Security Valuation

School of Economics and Finance

Latrobe University

SECURITY VALUATION (FIN3SEV) – SEMESTER 1, 2010

ASSIGNMENT 1

This assignment’s aim is using the annual report of Coca-Cola Amatil Limited as a mean to gain an understanding of the company’s ownership characteristics, risk and share price information.

1) Using the 2006-2008 annual report, the composition of ownership structure for each year shows the Distribution Schedule of Shareholders comprising the numbers of holders for each range of amount of shares owned. We can see that when the amount shares owned of each range increases the numbers of holders decrease. It said that there are fewer investors being able to make bigger investments.

In addition, looking at the breakdown of shareholders in the company, to find which investor is the marginal one for each year, we firstly have to know who the marginal investor is. So, the marginal investor is the investor most likely to be trading on the equity and to influence the equity prices. Generally speaking, the marginal investor in a stock has to own a lot of stock and also trade a lot. Since trading is required, the largest investor may not be the marginal investor.

Therefore, although Coca-Cola Holdings (Overseas) Limited is the largest investor it is not the marginal one in years from 2006 to 2008 as it has not traded at all. In 2006, the marginal investor is National Nominees Limited because it had the largest change in ordinary shares owned. Similarly, in 2007 and 2008, the marginal investor is HSBC Custody Nominees (Australia) Limited. Especially, from 2006 to 2007, it is seen that HSBC made a huge change in the number of shares they hold, from 6.6 million to 97.7 million shares.

2) Using the Financial Statements in each year from annual report from 2006 to 2008, we have a table to express financial figures necessary to calculate financial ratios so that we can make judgment in default risk.

Financial figures/year | 2006 | 2007 | 2008 |...