Accounting Report

START DATE: 09 May 2013 DUE DATE:28 May 2013 by 3pm PART A WRITTEN REPORT = 50% of Coursework Marks Task 1 Using your text book, other books, journals and/or internet resources explain the key advantages of one key source of finance for a company. (5 marks) Task 2 Collect the latest annual reports of two publicly traded companies (companies whose shares are bought and sold on the stock market) in the same industry and carry out the following tasks: a) Explain the long and short term sources of finance utilised by each company in two consecutive years. (6 marks) b) Calculate gearing ratios and comment on the long term debt to equity ratios in each company for two consecutive years. (6 marks) c) Calculate the dividend cover, dividend yield and interest cover ratios for both companies for two consecutive financial years. Based on your calculations and other relevant information, explain the risks and reward for shareholders and loan providers for both companies. (15 Marks) d) How would the return to both (shareholders and loan providers) vary if the ‘Profit before Interest and Tax’ rises or falls? (A sensitivity analysis is required by simulating data within a reasonable range) (8 marks) Task 3 Based on your calculations above and other relevant information, conclude which of the two companies is less risky in terms of its capital structuring and give reasons in support of your views. (5 marks) NOTE: Structure, Presentation, and Referencing: (Total 5 marks) Writing and presenting the assignment in the form of a report and referencing it using the Harvard System of Referencing (5 Marks)