Business Company Financial Analysis
Project description
Portfolio consisting of two tasks:
Company is Thomas cook group we have to do on this company
Task 2 Company Financial Analysis (2,000 words) You will be allocated a company within the FTSE 250 index to undertake this task. Collect share price data for both your company and the FTSE 250 index from 1st February 2008 until 31st January 2013 from Morningstar company intelligence and Yahoo Finance (uk.finance.yahoo.com) and undertake the following tasks:
(i) Provide an introduction of no more than 100 words to your company and the sector in which it operates.
(ii) Using the data collected, calculate the beta for your company using Excel. Compare your results with the published beta for your company on uk.reuters.com. Explain any differences between the published result and your calculated result.
(iii) Compare the share price performance of your company with that of the FTSE 250 index. In your comparison, you should analyse your company’s performance using finance theories.
(iv) Compare the five-year performance of your company with the share price performance since the 31st January 2013 (i.e. 1st February 2013 – 20 April 2013). Within your comparison, you should identify the principal factors that have caused price changes over this three-month period and how this may be explained by finance theory
Task 2 Company Financial Analysis (2,000 words) You will be allocated a company within the FTSE 250 index to undertake this task. Collect share price data for both your company and the FTSE 250 index from 1st February 2008 until 31st January 2013 from Morningstar company intelligence and Yahoo Finance (uk.finance.yahoo.com) and undertake the following tasks:
(i) Provide an introduction of no more than 100 words to your company and the sector in which it operates.
(ii) Using the data collected, calculate the beta for your company using Excel. Compare your results with the published beta for your company on uk.reuters.com. Explain any differences between the published result and your calculated result.
(iii) Compare the share price performance of your company with that of the FTSE 250 index. In your comparison, you should analyse your company’s performance using finance theories.
(iv) Compare the five-year performance of your company with the share price performance since the 31st January 2013 (i.e. 1st February 2013 – 20 April 2013). Within your comparison, you should identify the principal factors that have caused price changes over this three-month period and how this may be explained by finance theory
Detail of tutorial inputs, etc. Task 1 – weeks 1 and 3-11 inclusive
Task 2 – weeks 1-11 inclusive
Recommended reading and other sources Alkaraan, F., & Northcott, D. (2006) Strategic capital investment decision-making: a role for emergent analysis tools? A study of practice in large UK manufacturing companies, The British Accounting Review, 38(2), 149-173
Arnold, G. (2007) Essentials of corporate financial management, Harlow, Essex: Pearson Education Limited.
Arnold, G.C. & Hatzopoulos (2000) The theory-practice gap in capital budgeting: evidence from the United Kingdom, Journal of Business Finance & Accounting, 27(5&6), 603-626
Atrill, P. (2009) Financial management for decision-makers. 5th ed., Harlow, Essex: Pearson Education Limited.
Baghestani, H. (2009) Survey evidence on forecast accuracy of U.S. term spreads, Review of Financial Economics, 18(3), 156-162
Ballas, A.A., & Hevas, D.L. (2005) Differences in the valuation of earnings and book value: regulation effects or industry effects? The International Journal of Accounting, 40(4), 363-389
Berk, J., DeMarzo, P., & Harford, J. (2009) Fundamentals of Coporate Finance: International Financial Reporting Standards Edition, Boston, MA: Pearson Education Inc.
Block, S.B., & Hirt, G.A. (2008) Foundations of financial management.
13th ed., New York, New York: McGraw-Hill/Irwin.
Brealey, R.A., Myers, S.C. & Marcus, A.J. (2009) Fundamentals of corporate finance. 6th ed., New York, New York: McGraw-Hill/Irwin.
