Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

1 HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HC2091 Business Finance 2018 Group assignment (Case study) Due date: Week 10, Friday 17:00 Weighting: 20% Minimum words limit: 3500 words Max group...

1 answer below »
1

HOLMES INSTITUTE

FACULTY OF HIGHER EDUCATION



HC2091 Business Finance
2018

Group assignment (Case study)

Due date: Week 10, Friday 17:00
Weighting: 20%
Minimum words limit: 3500 words
Max group members in one group: 4 students
The objective of this assignment is to assess your group ability to evaluate and to compare the
operation and performance of two companies (Peer Group Analysis) that are competitor to
each other using Fundamental Analysis technique (Financial Ratios).
Your group need to choose two companies and the two companies have to be Australian
public listed companies, operating under the same industry, targeting the same consumers,
2
producing similar products or services and similar in size for example: BHP Billiton and Rio
Tinto (mining industry in Australia)
Please note: each group can only choose 2 companies, and once those two companies are
chosen, the other group cannot choose the same companies (in other words, the later group
has to choose another two companies that haven’t been chosen by others).
The rule is first come first serve, it means let your lecturer knows asap which companies your
group want to discuss and your lecturer can check whether your chosen companies are still
available or not.
You need to extract the latest year financial statements (Income statement, balance sheet etc.)
of your chosen companies from online source. such as ASX website (www.asx.com.au)
Each company will be evaluated and compared based on the five aspects to determine which
company is better fundamentally.
The five (5) aspects:
- Short term solvency (Liquidity ratios)
- Long term solvency (Financial Leverage ratios)
- Asset utilization (efficiency or turnover ratios)
- Profitability ratios
- Market value ratios
You need to present a well-structured Report using appropriate style and language
Scenario:
You’re an Investment Manager of a large corporation based in Australia. There’s one big
institutional investor from overseas is interested in investing in the Australian market, however
the investor only interested in the blue chip companies. You’ve been asked to choose two
large companies operating under the same industry in Australia (the industry you think will
have the most promising future for investment) then evaluate and compare them. finally make
a recommendation through your Report to the investor which one is more superior
fundamentally.
3
Structure of the Report:
1. Title
2. Introduction
3. Table of Content
4. Body (In text citation: paraphrased or quotation to support your arguments)
5. Conclusion
6. Recommendation
7. Reference lists (Harvard Rules techniques)
Notes:
1. The quality of your academic writing skills will also greatly influence your mark;
therefore, you must follow all the rules.
2. No in text citation in the body will be considered not an academic writing.
3. No reference lists part will be considered not an academic writing as well.
4. Minimum reference lists = 10 and must be from trustworthy sources
5. Minimum words limit: 3500 words
6. You’re required to submit the assignment on Blackboard with the maximum similarity
(plagiarism check) not exceeding 30%.
7. Deduction will apply for late submission (due date = week 10)
8. Font: Times New Roman, Size: 12, line spacing: 1.5
9. Holmes Institute front page cover sheet is needed and you have to write down your full
name, student ID, subject code, subject name, and lastly your Lecturer’s name
10. Always keep an electronic copy of your assignment until you have received the final
grade for your subject or unit.
Assessment criteria:

- Presentation and writing style = /3
- Introduction = /2
4
- Evidence of research = /3
- Quality of the analysis = /7
- Conclusion and Recommendation = /3
- Referencing = /2
XXXXXXXXXX_________+
XXXXXXXXXXTotal = /20
Remember:
The quality of your analysis is more important than the quantity of the ratios. Meaning,
your assignment mark will be greatly influenced by your interpretation and understanding
of the numbers rather than the calculation itself.
Best of Luck
Answered Same Day May 14, 2020 HC2091

