Assignment 3 – Assessing Business Sustainability
In Assessment 1b you decided which of the two companies (Premier Investments and Kathmandu Holdings) performed best using their historical financial ratios. In Assessment 2 you decided which of the two stocks provided the best investment opportunity by determining their intrinsic values using the discounted free cash flow (DCF) model.
In this assignment you will focus on the long-term future of the two companies by assessing their sustainability.
Specifically, you are required to write a maximum 1,000 word (+10% tolerance) report which addresses the following:
Assess the waste and recycling disclosures made by both Kathmandu Holdings and Premier Investments. (4 marks)
In assessing the disclosures consider the following:
Which national and/or global social or environmental issues are addressed by the disclosures? (2 marks)
How do the disclosures address them? (2 marks)
Why do you think the companies made the disclosures? (3 marks)
Maximum 500 words (+10% tolerance)
Based on your answers to question 1, do you believe that a change (up or down) in the suggested 5% long-term discount rate contained in the Excel spreadsheet for the stock valuation of each company is warranted, and if so by how much? Provide a rationale. What is the impact on the stock’s intrinsic value, if any? (6 marks)
Given your consideration of both the financial performance of the two companies (Assessment 1) and any potential changes in the intrinsic value due to your adjustment of the long-term discount rate, does this alter your view about which of the two companies provides the best investment opportunity for your client? Provide a rationale for your decision including how have you weighted the historic financial performance, short-term value and long-term sustainability. (5 marks)
Maximum 500 words (+10% tolerance)
