For this assignment, you are encouraged to use the information provided on the firm’s corporate websites together with the following sources:
1. OneSource: Global Business Browser (available through Library DatabasesJ
2. Australian Stock Exchange http://www.asx.com.au/
3. Yahoo Finance https://au.finance.yahoo.com/
4. Reuters http://www.reuters.com/finance/markets
News sources such as those secured through the Library’s ANZ Newsstream and Factiva databases are also likely to be relevant
Show all your calculation on the annexure.
Your report should include:
1. A brief executive summary.
3. Body (use appropriate headings and sub-headings as relevant sign-posts).
Australia and New Zealand Banking Group Limited (ANZ) is one of the big four banks in Australia, providing various banking and financial products and services to individual and business customers and playing a substantial role in the financial sector (Yahoo Finance, n.d.). However, together with other big banks within the sector, ANZ has been under the scrutiny of the banking royal commission.
As part of the finance team of ANZ Limited you have been tasked with reviewing and preparing a report on the capital structure of the firm to critique whether the firm has been successful in maximising wealth generation for shareholders.
Your report should be approximately 1000 words (in total) and cover the following areas:
1. Using data from the firm’s 2017 financial year annual report and other sources assume that the firm has a Beta of 1.37 (Yahoo Finance) and that capital return on the market for 2017 was 8.2%:
a. Categorise the ANZ’s current capital structure into debt and equity using its 2017 balance sheet. (6 marks)
b. Calculate the firm’s after-tax Weighted Average Cost of Capital (include any assumptions you have made in developing this metric). (4 marks)
c. Using the CAPM calculate whether the firm is providing an appropriate return given its risk. (4 marks)
d. Compare the firm’s capital structure with at least one other firm operating within a similar industry (6 marks).
2. Use five (5) key financial ratios to evaluate ANZ Limited’s performance. For each ratio used, you have to justify why these ratios are relevant to your evaluation (10 marks).
3. Outline and discuss any significant changes that have occurred to the firm’s capital structure during the past three years. What can we learn from these changes? (5 marks).
4. In the 2017 Annual Report, on page 10, ANZ’s Directors highlighted that they care about integrity and accountability. On page 35, they described the reputation risk facing by the business and how the business manages this risk. Given the impact on the share price of ANZ following the scandals identified by the banking royal commission during 2018, discuss whether you believe ANZ’s 2017 annual report adequately or properly represents the reputation risk that ANZ is facing and whether the firm has been acting with integrity and accountability. In your response critically identify some of the key findings from the royal commission and evaluate the extent to which the firm has been successful in managing its reputation risk (approx. 450-600 words) (10 marks).
Presentation – 5 marks
You are required to provide a quality presentation of the total assignment including using the correct report format for Part B, referencing throughout and a bibliography.
Please reference any sources of information you use with APA referencing style.
Online submission via Turnitin is required for this assignment. Please see details underRequirements after Marking Rubric.