Semester 1, 2024
FINC2012 Corporate Finance II
INDIVIDUAL ASSIGNMENT
Due: 23:59 on 12th April
Instructions
Choose two firms from the following list:
Company Name Code Sector
BHP Group Ltd BHP Materials
Fortescue Ltd FMG Materials
RIO Tinto Ltd RIO Materials
James Hardie Industries Plc JHX Materials
Northern Star Resources Ltd NST Materials
Telstra Group Ltd TLS Communication Services
REA Group Ltd REA Communication Services
CAR Group Ltd CAR Communication Services
Commonwealth Bank of Australia CBA Financials
National Australia Bank Ltd NAB Financials
Westpac Banking Corporation WBC Financials
ANZ Group Holdings Ltd ANZ Financials
Macquarie Group Ltd MQG Financials
CSL Ltd CSL Health Care
Fisher & Paykel Healthcare Corporation Ltd FPH Health Care
Pro Medicus Ltd PME Health Care
Wisetech Global Ltd WTC Information Technology
Xero Ltd XRO Information Technology
JB Hi-Fi Ltd JBH Consumer Discretionary
Wesfarmers Ltd WES Consumer Discretionary
Your choice of the first firm needs to be a growth stock and the other firm needs to be a mature firm
with substantial tangible assets. Note that if you pick the same stocks based on someone else’s choice
your response may be subject to particular scrutiny to ensure that both reports have been written
independently. Data can be obtained from the DatAnalysis Premium Morningstar database through the
University library website.
Using the criteria that you have determined for growth and mature firms, download and use data from
the FY2023 annual financial statements as a starting point to support your selection criteria. You are
not restricted to the use of data solely from FY2023 and may extend your data source beyond this point
if you think it would enhance the argument underpinning your choice of firms.
Prepare a report that covers the following questions and use headings for each question:
1. Explain your selection criteria for each stock and present the data that you used to make the selection.
3 marks
2. Report the balance date(s) for each stock. Determine the companies’ leverage ratios in book value
and market value terms as at the balance date and show your calculations. 2 marks
3. For each firm, explain why there are differences between the market value and book value leverage
ratios. If there are no differences, or if they are small, explain why this is so. 5 marks
2
4. How do the levels of leverage vary between the two firms? Compare both book and market value
leverage ratios. Explain the reasons for differences between the firms and whether the level of leverage
seems appropriate for each firm. 5 marks
5. Pick one of your companies. What are the likely effects on the financial distress of the company when
financial leverage increases? How would this relation impact the level of conflicts of interest between
debt holders and shareholders? What are ways to mitigate the conflict of interest between debt holders
and shareholders? Explain your answers in the context of your chosen firm. 5 marks
5 marks will be awarded based on the overall quality of the assignment, as reflected in well written
concise and clear explanations, depth of analysis, critical thinking, insight, the exercise of intelligent
judgement, the use of research literature and originality.
Total marks (/25)
Other Requirements:
Include a cover/ title page showing your student identification number. Do not include your name.
Maximum length of assignment: 2000 words excluding cover/ title page, tables, graphs, figures,
reference list and appendix. Penalties for going over the word limit will be applied as per faculty
assessment policy.
The appendix section does not have a word limit.
Do NOT include executive summary, introduction or conclusion sections. These sections will not be
marked.
Formatting requirements: A4 sized page, single line spacing, 1.5 cm margins and 11 point font size.
Tables, charts and figures should be clearly labelled.
Penalties apply for poorly presented work.
You must enumerate and label your answers for each part of the tasks clearly. (e.g. Task 1, Task 2, a.
b., etc.).
Referencing: You are expected to use academic references to support your analysis and arguments.
Citations and the reference list must be prepared following one of the University of Sydney referencing
and citation styles (https://libguides.library.usyd.edu.au/citation). It is ideal to employ at least three
references to justify your arguments.
Writing: The logic of the answers must be easy to follow. There are expected to be no spelling or
grammatical errors and terminology should be clearly defined.
Professional presentation is highly encouraged.
Submit ONE word document ONLY. This document should include the main body of the report and
complementary materials in the Appendix.
General Marking criteria
The criteria below will be followed when marking each part of the assignment:
1. The extent and quality of critical reasoning/critical thinking.
2. The demonstration of knowledge of relevant theory.
3. The successful usage and interpretation of relevant data.
4. The extent to which the work is clearly, concisely and professionally presented.