Corporate Finance Supply Network Limited

Question: Discuss about theCorporate Financefor Supply Network Limited. Answer: Introduction: The assignment mainly helps in depicting the overall dividend decaled by Supply Network Limited from 2010 to 2016. In addition, the novice effectively evaluates the return on dividend, which is been provided by the company for the seven year period. The novice also uses the announcements date to depict the return, which could be provided from Supply Network Limited and ASX. In addition, the novice effectively depicts relevant dividend policy, signalling theories and information support with the findings obtained from excess return. Step 1: 1. Portraying the Dividend History of Supply Network Limited for Seven Years: Balance Date Dividend Type Cent Per Share dollar per share percentage change 30/06/2016 Final 5.00 0.05 0.00% 30/06/2015 Final 5.00 0.05 0.00% 30/06/2014 Final 5.00 0.05 0.50% 30/06/2013 Final 4.50 0.045 0.50% 30/06/2012 Final 4.00 0.04 1.00% 30/06/2011 Final 3.00 0.03 1.00% 30/06/2010 Final 2.00 0.02 0.00% 30/06/2009 Final 2.00 0.02 0.00% 30/06/2008 Final 2.00 0.02 Step 2: 2. Stating the Announcement Date of Supply Network Limited for Seven Years: Announcement date 26-Aug-16 19-Aug-15 20-Aug-14 28-Aug-13 24-Aug-12 24-Aug-11 25-Aug-10 26-Aug-09 Step 3: Stating the Return Generated by Supply Network Limited for Seven Years: Supply Network Limited Date Closing price Return 24-Aug-16 2.01 25-Aug-16 2.05 0.0199 26-Aug-16 2.01 -0.0195 29-Aug-16 2.06 0.0249 Date Closing price Return 17-Aug-15 2.06 18-Aug-15 2.06 0.0000 19-Aug-15 2.05 -0.0049 20-Aug-15 2.12 0.0341 Date Closing price Return 18-Aug-14 2.5 19-Aug-14 2.58 0.0320 20-Aug-14 2.58 0.0000 21-Aug-14 2.44 -0.0543 Date Closing price Return 26-Aug-13 1.7 27-Aug-13 1.7 0.0000 28-Aug-13 1.76 0.0353 29-Aug-13 1.74 -0.0114 Date Closing price Return 22-Aug-12 1.26 23-Aug-12 1.26 0.0000 24-Aug-12 1.26 0.0000 27-Aug-12 1.18 -0.0635 Date Closing price Return 22-Aug-11 0.6 23-Aug-11 0.6 0.0000 24-Aug-11 0.61 0.0167 25-Aug-11 0.64 0.0492 Date Closing price Return 23-Aug-10 0.42 24-Aug-10 0.4 -0.048 25-Aug-10 0.42 0.05 26-Aug-10 0.41 -0.0238 Date Closing price Return 24-Aug-09 0.36 25-Aug-09 0.38 0.0556 26-Aug-09 0.36 -0.0526 27-Aug-09 0.38 0.0556 Stating the Return Generated by ASX for Seven Years: ASX Market Date Closing price Return 24-Aug-16 5561.7 25-Aug-16 5541.9 -0.0036 26-Aug-16 5515.5 -0.0048 29-Aug-16 5469.2 -0.0084 Date Closing price Return 17-Aug-15 5367.7 18-Aug-15 5303.7 -0.0119 19-Aug-15 5380.2 0.01442 20-Aug-15 5288.6 -0.017 Date Closing price Return 18-Aug-14 5587.1 19-Aug-14 5623.8 0.00657 20-Aug-14 5634.6 0.00192 21-Aug-14 5638.9 0.00076 Date Closing price Return 26-Aug-13 5135.4 27-Aug-13 5141.2 0.00113 28-Aug-13 5087.2 -0.0105 29-Aug-13 5092.4 0.00102 Date Closing price Return 22-Aug-12 4376 23-Aug-12 4383.7 0.00176 24-Aug-12 4349 -0.0079 27-Aug-12 4343.7 -0.0012 Date Closing price Return 22-Aug-11 4082.3 23-Aug-11 4173.4 0.02232 24-Aug-11 4167.6 -0.0014 25-Aug-11 4212.8 0.01085 Date Closing price Return 23-Aug-10 4429 24-Aug-10 4381.3 -0.0108 25-Aug-10 4320.1 -0.014 26-Aug-10 4356 0.00831 Date Closing price Return 24-Aug-09 4426.1 25-Aug-09 4405.8 -0.0046 26-Aug-09 4454.5 0.01105 27-Aug-09 4450.8 -0.0008 Stating the Excess Return Generated by Supply Network Limited for Seven Years in Comparison with ASX: Excess return Date SNL return ASX return Excess Return Percentage change in dividend 25-Aug-16 1.990050% -0.356006% 1.634043% 0.00% 26-Aug-16 -1.951220% -0.476371% -1.474849% 29-Aug-16 2.487562% -0.839452% 1.648110% 18-Aug-15 0.000000% -1.192317% -1.192317% 0.00% 19-Aug-15 -0.485437% 1.442389% 0.956952% 20-Aug-15 3.414634% -1.702539% 1.712095% 19-Aug-14 3.200000% 0.656870% -3.856870% 0.50% 20-Aug-14 0.000000% 0.192041% -0.192041% 21-Aug-14 -5.426357% 0.076314% 5.350042% 27-Aug-13 0.000000% 0.112942% 0.112942% 0.50% 28-Aug-13 3.529412% -1.050338% 2.479073% 29-Aug-13 -1.136364% 0.102217% -1.034146% 23-Aug-12 0.000000% 0.175960% -0.175960% 1.00% 24-Aug-12 0.000000% -0.791569% -0.791569% 27-Aug-12 -6.349206% -0.121867% -6.227339% 23-Aug-11 0.000000% 2.231585% -2.231585% 1.00% 24-Aug-11 1.666667% -0.138975% 1.527691% 25-Aug-11 4.918033% 1.084557% 3.833476% 24-Aug-10 -4.761905% -1.076993% -3.684912% 0.00% 25-Aug-10 5.000000% -1.396846% 3.603154% 26-Aug-10 -2.380952% 0.830999% -1.549953% 25-Aug-09 5.555556% -0.458643% 5.096913% 0.00% 26-Aug-09 -5.263158% 1.105361% -4.157797% 27-Aug-09 5.555556% -0.083062% 