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1006GBS Why Money Matters

Assessment 2

40 Marks worth 40% of total assessment.

Financial Decision-Making Take Home Assignment.

Notes – read these carefully!

- Use a word processing software and type in your answers in addressing each question. Label questions numbers, e.g. 1), 2), 3), … in presenting your answers. There is no need for you to re-type the questions.  At the start of your assignment document, insert your name (Surname, Given Name), and your student number.  

- Please refer and adhere to word limits for your answers that are specified in each of the questions.

- Students must use their own words when presenting relevant information taken from the provided annual report, instead of just copying and pasting.

- Assignment must be submitted as a PDF document.

- Students must complete the digital cover sheet of this assessment item, available under Assessment folder in the Learning@Griffith course site.

- Students must submit the completed work through the FINAL submission link provided under Assessment folder in the Learning@Griffith course site.

- You are required to keep a hard copy of your submitted assignment to re-submit in case the original submission is lost for some reason.

- Please keep 2 decimal places in your calculation questions.

- Please provide a weblink in the footnotes if other sources were used.

- Please show formula and calculation process for calculation questions.

This assessment requires you to analyse the financial performance and position of an organization from different perspectives. This will include examining a balance sheet, income statement.

Question 1: State the name of the current Chief Executive Officer (CEO) of The Reject Shop? What was the CEO’s total remuneration package in 2021 as specified in the statutory remuneration table?  

30 words max, 2 marks

Question 2: Describe what is the main business that the company operates and in which Business sector is it located? Explain the reasoning behind your answer.

50 words max, 3 marks

Question 3: In referring to the relevant sections in the Annual Report provided, name 2 business risks faced by The Reject Shop and how this impacts supply or demand.

200 words max, 4 marks

Question 4: In one sentence describe the purpose of the 1) income

statement and the 2) balance sheet. 3) After a company pays off its short-term liabilities, income taxes, and dividends to shareholders, in which section of the balance sheet, the amount of the remainder of the profit is represented?

100 words max, 3 marks

Question 5: What’s the percentage change of finance costs between FY2021 and FY2020. What may have caused the change?

 200 words max, 2 marks

Question 6: What are The Reject Shop’s total asset, total liability, and total equity in 2020 and 2021?

50 words max, 3 marks

Question 7: Based on your answers in Question 6, undertake a horizontal analysis by calculating the percentage change (year on year) for total assets, total liabilities, and total equities.

100 words max, 3 marks

Question 8: Calculate the gross profit margin, operating profit margin and net profit margin for The Reject Shop in 2020 and 2021.Based on your answer, are gross profit margins and operating margins changing in the same direction or not?

100 words max, 4 marks

Question 9: Please calculate the current ratio and quick ratio of The Reject Shop in 2020 and 2021.

100 words max, 2 marks

Question 10A: Please calculate the debt-to-equity ratio of The Reject Shop in 2020 and 2021.  

30 words max, 1 marks

Question 10B: Consider the trend in your answer to Question 10A, explain how this trend will make it harder or easier for the company to borrow money?

30 words max, 0.5 marks

Question 10C: How would the debt-to-equity compare to the competitor in terms of the financial risk of the business? (Assuming competitor’s debt-to-equity ratio is 1.48)

30 words max, 0.5 marks

Question 11A:  Please calculate the ROE of The Reject Shop in 2020 and 2021. (Total equity at the end of 2019 is $125,322,000)

50 words max, 1 mark

Question 11B: Decompose the calculated 2021 and 2022 ROE from Question 11 to ROA and Equity multiplier, and comment on your result. (Total asset at the end of 2019 is $ 225,318,000)

30 words max, 3 marks

Question 11C: From a shareholder’s perspective, explain if you would be satisfied with the company’s financial performance and position. Your answer should reference the company’s profitability, liquidity and solvency.

200 words max, 5 marks