Posted: September 16th, 2022

• your references should be from credible sources such as books, industry-related journals, magazines or academic journal articles.

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Summary Write a 2000-word comparative report based on the financial scenario given and considering the relevant financial principles, concepts and theories. Conduct a peer analysis using the data and information provided for the competitor firm. Conduct the necessary financial analysis and make recommendations based on the analysis, ethical implications and limitations. Learning outcomes 1. Demonstrate understanding of core contemporary financial management theory, techniques and practice. 2. Critically evaluate and effectively communicate recommendations to address financial management issues. 3. Apply financial management theory and techniques to professional practice in an ethical manner. Task Context You have recently joined Commonwealth Bank of Australia as the Chief Financial Analyst. You have been asked by the Board to analyse the current financial condition of Cochlear Ltd. Cochlear Ltd, an Australian medical device company that designs, manufactures, and supplies medical and surgical equipments has approached your bank for a loan to expand their business further internationally. Cochlear Ltd has been operating under severe operating and financial pressure since the onset of COVID-19 pandemic due to border restrictions. The company is listed on the Australian Securities Exchange (ASX) under the code COH (IBISWorld 2021). The company has been investing substantially in capital projects and building its stock in the last few years. This company is very keen to keep increasing the stock level as it provides a wide range of equipments available for sale, and to continue spending on capital by opening new stores (the company has limited online presence to-date). You are now requested to prepare a comparative financial report for the next Board Meeting to be held in September 2022. For comparison purposes, the Board has advised you to use ResMed Holdings Pty Ltd (attached) as benchmark company that belongs to same industry. Financial information and ratios for the past 5 years have been calculated and provided to you by the management team of Cochlear Ltd: (attached)? Source: IBISWorld 2021, cochlear Ltd: Premium company profile, viewed 17 July 2022, retrieved from IBISWorld database. https://my-ibisworld-com.aib.idm.oclc.org/au/en/company- reports/6207/financials Print version: Cochlear Ltd Financial Ratios for 2017-2021 (attached) Written Report Your comparative financial report should address points 1 to 5 below: 1. Comment critically on the five-year performance trends for Cochlear’s liquidity, profitability, efficiency and financial leverage using the relevant ratios provided. Retrieve the relevant financial ratios for ResMed Holdings Pty Ltd from IBISWorld and Compare the performance trends of Cochlear with ResMed Holdings Pty Ltd discussing the specific areas of strengths and weaknesses for Cochlear Ltd. 2. Using the DuPont Method, provide a critical analysis of Cochlear’s Return on Equity (ROE) performance during 2017-2021 relative to the competitor. (Assume there are no outstanding preference shares) 3. 2020 was not a good year for most companies and 2021 started quite slow with businesses seeing a large number of returns (refunds). Management of some of these companies have proposed that these refunds be posted in the 2022 results to give some breathing space for 2021. Discuss the ethical implications of this proposal from the management of these businesses. 4. The management of Cochlear is also considering to raise new capital externally by issuing shares or bonds to improve the overall financial stability and health of the company. Advise them the pros and cons of raising new capital using debt (i.e., bonds and/or bank loans) and equity (i.e., ordinary shares). 5. Based on your analysis and discussion above (in Questions 1 through 4), make specific recommendations to the Board of your bank whether loan should be granted to Cochlear Ltd or not based on its financial health. Identify and discuss the limitations of your analysis. Take into account all the key finance principles, concepts and theories which are relevant. Note:? Students are advised to conduct a broader search to augment the analyses in the comparative financial report. Read about the assessment issues in journal articles (using the AIB Online Library’s “Summon Single Search” or GoogleScholar), books, industry reports, entity reports, business literature etc. Remember to note down your sources while researching and reference them correctly in the report. Example report structure – (attached) The following is a suggested structure only. Cover Page Executive summary Table of Contents 1. Introduction (about 200 words) 2. Comparative ratio analyses (about 600 words) 3. DuPont Analyses (about 300 words) 4. Ethical considerations (about 300 words) 5. Comparison of capital raising options (about 300 words) 6. Recommendations and limitations (about 300 words) References Other requirements • You are required to use at least five (5) academic references for this report (in addition to any references covering data sources). • Your references should be from credible sources such as books, industry-related journals, magazines or academic journal articles. • The report format should follow the Style Guide (i.e., cover page including your name and student ID, title and word count; executive summary; table of contents; body; list of references; and appendix, if needed). • Please refer to the Assessment Exemplar (attached) for how to structure your presentation and arguments in this assessment. In each section of your report, please define the financial concepts and/or critical theories before calculations/analyses. • Use the Report Template (attached) to format your report The assessment grade will be adversely affected if the report word count exceeds the allowed 2,000 words plus 10% tolerance The Provided Formula Sheet (attached) contains the relevant formulas from the textbook. Grading criteria and feedback Your assessment will be marked according to the following grading criteria: 1. Criterion 1: Comparative ratio analyses – 30% 2. Criterion 2: DuPont Analyses – 15% 3. Criterion 3: Ethical considerations of the Operations Team’s proposal – 15% 4. Criterion 4: Comparison of capital raising options – 15% 5. Criterion 5: Recommendations and limitations – 15% 6. Criterion 6: In-text citations and referencing – 5% 7. Criterion 7: Communication, presentation, structure and language – 5%

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