Solution

Aarti J answered on May 25 2020
130 Votes
Financial Analysis – OBE Insurance and Suncorp Group
Course Name
Course Date
Student’s Name
Financial Analysis – OBE Insurance and Suncorp Group
Table of Contents
Contents
Introduction    3
Company overview    3
Company overview – QBE Insurance    3
Company overview – SunCorp    4
Financial Analysis    4
Comparative Analysis and common size statement – Income Statement    4
Comparative Analysis and common size statement – Balance sheet    8
Ratio analysis    13
Liquidity ratios    13
Financial leverage ratios    14
Asset utilization ratios    15
Profitability ratios    16
Market value ratios    18
Conclusion    19
Reference    20
Introduction
This paper analysis the financials and the financial performance of the two major insurance companies of Australia. This paper analysis the financial position of both the companies using different financial ratios as well as comparative statements of the companies. The main aim of the paper is to analyze different aspects of the ratio analysis and financial tools to analyse the performance of the company. The two major companies that has been taken for analysis in this paper includes QBE insurance group and Suncorp group. Both the companies are the biggest insurance providers of Australia.
In this report different ratios has been used to analyse the performance of the companies which includes liquidity ratio, profitability ratios, solvency ratio, market value ratios and financial leverage ratios.
After the analysis of the companies it was seen that Suncorp is performing better than QBE company.
Company overview
Company overview – QBE Insurance
QBE Insurance group limited is one of the biggest insurance companies of Australia which provides a range of non-life insurance solutions to the individuals as well as the companies. There are different kinds of insurances that are provided by the company which includes transport operators policy, boat insurance, caravan, workers compensation insurance, home insurance, surety, builder’s wa
anty, and property insurance and commercial packages. The company also provides accident and health insurance, aviation insurance, farm insurance, motor and motor casualty insurance, crop insurance, specialty insurance, marine insurance, professional liability insurance and travel business insurance. The company is having its operations in different countries of the globe which includes Australia, Singapore, New Zealand, Bermuda, Malaysia, Hong Kong, the UK, Ireland, the US, Puerto Rico, Brazil, Switzerland, Fiji, Ecuador and Colombia, among others. (Annual Report, 2017)
The company has diverse geographic presence across the globe which helps in mitigating the risks on different aspects of the region. Apart from its diverse geographic presence the company also has strong financial performance with the annual growth of revenues over 1.2% from the year 2015. Apart from this the company also have wide offering of the products and insurance which helps the target customers to select different products to mitigate their risks.
Company overview – SunCorp
SunCorp group is one of the biggest financial services and solution provider which ca
ies out different general insurance and other financial activities and solutions toots target customers. The company has a group of non-life insurance which it provides to its target customers which includes home and contents insurance, boat insurance, travel insurance, motor insurance, special risks insurance, public liability and professional indemnity insurance, workers’ compensation insurance and compulsory third party insurance, directors’ and officers’ liability insurance, rural insurance, and construction and engineering insurance. Apart from this the company also provides wide range of life insurance products as well as other financial planning tools as well as superannuation and financial services, home loans, savings accounts, personal loans and business loans. The group is not just classified as the insurance company but also a banking, life insurance, retail and corporate customers. (Annual Report, 2017)
Financial Analysis
Financial analysis is one of the most important tools which are used by the organizations to analyse the performance of the companies. (Ball, R & Kothari, SP., 2014). There are different analytical tools which are used by the company to analyse their performances.
Comparative Analysis and common size statement – Income Statement
Analysis of SunCorp
The comparative analysis helps in comparing the cu
ent performance of the company from its past performance. It helps in calculating the change in different variables of the financial statements.
Considering the comparative analysis of SunCorp, we can see that The company’s insurance revenues has increased by 4.5% while the overall revenue of the company increased by 12.32% in 2017 as compared to 2016. With the major increase of 102% in reinsurance revenue while the total expenses of the company increased by 12.93% in 2017 as compared to the previous year. The overall increase in the net income as compared to the previous year was 3.83%.
Considering the common size statement, we can see that the insurance premium revenue forms as the 59.47% of the total revenue generated by the company while reinsurance revenue accounts ro be 19% of the total revenue of the company. The claim expenses of the company are reported to be 53.03% and the total expenses account of 90.76% of the total revenue of the company.
    Income Statement
    
