Business accounting and the finance Pearson

This report has been prepared on an Australian pany which name is TPG Tel limited. This pany is working under the IT industry and the Australian tel munication industry. The main services of the pany are mobile telephone services and the internet services. According to a report, TPG tel is the second largest apny in Australian market in internet service provider panies. This pany is mainly a merger between total peripherals group. This pany has been founded in 1992 by Vickey Teoh and David. Basically, this pany is performing well in terms of finance as well as in terms of finance (About us, 2018). Ownership corporate governance of the TPG tel expresses about the way good structure of the investors. 82.74% stock of the pany own by the top 20 shareholders. The largest shareholder of the pany is WASHINGTON H SOUL PATTINSON AND PANY LIMITED. The pany has held 25.15% stock of the pany. Currently, there are 6 stockholders in the pany who has more than 5% stock in the pany’s shares and only 1 stockholder has more than 20% stock. Further, the annual report describe the CEO, executive directors, non executive directors, CFO etc of the pany has been evaluated and David Teoh is the executive chairman of the pany, Denis Ladbury, Robert Millner, Joseph Pang and Shane Teoh is the non executive directors of the pany. The report of top 20 shareholders of the pany explains that no members of the pany have more than 2% stock of the pany (Annual Report, 2018). Performance ratios of the pany have been described below. Performance ratios explain about the positive changes, position and the performance of the pany. Following are some of the performance ratios of TPG Tel as follows: Return on assets of the pany explains that the performance of the pany is quite better. It explains that how much profit is earned by the pany in context with the total assets. Following is the calculations of return on assets of the pany: Return on equity of the pany explains that the performance of the pany is quite better. It explains that how much profit is earned by the pany in context with the total equity. Following is the calculations of return on equity of the pany: Net profit after tax/ ordinary equity Debt ratios of the pany explain about the position and the capital structure of the pany. The current capital structure of the pany is way better. It explains that how much total liabilities are held by the pany in context with the total liability. Following is the calculations of debt ratio of the pany: EBIT / TA * NPAT / EBIT * TA/ OE = NPAT / OE Total assets and total equity determine the ROA and ROE of the pany with the help of the Net profit after tax. If the total assets and the total equity of an organization changes than it directly makes an impact over the ROA and the ROE (Deegan, 2013).   The above calculations on the TPG tel ’s ROE and ROA have been evaluated and it has been found that the ROA and ROE of the pany is 10.59% and 28.57%. It explains that the return on equity is always greater than the return on assets due to the accounting principle which states that the assets are the total of liabilities and the equity. The study of stock price has been evaluated further and it has been analyzed that the stock price of the pany and the stock price of AORD, both are quite volatile in nature and explains about the good performance of the pany (Yahoo finance, 2018). The following graph explains about the stock prices of both the stocks: Further, the graph epxlains that the correlation of the pany is in negative as it explains about the negative relationship among both the stocks. It epxlains that the changes in the stock of TPG is quite higher than the volatility of AORD stocks. Further, it explains that currently the stock price of the pany is way better (Brown, Beekes and Verhoeven, 2011).   Further, the factors has been evalauted which have imapcted on the stock price and due to which the stock of the pany has been changed. The main reason behind chnage is the petetion level of the pany, current report about the pany that is the second largest pany in the industry, further, the analysts has   described in their report about a better position of the pany in the market (Davies and Crawford, 2011). On the other hand, due to new technology and patetion the stock price of the pany has been lowered 2 to 3 times. The calculation on the stock price of the pany depicts that the beta of the pany is 0.7415. The required rate of return of the pany is as follows: Calculation of cost of equity (CAPM) The above calculations express that the pany’s cost in terms of equity is 5.48%. If the pany wants to raises the funds through equity than the pany has to pay 5.48% of total profit as cost of equity to the stockholders of the pany. The cost of equity of the pany is moderate.   According to the evaluation, it has been found that the risk of the pany is lower and return of the pany is quite higher and thus the pany is a conservative investment. Calculations of WACC are as follows: Calculation of cost of equity (CAPM) The above calculations express that the pany’s cost in terms of equity is 5.48% and in terms of debt is 4.2%. If the pany wants to raises the funds through equity than the pany has to pay 5.48% of total profit as cost of equity to the stockholders of the pany. On the other hand, in terms of debt, pany has to pay 4.2%. The cost of equity of the pany is higher than the cost of debt of the pany. The above calculations express that the cost of capital of the pany is 4.07%. Optimal capital structure of the pany explains that the liabilities of the pany have been reduced by the pany to manage a better capital structure. (Brown, Beekes and Verhoeven, 2011) Gearing ratios of the pany explains about the liabilities of the pany which has been reduced and the borrowings of the pany has been increased in current month and thus the gearing ratios of the pany has been lowered. Total Liabilities/ Capital employed Total Liabilities/ Capital employed The annual report of the pany expresses that the pany offers a great dividend to the pany with a 1.25% growth rate each year. It depicts that the pany is following relevant dividend policies (Annual report, 2018). Relevant dividend policies are a part of dividend policies. These policies explain to the pany that they should announce and give a good amount of dividend to the stockholder so that the investment level of the pany could be enhanced. Subject: R mendation about investment. It is r mended to you to invest into TPG tel . The report of evaluation of TPG tel briefs that the current position of the pany is quite attractive. It presents that the huge profit is earned by the pany and the great amount of dividend is given to the shareholders of the pany. The market stock price of the pany is also good. It explains that the investors should invest into the pany.   So, it is the best option for you to invest right now. About us. 2018. TPG Tel Limited. viewed Jan 25, 2018, https://www.tpg .au/ Annual Report. 2018. TPG Tel Limited. viewed Jan 25, 2018, https://www.tpg .au/about/pdfs/FY17%20Annual%20Report.pdf Brown, P., Beekes, W., and Verhoeven, P. 2011. Corporate governance, accounting and finance: A review.  Accounting & finance,  51(1), 96-172. Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson. Davies, T. and Crawford, I., 2011.  Business accounting and finance. Pearson. Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia. Jiashu, G. 2009. Study on Fair Value Accounting——on the essential characteristics of financial accounting [J].  Accounting Research,  5, 003. Morningstar. 2018. TPG Tel Limited. viewed Jan 25, 2018, https://financials.morningstar /cash-flow/cf.html?t=XBER:YST®ion=deu&culture=en-US Yahoo Finance. 2018. TPG Tel Limited. viewed Jan 25, 2018, https://au.finance.yahoo /quote/TPM.AX/chart?p=TPM.AX