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Financial statement analysis has long been a major instrument to predict the probability of bankruptcy of firms

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  • Post Date 2018-11-09T12:04:03+00:00
  • Post Category Research Paper Queries

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Financial statement analysis has long been a major instrument to predict the probability of bankruptcy of firms

FIN921 – MANAGERIAL FINANCE
ASSESSMENT 2 – Individual Essay Assignment – MANUAL
This manual outlines the followings:
 Provision of essay topics
 Task requirements
 Format and printing requirements
 Submission requirements
 Provision of essay topics
You must select one of the following three essay topics.
Topic A: Financial statement analysis has long been a major instrument to predict the
probability of bankruptcy of firms. However, significant corporate scandals have
revealed that financial statements are not reliable to estimate the firm’s default
(bankruptcy) risk. Using the supporting evidence from journal articles, discuss whether
corporates need other approaches than financial statement analysis to bankruptcy
prediction. (Note: This topic is neither to discuss about historical evolution of
bankruptcy prediction models, nor to list various types of default prediction models.)
Topic B: Financial market regulators worldwide recently imposed short selling
restrictions on financial securities. The primary purpose of this was to curb excess stock
price volatility. Discuss if these restrictions successfully achieved their purpose. Use
supporting evidence from journal articles together with your own analysis of actual
financial market evidence.
Topic C: Negative gearing occurs when an asset (e.g. a house or share portfolio)
is financed largely by a loan and the periodic interest payments on the loan
exceed the income produced by the asset in the same period (e.g. monthly interest
exceeds monthly rent receipts or monthly share dividend yield). Explain the
advantages and disadvantages of such arrangements in terms of risk and return,
especially in the context of increasingly volatile market conditions. Illustrate your
answer with example calculations and references to the journal articles and financial
press.
Task requirements
1. The essay MUST be completed individually.
2. You must address all the questions of the topic chosen, and build up your own
argument from reading the relevant journal articles and news articles in the
financial press.
3. At least 6 key Journal Articles should be included.
4. The maximum length of the essay (including abstract, body text, in‐text citation
and reference list) is 1,500 words. Essays exceeding the word limit will be
penalised with 10% penalty.
5. An abstract of no more than 150 words is to preface the essay.
6. The essay should follow the structure including Abstract, Introduction, Body text,
Conclusion and the Reference List.
7. Referencing and in‐text citation must follow an acceptable academic format using
the Harvard referencing style. Please follow the guidelines (“Referencing Guide”)
uploaded on the FIN 921 moodle site. All sourced material, including direct
quotations, must be appropriately acknowledged.
8. Use your own words. Reference wherever necessary. Do NOT plagiarise

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