Brounen, D., de Jong, A., Koedijk, K. (2004) Corporate finance in
Europe: confronting theory with practice, Financial Management, 33(4),
71-101
Burns, R.M., & Walker, J. (2009) Capital budgeting surveys: the future is now, Journal of Applied Finance, 19(1/2), 49-62
Childs, P.D., Mauer, D.C., & Ott, S.H. (2005) Interactions of corporate financing and investment decisions, Journal of Financial Economics,
76(3), 667-690
Daily, C.M., Dalton, D.R. & Cannella, Jr, A.A., (2003) Corporate
governance: decades of dialogue and data, Academy of Management
Review, 28(3), 371-382
Fama, E.F., & French, K.R. (2004) The capital asset pricing model:
theory and evidence, Journal of Economic Perspectives, 18(3), 25-46
Graham, J.R., & Harvey, G.R. (2001) The theory and practice of corporate finance: evidence from the field, Journal of Financial Economics, 60(2-3), 187-243
Gregory, A., & Michou, M. (2009) Industry cost of equity capital: UK
evidence, Journal of Business Finance & Accounting, 36(5/6), 679-704
Grinyer, J.R. (1986) An alternative to maximisation of shareholders’ wealth in capital budgeting decisions, Accounting & Business Research, 16(64), 319-326
Heath, J. (2009) The uses and abuses of agency theory, Business
Ethics Quarterly, 19(4), 497-528
Jensen, M.C., (2002) Value maximisation, stakeholder theory and the corporate objective function, Business Ethics Quarterly, 12(2), 235-256
Jensen, M.C., & Meckling, W.H., (1976) Theory of the Firm: Managerial behaviour, agency costs and ownership structure, Journal of Financial Economics, 3, 305-360
Ledoit, O., & Wolf, M. (2003) Improved estimation of the covariance matrix of stock returns with an application to portfolio selection, Journal of Empirical Finance, 10(5), 603-621
Lee, C-F., Tsai, C-M., & Lee, A.C. (2009) A dynamic CAPM with supply effect: theory and empirical results, The Quarterly Review of
Economics and Finance, 49(3), 811-828
Miller, R.A. (2009) The weighted average cost of capital is not quite right, The Quarterly Review of Economics & Finance, 49(1), 128-138
Perold, A.F. (2004) The capital asset pricing model, Journal of
Economic Perspectives, 18(3), 3-24
Ross, S.A. (1995) Uses, abuses, and alternatives to the net-present- value rule, Financial Management, 24(3), 96-102
Ross, S.A., Westerfield, R.W. & Jordan, B.D. (2007) Essentials of corporate finance. 6th ed., New York, New York: McGraw-Hill/Irwin
Sharpe, W.F. (1964) Capital asset prices: a theory of market equilibrium under conditions of risk, The Journal of Finance, 19(3),
425-442
Van Horne, J.C. & Wachowicz, Jr., J.M. (2008) Fundamentals of financial management. 13th ed., Harlow: Financial Times Prentice Hall.
Welch, I (2009) Corporate Finance: An Introduction, Boston, MA: Pearson Education Inc.
Checklist of issues to consider:
You are expected to demonstrate that you have a good grasp of the key principles of finance and the factors influencing the financial environment and financial decision-making.
Avoiding Academic Misconduct
Warning
Collusion, plagiarism and cheating are very serious offences that can result in a student being expelled from the University. The business school has a policy of actively identifying students who engage in academic misconduct of this nature and routinely applying detection techniques including the use of sophisticated software packages.
Avoid Collusion
The business school encourages group working, however to avoid collusion always work on your own in order to complete your individual assessments. Do not let fellow students have access to your work before it is submitted and do not be tempted to access the work of others. Refer to your module tutor if you do not understand or you need further guidance.
Avoid Plagiarism
You must use available and relevant literature to demonstrate your knowledge of a subject, however to avoid plagiarism you must take great care to acknowledge it properly. You should therefore always use of the Harvard style referencing system in all cases (for further guidance go to from the menu that then appears, make these choices in turn: Study skills, referencing, Harvard Citation). Plagiarism is the act of stealing someone else’s work and passing it off as your own. This includes incorporating either unattributed direct quotation(s) or substantial paraphrasing from the work of another/others. For this reason, it is important that you cite all the sources whose work you have drawn on and reference them fully in accordance with the Harvard referencing standard. Extensive direct quotations in assessed work is ill advised because it represents a poor writing style that is unlikely to meet the pass grade marking criteria, and it could lead to omission errors and a plagiarism offence could be committed accidentally.
Maximising the benefits of team working
Individual assessment must represent an effort prepared and submitted by you. It will contain your solutions to exercises set during the delivery of the module. (Your submission may reflect some contributions arising from group working and classroom presentations).
Always:
Maintain a file of evidence (e.g. academic papers used in preparing your assignment)
Submit an electronic copy (e.g. a disk or CD) of all written assessments in addition to paper copies.
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