    2017
    2016
    Comparative
    2017
    2016
    Revenue
    
    
    
    
    
    Insurance premium income
    10344
    9899
    4.50%
    59.47%
    63.92%
    Reinsurance and other recoveries income
    3280
    1621
    102.34%
    18.86%
    10.47%
    Interest income on
    
    
    
    0.00%
    0.00%
    financial assets not at fair value through profit or loss
    2464
    2622
    -6.03%
    14.16%
    16.93%
    financial assets at fair value through profit or loss
    591
    606
    -2.48%
    3.40%
    3.91%
    Net gains on financial assets and liabilities at fair value through profit or loss
    91
    
    
    0.52%
    0.00%
    Dividend and trust distribution income
    74
    171
    -56.73%
    0.43%
    1.10%
    Fees and other income
    551
    568
    -2.99%
    3.17%
    3.67%
    Total revenue
    17395
    15487
    12.32%
    100.00%
    100.00%
    
    
    
    
    0.00%
    0.00%
    Expenses
    
    
    
    0.00%
    0.00%
    Claims expense and movement in policyowner liabilities
    9228
    7561
    22.05%
    53.05%
    48.82%
    Outwards reinsurance premium expense
    1445
    1220
    18.44%
    8.31%
    7.88%
    Underwriting and policy maintenance expenses
    2387
    2334
    2.27%
    13.72%
    15.07%
    Interest expense on
    
    
    
    0.00%
    0.00%
    financial liabilities not at fair value through profit or loss
    1369
    1493
    -8.31%
    7.87%
    9.64%
    financial liabilities at fair value through profit or loss
    73
    94
    -22.34%
    0.42%
    0.61%
    Net losses on financial assets and liabilities at fair value through profit or loss
    160
    -100.00%
    0.00%
    1.03%
    Impairment loss on loans and advances
    7
    16
    -56.25%
    0.04%
    0.10%
    Amortisation and depreciation expense
    168
    165
    1.82%
    0.97%
    1.07%
    Fees, overheads and other expenses
    933
    913
    2.19%
    5.36%
    5.90%
    Outside beneficial interests in managed funds
    177
    24
    637.50%
    1.02%
    0.15%
    Total expenses
    15787
    13980
    12.93%
    90.76%
    90.27%
    
    
    
    
    0.00%
    0.00%
    Profit before income tax
    1608
    1507
    6.70%
    9.24%
    9.73%
    Income tax expense
    523
    462
    13.20%
    3.01%
    2.98%
    Profit for the financial yea
    1085
    1045
    3.83%
    6.24%
    6.75%
    
    
    
    
    0.00%
    0.00%
    Earnings per share
    
    
    
    0.00%
    0.00%
    Basic earnings per share
    83.84
    81.19
    3.26%
    0.48%
    0.52%
Analysis of QBE:
Looking at the income statement of the company, we can see that the company’s revenue has increased by 8.815 in the year 2017 as compared to 2016 whereas the company has had high expenses which includes the net claim expenses which increased by 32.5% in 2017 as compared to the previous year. In the year 2017, the company incu
ed the losses of $1253million which was a decrease of 248.46% as compared to the previous year. Thus it can be seen that the company’s performance decreased in 2017 as compared to 2016.
Looking at the common size statement, we can see that the gross written premium holds the highest share in the revenues generated by the company and the gross claim expenses amount to 94.83% of the net revenues of the company. The gross claim expenses increased immensely in 2017 as compared to the previous year.
    
    2017
    2016
    Comparative
    2017
    2016
    Gross written premium
    14191
    14395
    -0.0142
    117.86%
    130.08%
    Unearned premium movement
    255
    -119
    -3.1429
    2.12%
    -1.08%
    Gross earned premium revenue
    14446
    14276
    0.01191
    119.97%
    129.01%
    Outward reinsurance premium
    2615
    2653
    -0.0143
    21.72%
    23.97%
    Defe
ed reinsurance premium movement
    210
    -557
    -1.377
    1.74%
    -5.03%
    Outward reinsurance premium...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here