Course Learning Outcomes: Upon completion of the assignment, the students are able to: 1. Interpret and rationalize financial markets analysis in terms of corporate financing PURPOSE The purpose of this assignment is to enable the students to analyse and evaluate the financial position and performance of companies. QUESTION 1 REQUIREMENT: Select any 2 companies from the same industry in Bursa Malaysia. Obtain their financial reports for years 2015/16, or 2016/17, or 2017/18. Compute all the relevant ratios and analyse their liquidity, efficiency in managing assets, debt position and performance. Based on the ratios and your analysis, determine which company is a better company in terms of financial performance. You are also required to outline to users on the limitations of using ratios to evaluate and compare the two companies. QUESTION 2 PURPOSE: The purpose of this assignment is to enhance learners’ ability to value stocks using different approaches. REQUIREMENT: A Pension fund has requested XY Mutual Funds to present an investment seminar to the staff and its members. Rizal, the senior vice presidents of XY Mutual Funds has asked your hemp to prepare the content for the presentation. To illustrate the common stock valuation process, Rizal has asked you to analyse ABC berhad, an IT solution company that supplies business analytics software. You are to prepare the answer the following questions: a. Explain how to value any stock, regardless of its dividend pattern. b. If risk-free rate is 4% and the market risk premium is 6%, what is the required rate of return on the firm’s stock, given that its beta coefficient is 1.2? c. If the company is a constant growth company whose last dividend (D0, which was paid yesterday) was RM 0.50 and whose dividend is expected to grow indefinitely at 5 %. i. What is the firm’s expected dividend stream over the next 3 years? ii. What is the firm’s current stock price? iii. What is the stock’s expected value 1 year from now? d. Assuming that the stock is currently selling at RM 6.20, what is the expected rate of return on the stock? e. Now assume that the company is expected to experience supernormal growth of 40 percent for the next 2 years, thereafter return to its long-run constant growth rate of 5%. What is the stock’s current value under these conditions? f. If the company’s earnings and dividends are expected to decline by a constant percent per year, that is g= -5%, why would anyone be willing to buy such a stock, and at what price should it sell? g Discuss the possible problems of using the dividend discounted method to value a stock and suggest an alternative approach to value the stock.