Posted: December 7th, 2022

ACC3155 FINANCIAL STATEMENT ANALYSIS AND VALUATION

ACC3155 FINANCIAL STATEMENT ANALYSIS AND VALUATION
ACADEMIC YEAR 2022-2023
Individual Assignment
(60% of the Module weighting)
You are required to conduct research on a listed company and its benchmark company,
and complete the following 3 tasks.
Assignment structure,
format and details
• Preparing reformulated financial statements and analysis report;
and preparing forecasted financial statements and performing
equity valuation.
• Detailed requirements for each task are available in the following
pages.
Submission date, time Online submission via My Learning of myUniHub:
• Task 1 (20%) – Learning week 11
• Task 2 (20%) – Learning week 17
• Task 3 (20%) – A week after learning week 24
Your Tutor will advise of the exact day and time for each task.
Feedback type & date Formative feedback: Available over the learning weeks during the
Lecture and Seminar sessions, Tutor’s office hours, and any other
pre-arranged sessions. You can also contact the Learning
Enhancement Team via LET@mdx.ac.uk for academic writing
support and other related aspects.
Summative feedback: Written feedback within 3 to 4 learning weeks
upon submission.
Assessed learning outcomes • Interpret financial statements and make appropriate adjustments
to facilitate analysis and synthesis.
• Apply the discounted cash flow and residual income methods of
equity and enterprise valuation and critically appraise each
method.
• Assess companies’ operating and financial risk by reference to
financial statements.
• Analyse and critically evaluate financial statements.
• Undertake quantitative and qualitative analysis of corporate
performance.
• Assess the profitability and solvency of companies using
financial and non-financial information.
• Calculate and apply a range of ‘market comparable’ ratios and
other metrics and critically evaluate their use in security
valuation.
Key reading and learning
resources
• Lecture and Seminar materials
• Online websites and relevant resources (such as Financial Times)
Marking criteria Detailed marking criteria for each task are available in the following
pages.
2
ACC3155 FINANCIAL STATEMENT ANALYSIS AND VALUATION
ACADEMIC YEAR 2022-2023
Detailed requirements for Task 1
You are required to complete the following work:
• Choose a company from the list provided on the My Learning and sign up online using the
“sign-up sheet” on the My Learning of myUniHub.
• Identify a benchmark company for comparison.
• You are required to prepare the Reformulated Consolidated Balance Sheets and
Reformulated Consolidated Income Statements for your chosen company (three most recent
financial years) and its benchmark company (one most recent financial year).
• Adopt “Profit after taxation” in the Consolidated Income Statement for reformulation. You
are not required to consider the “Other comprehensive income” in the Consolidated
Statement of Comprehensive Income for reformulation.
• Where applicable, describe your bases and assumptions made during your reformulation
process together with the relevant workings.
• To include the original version of Consolidated Balance Sheet and Consolidated Income
Statement and their relevant Notes to the Consolidated Financial Statements for the most
recent financial year of both companies to support your bases and assumptions of
reformulation.
• Using the amounts from the reformulated financial statements, compute the accounting
ratios for return on common equity (“ROCE”) in conducting the first level and second level
analysis of profitability and solvency for your chosen company (three most recent financial
years) and its benchmark company (one most recent financial year).
• You are required to show detailed workings with formulae for all the relevant accounting
ratios.
• You are required to apply the Excel applications in the preparation of reformulated financial
statements as well as in the computation of accounting ratios.
• Seek progressive feedback from your Tutor on your work – early feedback and guidance are
encouraged and welcomed while last-minutes appointment may not be entertained.
Individual Assignment (Task 1)
(20% of the Module weighting)
You are required to prepare reformulated financial statements and calculate accounting
ratios for online submission via My Learning of myUniHub in the learning week 11 (the
exact day and time will be advised by your Tutor).
3
Marking criteria for Task 1
The assessment scheme is based on the accurate computation and presentation of results using
the Excel applications. The allocations of marks (out of 100%) are as follows:
Reformulated Consolidated Balance Sheets 35%
Reformulated Consolidated Income Statements 20%
Accounting ratios relating to ROCE 35%
Proper adoption of Excel applications 10%
100%
4
ACC3155 FINANCIAL STATEMENT ANALYSIS AND VALUATION
ACADEMIC YEAR 2022-2023
Detailed requirements for Task 2
You are a financial analyst in a consulting firm. You have been assigned to assess the
profitability and solvency of a company from the investor perspective using the results obtained
under Task 1. The report with a maximum word limit of 2,000 words (excluding cover page,
content page and reference list) must be prepared using Microsoft Word and should include, at
least, the following elements and contents:
Assessment criteria Marks
allocations
Cover page
• Module code and name.
• Student number.
• Academic year and title of work.
• The name of analysed company.
*
Content page
• Proper title and heading with complete page referencing.
*
Chapter 1: Introduction to the research
• The purpose of the report.
• Justification for the selection of companies.
• Method used in generating the report and its limitations.
• Signposting the report.
5%
Chapter 2: Background, financial results and key non-financial
information
• Introduction to the chosen company, its business and its competitors.
• A review of the financial results contained in the most recent annual
report and an up-to-date commentary by reference to the most recent
announcements and interim reports for the chosen company and its
benchmark company.
• Recent difficult situations or controversial issues facing by the chosen
company.
• Key non-financial information, such as appointment of a new director,
