GROUP ASSIGNMENT
ACCT90013 Financial Accounting Theory & Practice
Semester 1, 2024
DEPARTMENT OF ACCOUNTING
ACCT90013 FINANCIAL ACCOUNTING THEORY & PRACTICE
Semester 1, 2024
Group Assignment
DUE DATE Friday, 03 May 2024 11.59PM (Melbourne Time)
This assignment represents 20% of your overall grade for this
subject.
This assignment is to be completed in a group of 3 to 4 students.
WORD LIMIT No more than 4,000 words (excluding References and
Appendix).
REFERENCE
References should be on a separate sheet(s). Please include in-
text reference in your report. You are suggested to use the
Harvard system of referencing your sources (see Giblin-Eunson
Library Help sheets for a referencing resource).
Please note that Wikipedia is not considered a reliable source.
ADMINISTRA-
TION
Assignments must be typed, double-spaced with font size of at
least 11 (Arial) or 12 (Times New Roman). All pages should be
numbered.
SUBMISSION
Submission should be made on the LMS subject page. If you use
excel worksheets, they should be added in the Appendix to your
report.
Please make sure that you only submit the final version of the
assignment (as a pdf document) and that the file name includes
the company name, followed by “_” and your group number
(without spaces). An example is “Microsoft_55.pdf”.
FURTHER
INFORMATION
For information relating to plagiarism/collusion, late submission,
special consideration, referencing, penalties, teaching and
learning unit, please refer to SUBJECT GUIDE.
1
Group Assignment
The group assignment is designed to further develop your understanding of the core materials
from the first seven lectures of this course (weeks 1 through 7). The assignment is to be done
in a group with 3 to 4 members. Each group is required to select one company from the
following list:
Company Industry Country Investor relations website
Microsoft Software U.S. https://www.microsoft.com/investor/reports/ar23/download-
center/
Nvidia Technology U.S. https://investor.nvidia.com/financial-info/annual-reports-
and-proxies/default.aspx
AstraZeneca Pharmaceutical UK https://www.astrazeneca.com/investor-relations/annual-
reports/annual-report-2023.html#downloads
You are an equity analyst team, who is tasked with providing fundamental insights about the
followed company’s fundamentals and financial reporting in 2022/2023. You are required to
provide an executive report on several issues of the company, including its general business
model, its reliance on intangible assets, its executive compensation design, and a preliminary
valuation of the company. In your report, you should address the following issues about the
company by using as much information from the annual report of FY2023 as possible but
also drawing from additional disclosures from the company, such as its proxy statement,
quarterly reports, semi-annual reports, press releases and so on.
Please note that for US listed companies, details on executive compensation are normally
discussed in the proxy statement. The annual report of Nvidia already includes 2023 Proxy
Statement. You can access the 2023 proxy statement of Microsoft through the company's
website or via the following links:
https://www.microsoft.com/en-us/investor/annual-meeting.aspx
In today's rapidly evolving world, the integration of artificial intelligence (AI) into various
aspects of our lives is becoming increasingly prevalent. To prepare for the workforce of
tomorrow, learning to harness the power of AI tools and critically analyze their outputs is not
just advantageous—it's essential. Therefore, we require you to first use ChatGPT to complete
Section 2 on asset recognition and Section 3 on executive compensation, then analyse the
annual report yourself and critically evaluate the results from ChatGPT. Please see details listed
in the table below.
2
Section Description of section requirement Marks
1. Business
environment
(around 200
words)
Provide a brief description of the company’s business model
and environment, for instance, its main operational activities,
the key source of revenue, its strategy, and its competitive
environment.
1
2. Asset
recognition
(around 1000
words)
Part I: use ChatGPT to answer the following questions
related to your selected firm:
• What are the company’s recognised intangible assets?
• What are the company’s important non-recognised
intangible assets for value creation?
• Does the mandated accounting treatment for these assets
introduce asset-nonrecognition biases into the financial
statements?
• Is nonrecognition of intangible assets a big concern for
the company’s financial reporting quality? Explain why.
Part II: analyse the selected firm yourself and critically
evaluate the results you get from ChatGPT.
Part III: write a summary briefly discussing the results from
ChatGPT, how your own analysis differs and why.
5
3. Executive
compensation
(around 1200
words)
Part I: use ChatGPT to answer the following questions
related to your selected firm:
• What components are featured in the CEO’s
compensation?
• What is the CEO’s remuneration mix (fixed vs. variable,
short- vs. long-term, equity vs. cash)?
• What performance measures are used in the variable parts
of the CEO’s compensation?
• How does CEO compensation structure relate to the
firm’s strategic objectives?
• Is the CEO paid fairly?
Part II: analyse the selected firm yourself and critically
evaluate the results you get from ChatGPT.
Part III: write a summary briefly discussing the results from
ChatGPT, how your own analysis differs and why.
5
3
4. Valuation
(around 1600
words)
Part I: apply a relative valuation approach to value the firm
on April 08, 2024. Your discussion should include the
following points:
a) Identify three benchmark companies and discuss why you
think these companies are comparable benchmarks.
b) Value the firm using the P/E ratio, the P/B ratio, and
TEV/EBITDA. Discuss potential reasons specific to your
firm on why the different multiples lead to different values.
c) Discuss what happens to the valuation under (b) if you
adjust for the most important non-recognised intangible asset
as identify under Asset Recognition.
Part II: use FCFF model to value the firm on April 08, 2024.
You do NOT need to make adjustment on non-recognised
intangible assets for Part II. Your discussion should include
the following points:
a) Clearly explain and briefly justify the assumptions you
have used in FCFF model.
b) Compare the valuation from FCFF model to the valuation
from the relative valuation approach from Part I. Explain
what might drive the different valuation results.
Please provide your calculations for both Part I and Part II as
an Appendix in the report to support your answer.
8
Structure,
presentation, and
clarity of the report
The information contained in the report should be structured
to sensibly progress from requirements to conclusions in
clear sections. Brevity is desirable, provided that necessary
information is properly communicated.
1
TOTAL 20
Additional guidance
1. Format: The group assignment should be delivered in a report format. Please include
a brief introduction and a conclusion in your report. You are encouraged to use the
4
above framework to scope the report. It is expected that you address all the key issues
listed above.
2. Specificity: You are expected to analyse the above key issues under the specific
situation of the firm. Please avoid generic discussions with no link to the specific firm.
3. Quality: A high-quality report should provide convincing and concrete arguments and
support the analyses with evidence. Note that writing quality will also be assessed.
4. Incomplete information: As the chosen firms are real firms, you may find that crucial
information is not readily available. In this case, please make assumptions where
necessary and clearly state the assumptions in the report.