M7101: Corporate Finance & Accounting Assignment

Assignment

Objective

1. To analyze the capital structure of selected Malaysian public listed companies.
2. To assess the relationship between capital structure and firm value.
3. To evaluate the influence of leverage on financial performance indicators

Assignment Structure

Section 1

Background of the Study:

• Explain capital structure and its importance to firm performance.
• Identify the main issue or question the study addresses. State clear objectives of the study.

Section 2

Capital Structure Theories:

• Review relevant capital structure theories: ModiglianiMiller, TradeOff Theory, Pecking Order
• Theory. Summarize findings from past studies (both global and local). Present key determinants of capital structure and firm value.

Section 3

Methodology:

• Explain the approach used:
  • Company selection criteria (e.g., by industry, size).
  • Timeframe (e.g., 2020–2024).
• Mention analytical tools:
  • Financial ratios (Debt Ratio, ROE, EPS) 
  • WACC (if applicable) Comparative analysis or basic regression (optional)

Section 4

Data Analysis and Findings:

• Present findings for each company:
  • Capital structure ratios (e.g., Debt-to-Equity, Interest Coverage) 
  • Firm value indicators (e.g., Market Capitalization, ROE, EPS) 
• Compare and analyze data over time and between firms. 
• Use charts, tables, or graphs for clarity. Interpret how capital structure decisions have impacted firm value.

Chapter 5

Discussion:

• Link findings back to theory and previous studies. 
• Discuss reasons behind observed trends (industry differences, governance, economic factors). 
• Evaluate whether capit 
• al structure decisions were optimal. Discuss limitations or external factors (e.g., Covid-19, interest rate changes).

Section 6

Conclusion and Recommendations:

• Summarize key insights from the analysis. 
• Conclude on the overall impact of capital structure on firm value. Provide practical recommendations for financial managers in Malaysian firms.

Brief Summary of Assessment Requirements

The objective of this assignment is to critically analyze the capital structure of selected Malaysian public listed companies and evaluate how financing decisions influence firm value and financial performance. The assessment requires students to combine theoretical understanding with practical financial analysis using real company data.

Key pointers covered in the assessment include:

• Understanding the concept and importance of capital structure
• Applying established capital structure theories to real firms
• Selecting appropriate companies and a defined time period for analysis
• Using financial ratios and firm value indicators to assess performance
• Interpreting trends and linking empirical findings with theory
• Drawing conclusions and providing practical recommendations

The assignment is structured into six sections, progressing logically from theoretical background to empirical analysis, discussion, and managerial recommendations.

Step-by-Step Approach Taken by the Academic Mentor

Step 1: Clarifying Objectives and Scope

The academic mentor first guided the student to clearly understand the three core objectives:

1. Analyze capital structure patterns
2. Examine the relationship between leverage and firm value
3. Evaluate financial performance indicators

This step ensured alignment between the objectives, data selection, and analysis.

Step 2: Developing the Background of the Study (Section 1)

The mentor assisted the student in:

• Explaining capital structure and its relevance to firm performance
• Identifying the key research problem, such as whether leverage improves or harms firm value
• Framing clear and measurable study objectives

This section set a strong foundation and context for the rest of the assignment.

Step 3: Reviewing Capital Structure Theories (Section 2)

The mentor guided the student to:

• Review and explain Modigliani–Miller Theory, Trade-Off Theory, and Pecking Order Theory
• Compare theoretical assumptions with real-world conditions
• Summarize findings from previous global and Malaysian studies
• Identify key determinants affecting capital structure and firm value

This step strengthened theoretical understanding and supported later analysis.

Step 4: Designing the Methodology (Section 3)

The mentor helped structure a clear and logical methodology by:

• Selecting Malaysian public listed companies based on industry and size
• Defining the analysis period (2020–2024)
• Choosing appropriate analytical tools, including:
  • Financial ratios (Debt Ratio, ROE, EPS)
  • Firm value indicators
  • Comparative analysis (and optional regression where applicable)

This ensured methodological clarity and academic rigor.

Step 5: Conducting Data Analysis and Presenting Findings (Section 4)

Under mentor guidance, the student:

• Calculated capital structure and performance ratios
• Analyzed firm value indicators over time
• Compared results across companies
• Used tables and charts to enhance clarity
• Interpreted how changes in leverage influenced firm value and profitability

The mentor emphasized data interpretation rather than mere presentation.

Step 6: Linking Findings to Theory (Section 5 – Discussion)

The mentor guided the student to:

• Relate empirical findings back to capital structure theories
• Explain observed trends using industry conditions, governance, and economic factors
• Evaluate whether firms adopted optimal capital structures
• Acknowledge limitations such as Covid-19 impacts and interest rate changes

This section demonstrated critical thinking and analytical depth.

Step 7: Drawing Conclusions and Recommendations (Section 6)

Finally, the mentor supported the student in:

• Summarizing key insights clearly and concisely
• Concluding on the overall impact of capital structure on firm value
• Providing practical, actionable recommendations for financial managers in Malaysian firms

This ensured the assignment delivered both academic and practical value.

Outcome Achieved and Learning Objectives Covered

Final Outcome

• A well-structured, theory-backed, data-driven analysis
• Clear linkage between capital structure decisions and firm value
• Strong academic coherence across all sections

Learning Objectives Covered

• Application of financial and capital structure theories
• Quantitative financial analysis using real company data
• Critical evaluation of leverage and performance indicators
• Research, interpretation, and academic writing skills
• Practical financial decision-making insights

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