5.472493% Step 4: Stating the Findings with the Help of Relevant Theory from Dividend Policy, Signalling Elements and Information Content: The overall excess return that is been generated from Supply Network Limited in relatively to ASX is effectively depicted in the above tables. In addition, the return of Supply Network Limited is mainly high after the annual report date of the company as compared to the return generated by ASX. Three day return is been effectively used to detect the impact of final report on the share price movement of the company. The following theories could be effectively used to depict to return that is been generated by Supply Network Limited. Signalling Theory: Companies to increase its share price before the actual declaration of the annual report mainly use the signalling theory. According to Bhattarai, Eggertsson and Gafarov (2015), the signalling theory, a company is mainly needed to provide high dividends each year, which in turn help in increasing the number of investors to grasp the opportunity to receive dividends. In addition, the company has effectively increased dividends from 2011 to 2015 and its share price has also drastically increased from 0.64 to 2.06. This only depicts the high dividend that is been paid by the company, which has improved its overall share price Dividend Policy Theory: The dividend policy mainly uses the dividend that is been provide by the company to depict the future price movement and valuation. In addition, the annual report mainly holds the dividend declared by the company, which could be used by investors to depict the overall change in its share valuation. Kajola, Adewumi and Oworu (2015) stated that the investors with the use Gordon dividend model, investors are able to depict the exact value of companies share, which in turn help in making adequate investments. The share price movement of the company is mainly seen to rise on the next day of the results declaration. In addition, at the closing hour the company mainly provides the result, which affects the share price of the company in the next day. Information Content: The company to promote its share price before the actual announcement of the news mainly uses the information content system. Wang and Yu (2015) mentioned that this system allows the company to promote its high revenue before the actual news is been announced. In addition, from the revenue of SNL it could be seen that the companies return before the announcement date is relatively higher than the actual revenue generated on the announcement date. This action could effectively depict the use of information content conducted by SNL before the actual release of its annual report. Conclusion: The assignment is mainly helpful in identifying the spike in SNL share price during the three-day period of its announcement date. In addition, the spike is effectively compared with ASX return, which is been generated on those specific days. In addition, the excess return, which is been generated are effectively evaluated with the help of dividend policy relevance, information content and signalling elements. Reference: Au.finance.yahoo.com. (2016).^AXJO Historical Prices | SP/ASX 200 Stock - Yahoo!7 Finance. [online] Available at: https://au.finance.yahoo.com/q/hp?s=%5EAXJOa=07b=24c=2009d=07e=27f=2009g=d [Accessed 21 Oct. 2016]. Bhattarai, S., Eggertsson, G.B. and Gafarov, B., 2015.Time consistency and the duration of government debt: A signalling theory of quantitative easing(No. w21336). National Bureau of Economic Research. datanalysis.morningstar.com.au, (2016). [online] Available at: https://datanalysis.morningstar.com.au.ez.library.latrobe.edu.au/af/company/fullcompanyreport?ASXCode=SNLlicensee=datpremiumxsl-printfriendly=yesxsl-printfullreport=yes [Accessed 21 Oct. 2016]. Google.com. (2016).Supply Network Limited: ASX:SNL historical prices - Google Finance. [online] Available at: https://www.google.com/finance/historical?cid=689372startdate=Aug+1%2C+2009enddate=Aug+31%2C+2009num=30ei=yOEJWLHONJCpuASB3aCADQ [Accessed 21 Oct. 2016]. Kajola, S.O., Adewumi, A.A. and Oworu, O.O., 2015. Dividend pay-out policy and firm financial performance: evidence from Nigerian listed non-financial firms.International Journal of Economics, Commerce and Management, pp.1-12. Wang, J.W. and Yu, W.W., 2015. The information content of stock prices, legal environments, and accounting standards: international evidence.European Accounting Review,24(3), pp.471-493.