from each company's returns daily - the difference is the "residual".
ii. Progressively add each day's residuals together to determine the cumulative residuals for the six-week period under analysis. This shows each company's stock market performance after the general stock market movements are removed.
iii. Thus the residuals and cumulative residuals should be calculated as follows:
Cum ResDay1 = RetDay1 - Mar RetDay1
Cum ResDay2 = RetDay2 - Mar RetDay2 + Cum ResDay1
Cum ResDay3 = RetDay3 - Mar RetDay3 + Cum ResDay2
4. Graph your results TASK #2: GROUP INDUSTRY ANALYSIS
The objective of the group industry analysis is for students to collect, discuss, evaluate and analyse the key financial and non-financial information for the industry they have chosen.
You will gain a thorough understanding of the accounting information at the industry level and how that information is used in the decision making of large publicly listed organisations in Australia. You will access a number of databases and other resources to assess the industry's overall performance and report your findings as well as recommendations for future success.
During the semester, you will be collecting company-related information on the individual companies within the industry. This background industry information will create a foundation for the individual component.
About IBISWorld
Australia's largest provider of industry-based research
Since the early 1970's, IBISWorld has been providing thoroughly researched, reliable and current business information that is considered invaluable to many businesses and other users. IBISWorld is dedicated to provide information by expert analysts who research economic, demographic and government data so you don't have to. They provide valuable insights on Australia's 500 industries, its top 2,000 companies and its key business environment indicators, so you can make superior business decisions and plan for the future.
Whatever the industry, IBISWorld knows about the company and its competitors. Whether you require a better understanding of predicted market conditions; whether you need a clearer picture of supply and source industries; or whether you just want to keep abreast of competitor activity within the industry, IBISWorld's concise yet comprehensive reports will keep you well-informed.
The ANZSIC collection analyses industries at the class level offering the latest content on 500 industries. Each report consists of 30 to 40 pages of key statistics and analysis on market characteristics, operating conditions, current and forecast performance, major industry participants and more.
Students will find it very useful to access the IbisWorld database to analyse their industry and associated companies.
To access IbisWorld:
1. Visit Bond University's Library homepage.
2. Click onSearch & Find ->Electronic Resources->Fields of Study ->Business (or follow the link below [Ctrl + Click])
Electronic Resources | Bond University Library
Fields of Study -> Business
3. Choose IBISWorld Industry Research Reportsfrom the list of resources.
4. Login with your Bond username and password (off-campus login).
5. You will be logged in to the IbisWorld database homepage under Bond University's subscription.
6. Search for your industry (e.g. Mining, Retail etc.) You may wish to choose a sub-industry category if you want your report to be more specific (e.g. Media -> Free-to-Air Television Broadcasting in Australia).
** DOWNLOAD THE PDF REPORT FOR REFERENCE IN LATER WEEKS **
7. Collect information relevant to your industry by answering the following questions:
About the industry:
1. What industry/industries does your company operate in?
2. What sub-industry category could you use that would provide a deeper analysisof the main activities for your company? (e.g. Woolworths ->Supermarkets and Grocery Stores in Australia - G4111).
- Type your company name in the search field and see what options come up. Choose one to use for your analysis.
3. Who are the main competitors?
- Are these the same companies as your teammates are analysing? What are the similarities and differences?
(Name 3 of each as you think of them throughout the task)
4. What are the key economic drivers in this industry?
- Discuss with your group members how these drivers affect the performance of the companies in the industry? (e.g. crude oil prices affect costs in airlines).
Industry performance:
5. Make notes and discuss the current performance of the industry. What factors are affecting the industry? Are they having a positive/negative impact?
Industry outlook:
6. Make notes and discuss the future outlook for the industry. What factors are most likely to affect the future performance of the industry? Will they have a positive/negative impact?
7. What phase of the life cycle is this industry in? What does this mean?
Products and markets:
8. What are the products/services offered by this industry? Download the relevant chart.
9. How are the major markets split up? Download the relevant chart.
10. Does this industry rely heavily on international trade?
Competitive landscape:
11. Analyse the competitive landscape for your industry:
• Market share concentration?
• Key success factors?
• Cost structure?
• Basis of competition?
• Barriers to entry?
• Industry globalisation?
Operating conditions:
12. Analyse the operating conditions for your industry:
a. Capital intensity?
b. Technology and systems?
c. Revenue volatility?
d. Regulation and policy?
e. Industry assistance?
Key statistics:
13. Based on the key statistics provided, what is your overall view of the industry. Would you currently look at investing in your company from what you know? Would your teammates?
GROUP DISCUSSION:
Discuss what you have found about your company and the industry in which it operates with your group members.
• What similarities and differences have arisen?
• Why might this have occurred?
Attachment:- Tasks 1 - 2.rar