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Corporate Finance | 25765 Case Study Guideline

• Since, your group will report directly to the Board of Directors, you can assume Financial Management level knowledge of finance, i.e., you can assume that your readers would be familiar with Modigliani and Miller (MM) theorem with corporate taxes. The report should therefore cover material more advanced than MM with corporate taxes.

• You should thoroughly read lectures 7 through 9, the relevant textbook chapters, and pp. 1-34 of the survey, “The Theory and Practice of Capital Structure”, by Henri Servaes and Peter Tufano (available on UTSOnline) to gain the background necessary to undertake the project.

• The report should be no longer than 13.5 pages, including the executive summary, tables and graphs and references, but excluding appendices. You can include up to 4 pages of appendices.

• The report will be marked on both its content (discussions/analyses/arguments) and the quality of its write-up (organization, conciseness, clarity, grammar and punctuation).

o All graphs and tables included in the report must be produced by the group
members. You may not copy figures, graphs or tables from other sources such as company annual reports or financial databases.

 You may obtain raw financial data from financial databases.

	In order to receive high marks on the report, the report must successfully apply the

theories and concepts discussed in class to the assigned firm.

• Half of the executive summary page should be left blank.

2. COMPANY AND INDUSTRY OVERVIEW (4 MARKS)
Provide a brief summary of the firm’s business activities and business segments and recent developments in the company and its industry.

o recent trends in the use of debt and equity and recent financing activities of the firm (debt and equity issues, placements and share buybacks); current and recent history of leverage and interest coverage ratios; management discussions about the firm’s leverage policy.

 Does the company have a target leverage ratio?

•	You should document and discuss the firm’s leverage policy relative to the leverage policies of

comparable firms and to industry average leverage (information on industry average leverages will be posted on UTSOnline).

 The implications of the trade-off theory determinants of optimal leverage for the optimal leverage of the firm. The analyses of the determinants should be both qualitative and quantitative.

 You may incorporate stakeholder theory, agency theory and transaction cost theory in a broader trade-off theory framework.

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	o	Predation / Product market completion theory
	o	Managerial inertia theory
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GRAMMAR, PUNCTUATION AND CLARITY (3 MARKS)

• The report should satisfy the basic formatting requirements suggested in the UTS Guide to Writing Assignments:
These requirements inc
 MARGINS: The left-hand margins should be approximately 3cm. The top, bottom and right- hand margins of each page should be about 2.5cm.

 FONT & POINT SIZE: The type-face should be 11-point or 12-point in a standard font such as Times New Roman or Arial.

 PAGE NUMBERING: Page numbering should be included at the bottom of every page, except the title page.

• Other acceptable sources include published academic journal articles and articles posted on UTSOnline.

o You may not use Wikipedia, Investopedia or other similar internet sources as references. Appendices

RESOURCES

• Your group should acquire the financial and other information necessary to complete the case study from databases (e.g., DatAnalysis Premium) available through the UTS Library.