MAF307 EQUITIES AND INVESTMENT ANALYSIS Essay Example | Topics and Well Written Essays - 1000 words

MAF307 EQUITIES AND INVESTMENT ANALYSIS - Essay ExampleThe strategic analysis of the meeting indicates that with continued development of new initiatives and business products, the group is likely to expand its node base by entering new markets. The confederacys salary packing business continues to let an annuity stream of income that further allows cross-selling of companys other products such as leasing services. The company has a very strong balance sheet and cash flow position that gives it opportunity to choose inorganic expansion route. The companys revenues from core activities experienced 12.6% to $161.50 million at the end of December 2012, with displace earningss rising oer 19.3%. The company announced the gain in gross revenue and profit for the year June 2013 but a proposal from the Labour g everyplacenment shook companys forthcoming earnings capacity causing the companys share price to plunge by over 55% in the middledle of July 2013. Background of Share Price Cr ash McMillan Shakespeares Finance group share price almost halved since the government flagged changes to current laws of fringe benefit tax (FBT) that has created uncertainty in the markets. The companys trading was suspended for a week and when it resumed trading the share prices crashed by over 48% to $7.99 wiping away almost $549 m of shareholders wealthiness from the markets (Australian Associated Press, 2013). Due to this reason the companys way requested for an extension to halt trading which is viewed by many analyst as a dire move by the management to avoid such huge amount of losses and save shareholders wealth from volatile and uncertain markets. The Australian Securities and Investment Commission have however rejected the companys plea of halting trading. (Source ASX, 2013) The company has criticised the governments recent decision to fasten FBT guidelines especially on salary package and car leasing for the share price crash and uncertainty in markets. The panic amo ng the investors was explicit since the proposed changes to FBT guidelines dilute fringe benefit taxes on salary packaging and car leasing. The investors in the market expect the revenues of the company to be adversely affected from the governments decision since the companys radical source of revenues is generated from car leasing and salary packages. This negative outlook on the company future earning capacity from the tightening of FBT created panic in the broader markets that led to overselling of companys stocks in Australian Stock Exchange. Thus, it can be said from the above discussion that a chain of events starting from the governments decision to tighten FBT guidelines, the same decision to adversely affect profitability of the company, negative sentiments among the investors in the market regarding companys future, and huge sell of the Finance Groups MMS stocks after a weeks still trading, ultimately caused the companys share prices to plummet by over 55% in the mid o f July 2013. Reasons behind Dramatic Price Change The company under observation derives almost 50% of its revenues from ii major segments namely Asset Management and Group Remuneration Services. But from the analysis of financial statements of the company it is apparent that over 70% of its total earnings are generated from the revenues of group remuneration, which is almost three