BFW2140 Corporate finance 1 Research-Based Assessment 2026 | MUM

You must explain the methodology used to identify the matching firm and provide justification for your selection. An Excel file demonstrating the matching firm selection process, supporting data, and ratio calculations must be submitted as part of the assignment.

(c) Industry Capital Structure Analysis (15 marks)

Identify the industry classification of your allocated firm, including its GICS Sector and GICS Industry Group, and calculate the industry average for the following capital structure ratios for each of the five financial years (2021–2025):

• Total debt-to-total-assets ratio; and • Total debt-to-total-equity ratio.

Present both ratios in line graphs comparing the allocated firm with the industry average to illustrate trends over time, and provide a brief discussion of the observed patterns.

The industry analysis must include at least 20 firms. Exclude any firm that reports negative total equity in any of the five financial years (2021–2025).

If the relevant GICS Industry Group contains more than 20 firms, you may select 19 firms of similar size (based on total assets closest to your allocated firm’s total assets in 2021) and include your allocated firm, resulting in a sample of 20 firms (19 comparable firms + the allocated firm).

An Excel file demonstrating the firm selection process, supporting data, and ratio calculations must be submitted as part of the assignment.

(d) Business Risk Analysis (15 marks)

Calculate the business risk for the following:

• the allocated firm;   the matching firm; and
• the industry.

Use the standard deviation of EBIT-to-total-assets ratio over the five-year period (2021–2025) as a proxy for business risk.

Provide brief comments on the differences in business risk among the allocated firm, the matching firm, and the industry average, and discuss the possible implications of these differences for the firm’s capital structure decisions.

An Excel file demonstrating the business risk calculations and supporting data must be submitted as part of the assignment.

(e) Comparative Analysis and Optimal Capital Structure Discussion (40 marks)

Compare your allocated firm’s total debt-to-total-assets ratio and total debt-to-total-equity ratio with those of:

• the matching firm; and
• the industry averages.

Your discussion must:

• evaluate whether the allocated firm appears to operate at or near its optimal capital structure;
• explain differences in business risk among the allocated firm, matching firm, and industry;
• discuss differences in the tax environment affecting financing decisions;
• consider the implications of dividend imputation for the firm’s capital structure and financing choices;
• relate your analysis to relevant capital structure theories, including trade-off theory, pecking order theory, and agency considerations;
• provide a well-justified recommendation for the firm’s future financing strategy; and
• support your analysis and recommendations with relevant academic literature and appropriate referencing.

Penalty: Marks will be deducted for failure to submit the required components, including:

• the Excel workbook (with various worksheets consolidated into a single workbook);
• the cover sheet;
• the content page; and
• relevant academic journal citations and supporting discussion.