LD7205 Assessment Brief Module Code: LD7205 Module Title: Corporate Finance Distributed on: Immediate Hand in Date: To be announced on Black board site of this module Further information about general assessment criteria, ARNA regulations, referencing and plagiarism can be found on the module’s site on the e-Learning Portal. Students are advised to read and follow this information.
Instructions on Assessment: 3,000 words
Choose a multinational company listed on any internationally recognized Stock Exchange (i.e. NYSE, NASDAQ, LSE, EURONEXT, Deutsche Borse, TSE and etc.). Use the “Investor Relations” section of the website to download annual statements covering the most recent five-year period.
The report structure should be as follows:
Define working capital, working capital management and WCM indicators. Discuss the existing WCM policies (aggressive, conservative and moderate) from theoretical perspective. Calculate WCM indicators (working capital, days sales outstanding, days purchases outstanding, days inventories outstanding and cash conversion cycle), and identify WCM policy and its efficiency. (15 marks) Discuss trade-off capital structure theory focusing on relationships between WACC, debt-to-equity ratio and value of the firm. Evaluate capital structure ratios (debt-to equity, debt-to-assets, equity-to-assets ratios) and comment on selected capital structure policy. (15 marks) Calculate ROI, ROA, ROE and comment on investment policy focusing on company’s ability to generate positive returns and create value for the shareholders. (15 marks) Discuss dividend relevance and irrelevance theory and define existing dividend policies from theoretical perspective. Calculate dividend payout ratio and dividend per share to identify and comment on selected dividend policy (15 marks) Referring to the relevant literature, discuss the context when valuation is needed. Estimate the share price of the company by 2 valuation models: a. Gordon’s growth model. Discuss the model from theoretical perspective. To apply it, you will need to use CAPM to estimate a cost of equity and a number of approaches to justify the growth rate. b. P/E multiple technique. For this you will need to select comparable firm(s) to get valuation. Relate the obtained results to the market estimate of the share price and comment on the reasons behind possible differences using sensitivity table with both growth rate and cost of equity, also citing relevant theories. (40 marks)
(Total 100 Marks)
Assessment Regulations You are advised to read the guidance for students regarding assessment policies. They are available online:
https://www.northumbria.ac.uk/about-us/university-services/student-library-and-academic-services/quality-and-teaching-excellence/assessment/assessment-regulations-and-policies
Late submission of work Where coursework is submitted without approval, after the published hand-in deadline, the following penalties will apply. For coursework submitted up to 1 working day (24 hours) after the published hand-in deadline without approval, 10% of the total marks available for the assessment (i.e. 100%) shall be deducted from the assessment mark.
For clarity: a late piece of work that would have scored 65%, 55% or 45% had it been handed in on time will be awarded 55%, 45% or 35% respectively as 10% of the total available marks will have been deducted.
The Penalty does not apply to Pass/Fail Modules, i.e. there will be no penalty for late submission if assessments on Pass/Fail are submitted up to 1 working day (24 hours) after the published hand-in deadline.
Coursework submitted more than 1 working day (24 hours) after the published hand-in deadline without approval will be regarded as not having been completed. A mark of zero will be awarded for the assessment and the module will be failed, irrespective of the overall module mark.
For clarity: if the original hand-in time on working day A is 12 noon the 24 hour late submission allowance will end at 12noon on working day B. These provisions apply to all assessments, including those assessed on a Pass/Fail basis.
Word limits and penalties
If the assignment is within +10% of the stated word limit no penalty will apply.