3. Calculate the following key ratios for your selected company for the past 4 years. Annual reports are accessible via company websites (show all working out): i) Return on Assets (ROA) = (NPAT / Total Assets) Return on Equity (ROE) = (Net Profit After Tax / Ordinary Equity) Debt Ratio = Total Liabilities / Total Assets 12 marks ii) Explain what phenomenon is being “captured” by the variable TA/OE, and how it is impacting on the relationship between Return on Assets and Return on Owners Equity. 4 marks iii) Explain why the ROE (EBIT) is significantly greater than or less than the ROA (EBIT). 4 marks
4. Using the information from the ASX website: www.asx.com.au you must complete the following tasks: i) Prepare a graph / chart for movements in the monthly share price over the last two years for the company that you are investigating. Plot them against movements in the All Ordinaries Index. 6 marks ii) Write a report which compares movements in the companies’ share price index to the All Ords Index. For instance, how closely correlated is the line with the All Ords Index. Above or below? More or less volatile? 6 marks
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