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Project Guidelines FM Fall 2024

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Muhammad usman
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18 views2 pages

Project Guidelines FM Fall 2024

Uploaded by

Muhammad usman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Analysis-Capital Structure and Dividend Policy

Group: maximum 4 members (please do not approach the instructor or the TAs with requests to
have a group with more than 4 members)
Data Needed
Financial Statements (years ended 2020-2024); Dividends (cash and bonus shares) paid for years
ended 2020-2024. The company you select should be paying dividends. The company you
select should have long-term debt. Please ensure that the company that has been allotted to
your group pays dividends in at least 3 out of 5 years and has long term debt.
Source of Data
Source of data should be mentioned in the report.
Required Calculations (5 marks)
1. Free cash flow to Equity for 5 years
2. Dividend payout ratio for 5 years
3. Dividend yield for 5 years
4. Long-term debt ratio for 5 years
5. Times interest earned ratio for 5 years
6. Beta (using 5-year data for weekly prices, use closing price on Friday, benchmark index
KSE-100, Graphical method) and cost of equity (using CAPM)
Due Date for Excel Sheet submission on LMS: 17/10/2024. In case of late submissions, 1
mark per day will be deducted.
Required Analysis (5 marks)
Analysis should cover the following points:
1. Change in the capital structure of the company over the 5-year period. Reasons for the
change.
2. Discussion of the business and financial risk of the company. Is the current structure
optimal, given the industry structure, the firm size, nature of business, etc.? Does the firm
want to maintain the same structure in future? If it wants to change, why? Comparison of
company’s financing mix with competitors/industry. (An interview might be required for
this stage.)
3. The factors that the company considers before deciding the financing source for its
projects/assets. (Discussion of Capital structure theories is essential here)
4. Comparison of company’s cost of debt and cost of equity (computed using CAPM)?
5. Comments on the dividend policy the company follows. Is it in line with what other firms
in the industry are practicing? If the company is a low payer or a very high payer, reasons
for the payout.
6. What is the relation of company’s FCFF and dividends?
7. The factors that are investigated before deciding on the dividends for each year.
8. Is the payout consistent? If changing, why?
9. Discussion of stock dividends/splits or repurchases if there are any.
Due Date for Analysis submission on LMS: 5/12/2024. Hard copy of the analysis must be
submitted in class. A presentation schedule will be communicated. All group members will
have to present their calculations and the subsequent in depth critical analysis that
demonstrates practical application of theory in the presentation. Failure to present on the
given date will result in zero marks for the analysis component.
Page limit: 15 pages (excluding the copy of financial statements/appendices etc.)
Font: Arial, Font size 12, 1.5 line spacing. Your work should be professional looking, free of
spelling and grammatical mistakes and be presented as a consistent report.

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