An accountant is responsible

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MBS539 – Semester 2, 2019 Assignment –20% Marking Criteria Instructions: Internal Students: In groups of maximum 5, submit answers in the correct format relating to the requirements. External Students: Complete and submit the assignment individually. Format: Typed report, Word document (not PDF), 12 font, 1.5 line spacing. Cover sheet is to be completed by all members, photographed with smartphone and then inserted as a picture on the front page of the assignment. Submission Details: Only one student per group to submit through the LMS link. Due Date: Sunday, 20 October 2019, 5:00pm. Facts: An accountant is responsible for providing high level financial advice to their clients. The mining boom in Western Australia gave accountants the opportunity to assist within this lucrative industry specifically for corporations that mine and produce iron ore. Iron ore mining in Western Australia has accounted for a large proportion of the total value of the state’s resource production within recent years, specifically from the Chinese market, and has therefore been vital for the state’s economy. Three large iron ore companies within Australia include: Rio Tinto ASX code: RIO Website: https://www.riotinto.com/australia9559.aspx?utm_source=adwords&utm_medium=search&utm_campaign=brand_2019 BHP ASX code: BHP Website: https://www.bhp.com/ Fortescue Metals Group ASX Code: FMG Website: https://www.fmgl.com.au/ You have just formed a small firm of Accounting Partners (4 partners). You have been approached by Lewis Investments who are looking to invest $100 million in an Australian listed iron ore producer and you have short listed the following 3 companies as potential investments: Rio, BHP and Fortescue. Utilise the company websites, annual reports, relevant media information, financial information from www.reuters.com, your text book and any other relevant sources to prepare a referenced report to substantiate your recommendation. The report must include the following with each section (underlined) starting on a new page: Report Introduction and purpose (2 marks, 200 words) For each of the three companies: 1. Business descriptions (2 marks, 100 words each total 300 words) Describe the businesses. 2. Relevant and recent media commentary (5 marks, 200 words each total 600 words) Find relevant newspaper or other media references and list cited facts as to why this information is important in the context of the report requirements. 3. Ratio comparison and brief reasoning (4 marks): Using Reuters (www.reuters.com) choose the two best ratios to represent: a. Profitability b. Efficiency c. Liquidity d. Gearing Get the ratios for the last 3 years (year ending 2016, 2017, 2018) and comment briefly as to why these are the best ratios for the category. Use the following format: Rio BHP FMG Comment on suitability Profitability Profitability Ratio 1: 2016 2017 2018 Ratio 2: 2016 2017 2018 Efficiency Efficiency Ratio 1: 2016 2017 2018 Ratio 2: 2016 2017 2018 Liquidity Liquidity Ratio 1: 2016 2017 2018 Ratio 2: 2016 2017 2018 Gearing Gearing Ratio 1: 2016 2017 2018 Ratio 2: 2016 2017 2018 4. Additional ratios (4 marks) Calculate additional ratios that are relevant and are not listed in the Reuter’s website. Discuss why you have included these other ratios. (300 words) 5. Analysis (15 marks, 900 words total) Analyse the trend and discuss the ratios in the context of the report requirements. 6. Final recommendation (5 marks, 400 words) Format: Adherence to instructions, adequate referencing and sources (3 marks) 1. About Fortescue Metals Group ASX Code: FMG Website: https://www.fmgl.com.au/ a. Business descriptions (100 words) Describe the businesses. b. Relevant and recent media commentary (200 words) Find relevant newspaper or other media references and list cited facts as to why this information is important in the context of the report requirements. 2. Using Reuters (www.reuters.com) choose the two best ratios to represent Efficiency ratio (for Rio Tinto, BHP and Fortescue Metal Group : a. Table showing efficiency ratios for year 2016,2017,2018 b. 4.2 Efficency Ratio i. About efficiency ratio c. 4.2.1 Efficency ratio 1 i. Describe d. 4.2.2 Efficency ratio 2 i. Describe 3. Additional ratios Calculate additional ratios that are relevant and are not listed in the Reuter’s website. Discuss why you have included these other ratios. (100 words) 4. Analysis (250 words total) Analyse the trend and discuss the ratios in the context of the report requirements. 5. Final recommendation (150 words)

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