of the chosen company.
25%
Individual Assignment (Task 2)
(20% of the Module weighting)
You are required to analyse the results obtained under Task 1 and prepare a report
(maximum 2,000 words) for online submission via My Learning of myUniHub in the
learning week 17 (the exact day and time will be advised by your Tutor).
5
Detailed requirements for Task 2 (Cont’d)
Assessment criteria Marks
allocations
Chapter 3: Analysis and interpretation of profitability and solvency ratios
• Conduct the first level and second level analysis of profitability and
solvency through the return on common equity (“ROCE”).
• Summarised results of the ROCE of the chosen company for three
most recent financial years and its benchmark company for one most
recent financial year.
• Critically evaluate and discuss the ROCE drivers.
50%
Chapter 4: Summary and conclusion
• Summary of main findings of previous chapters.
• Draw conclusion on the profitability and solvency of your chosen
company in relation to the benchmark company and the industry as a
whole.
10%
References
• Use the Harvard referencing style.
• Complete list of references.
*
Presentation and language (including * above)
• Professional style of format and presentation.
• Professional style of language for report writing.
• Proper citation and referencing.
• Suitable graphs adopted with proper presentation.
10%
This 100% will be converted to 20% of the total assessment of the module. 100%
Note: Seek progressive feedback from your Tutor on your work – early feedback and
guidance are encouraged and welcomed while last-minutes appointment may not be
entertained.
6
Marking criteria with rubrics for Task 2 of Individual Assignment
Assessment
criteria
Grade 1-4 Grade 5-8 Grade 9-12 Grade 13-16 Grade 17-20
Chapter 1 All required
elements
included with
excellent
presentation.
All required
elements
included with
good
presentation.
Most of the
required
elements
included.
Some of the
required
elements
included.
Missing most
of the required
elements.
Chapter 2 All required
elements
included with
excellent
review and
presentation.
All required
elements
included with
good review
and
presentation.
Most of the
required
elements
included.
Some of the
required
elements
included.
Missing most
of the required
elements.
Chapter 3 Excellent and
in-depth
analysis and
interpretation
of the
presented
results.
Good and
specific
analysis and
interpretation
of the
presented
results.
Adequate level
of analysis and
interpretation
of the
presented
results.
Some but
limited level
of analysis and
interpretation
of the
presented
results.
No or very
limited level
of analysis and
interpretation
of the
presented
results.
Chapter 4 Excellent
summary of
findings and
drawing
appropriate
conclusions.
Good
summary of
findings and
drawing
appropriate
conclusions.
Some
summary of
findings and
drawing some
appropriate
conclusions.
Limited
summary of
findings and
drawing
limited
appropriate
conclusions.
Inadequate
summary of
findings and
drawing
inadequate
conclusions.
Presentation
and language
Excellent
presentation
and language
with very
minor spelling
and
grammatical
errors.
Excellent and
consistent
standards of
referencing.
Excellent
adoption of
graphic
presentation.
Good
presentation
and language
with few
spelling and
grammatical
errors.
Good
referencing
with minor
errors.
Good adoption
of graphic
presentation.
Satisfactory
presentation
and language
with some
spelling and
grammatical
errors.
Satisfactory
referencing
with some
errors.
Satisfactory
adoption of
graphic
presentation.
Inconsistent
presentation
and language
with some
spelling and
grammatical
errors.
Some
referencing
with errors.
Limited
adoption of
graphic
presentation.
Poor
presentation
and language
with lots of
spelling and
grammatical
errors.
No or
inadequate
referencing.
No or
inadequate
adoption of
graphic
presentation.
7
ACC3155 FINANCIAL STATEMENT ANALYSIS AND VALUATION
ACADEMIC YEAR 2022-2023
Detailed requirements for Task 3
You are a financial analyst in a consulting firm. You have been assigned to prepare the
Forecasted Consolidated Income Statement for your chosen company and perform equity
valuation.
You are required to complete the following work:
Assessment criteria Marks
allocations
Forecasted Income Statement
Based on the Consolidated Income Statements of your chosen company for
the past three financial years, prepare the Forecasted Consolidated Income
Statement for the incoming financial year.
• Clearly describe your bases and assumptions in arriving at your
forecasted amounts together with the appropriate workings.
• Compare your forecasted results with the published results made
available by the company, showing clearly the differences.
• Critically discuss the above differences.
You are recommended to present your work using the Microsoft Excel.
30%
10%
10%
Equity valuation
Perform equity valuation of your chosen company for the most recently
concluded financial year by adopting one of the following valuation methods:
Dividend discount model (“DDM”); or Discounted cash flow model (DCFM);
or Residual earnings model (“REM”); or method of comparables (“MOC”).
• Clearly demonstrate your workings together with the relevant bases
and assumptions in arriving at your equity valuation. For DDM,
DCFM or REM, you are required to use, at least, three forecasted
amounts in your computation while for MOC, you are required to
compare with, at least, another two companies.
• Compare your equity value with the current market value, comment on
the difference, and make appropriate recommendation to the investors.
• Critically discuss your selection of valuation method relative to other
methods.
30%
10%
10%
This 100% will be converted to 20% of the total assessment of the module. 100%
Individual Assignment (Task 3)
(20% of the Module weighting)
You are required to prepare forecasted financial statements and perform equity valuation
for online submission via My Learning of myUniHub in a week after the learning week
24 (the exact day and time will be advised by your Tutor).
8
Task 3 (Cont’d)
Note: Seek progressive feedback from your Tutor on your work – early feedback and guidance
are encouraged and welcomed while last-minutes appointment may not be entertained.

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