FIN2002- Corporate Finance
ASSIGNMENT- Semester 2 2024

GENERAL GUIDELINES
• The assignment is due to be submitted by 11.59 PM on Friday, 11 October, via the LMS
submission link.
• Both the report (Word file) and relevant calculations (Excel file) must be submitted. The
marking is based on your report, so you must include all of your outcomes and tables from
the Excel file in the report. The Excel file is used to check your work only.
• This assignment will contribute 30% towards the subject’s total assessment.
• Maximum 1500 words (excluding Tables, References, and appendices)
• Your allocated company is as below:
1. If your student ID ends with 0 or 1, your assigned company is Santos Limited (STO)
2. If your student ID ends with 2 or 3, your assigned company is AGL Energy Limited (AGL)
3. If your student ID ends with 4 or 5, your assigned company is JB Hi-Fi Ltd (JBH)
4. If your student ID ends with 6 or 7, your assigned company is TPG Telecom Ltd (TPG)
5. If your student ID ends with 8 or 9, your assigned company is EBOS Group Limited (EBO)
• Please carefully read the required tasks and instructions below.
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REQUIRED TASKS
This assignment requires the completion of the following tasks:
a) Provide an overview of your company (i.e., business nature, industry, size, growth rate,
and how long it has been in operation) (up to 300 words). (2 marks)
b) Calculate Long-term debt/Total assets and Long-term debt/Equity ratios for the company
allocated to you over the five years 2019 to 2023. (4 marks)
c) Compare your firm’s long-term debt/total assets and long-term debt/equity ratios with your
firm’s industry average and discuss the findings. You can choose any industry
classification level (sector/industry group/industry) and make sure you have at least ten
companies other than the company allocated to you for industry comparison. (4 marks)
d) Identify a matching firm in your firm’s industry that is similar in size to your firm (use
2023 total assets to choose a matching firm). Compare your firm’s long-term debt/total
assets and long-term debt/equity ratio with your matching firm and discuss the findings.
(4 marks)
e) Briefly discuss the term “Optimal Capital Structure”. Does your company have an optimal
debt/equity ratio? Use calculations on business risk in your analysis. (Hint: standard
deviation of EBIT/Total Assets over five years 2019-2023: use the template for calculation
in the LMS). Justify your answer and include citations and references. (4 marks)
f) Identify one dividend change (interim or final) announcement (note: compare interim to
interim to identify changes in interim dividend or final to final to identify changes in final
dividend using “dividend history from the DatAnalysis Premium Database” for the
company allocated to you). Identify the interim announcement date from the half-yearly
report or final announcement date from the preliminary final report
(i) Calculate (2 marks)
• The three-day return earned by your firm for the period from the day before the
announcement day to the day after the announcement date
• The two-day return earned by your firm for the period from the day of the
announcement to the day after the announcement date
(ii) Calculate the market return for the corresponding periods in (i). (1 mark)
(iii) Calculate the excess return: (i) - (ii) (1 mark)
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g) Compare and discuss the relevant theory for the findings of the market reaction to dividend
changes in (f(iii)). In your discussion, include the signaling hypothesis, the free cash flow
hypothesis, and the clientele hypothesis. Include citations and references. (6 marks)
h) Presentation of the report (format and layout; inclusion of graphs to show the trend), citation
and references. The report should be formatted in a professional manner: using Times New
Roman font at size 12 and double-spacing for the main text and single-spacing for others
(tables, figures, appendices, etc.). All figures and graphs must be clearly labelled and
numbered. References and citations follow either the AGPS Harvard Style or APA style.
(2 marks)
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INSTRUCTIONS
Step 1
Log on into DatAnalysis Premium at http://www.lib.latrobe.edu.au/databases/title.php?l=D
Step 2
a) Click on the Company Reports tab. Enter your company’s three letter ASX code. Choose
the required company from the list of options which match your entry.
b) Click on Financial Data tab that appears on the left-hand side.
c) Data on “Total Equity”, “Long-term Debt” and “Total Assets” can be found under the
Balance Sheet tab.
d) Data on “EBIT” can be found under the Profit & Loss tab.
e) Adjust Year Range to customize for the required period. Click GO. Click Download
Spreadsheet to download required data into an Excel document.
f) Use downloaded data to calculate “Long term Debt / Total Assets” and “Long term Debt /
Equity” ratios.
Step 3
a) Information on your company’s industry, including GICS Sector, GICS Industry Group
and GICS Industry, can be found under Corporate Details tab. Note this information
down for the next step.
b) Click on Search Tool tab that is next to the Company Reports tab. Select Time-Series
Financial Search from the drop-down menu.
c) In Section A, tick All Companies. Adjust Year Range for the five-year period. Group by
Data Item. Use information that you identified in the step 2a to select GICS Section,
GICS Industry Group and GICS Industry from drop-down menus.
d) In Section B, select Annual Balance Sheet from the drop-down menu under Section.
Select “Total Equity”, “Long-term Debt” and “Total Assets” with the option Display
Only and click ‘Add Query’. Your search criteria will then be added to the ‘Query List’
box in Section C.
e) Click Search to display search results. Click Download Spreadsheet to download the
search results into an Excel Spreadsheet
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f) Use downloaded data to calculate “Long term Debt / Total Assets” and “Long term Debt /
Equity” ratios for all companies in the identified industry. Then calculate industry
average for these ratios.
Please look at the “Guidance for computing the industry average” file on the LMS for
additional guidance.
Step 4
You can use the average of your firm’s industry average ratios as “optimal capital structure”.
You can also calculate business risk of your allocated company (standard deviation of
EBIT/Total assets for the 5-year period) as well as other firms in your firm’s industry. Use the
“Template for Calculation” in the LMS to calculate business risk, industry average etc.
a) A dividend change is defined as the relative difference from the previous year’s level.
• Interim dividend change = interim dividend per share in year t minus interim
dividend per share in year t-1.
• Final dividend change = Final dividend per share in year t minus Final dividend
per share in year t-1.

b) Announcement date for the dividend change can be identified from “ASX
announcements from the DatAnalysis Premium Database”.
• Announcement date for interim dividend change: use the announcement date of
half yearly report
• Announcement date for final dividend change: use the announcement date of
preliminary final report
▪ Select “ASX announcements”
▪ Select “Search option - Click here to refine your search by ASX
Announcement Type and/or text search”
▪ For Announcement Type: select periodic reports
▪ For Sub-Announcement Type: select preliminary - final statement for
final dividend; half yearly report interim dividend change
▪ Specify the date range
c) The stock prices required for calculating stock returns are available from Yahoo Finance.