Black Gold Ltd is a Japan-based multinational company engaged in the production of thermal power. This electricity is purchased by many manufacturing companies in Japan. Black Gold started its operations in 2004. In order to cut down cost of raw material (coal), the company has also invested in coal fields in South Africa. The extract from Black Gold’s financial statements is provided. Currently, Black Gold is considering purchase of a coal mine in Indonesia. For this project, the company needs a loan of $5 billion. The project will run for 20 years. End-value of the project (scrap value) is zero

Topic:

Consider the following scenario.

Black Gold Ltd is a Japan-based multinational company engaged in the production of thermal power. This electricity is purchased by many manufacturing companies in Japan.  Black Gold started its operations in 2004.  In order to cut down cost of raw material (coal), the company has also invested in coal fields in South Africa.  The extract from Black Gold’s financial statements is provided.  Currently, Black Gold is considering purchase of a coal mine in Indonesia.  For this project, the company needs a loan of $5 billion.  The project will run for 20 years.  End-value of the project (scrap value) is zero.

 

Extract from the financial statements of Black Gold Ltd    
for the financial years ended 2012, 2013 and 2014 (amount in million $)  
  2012 2013 2014      
Equity 1200 1200 1200      
Reserves 18300 20300 22600      
             
Long-term loan 46700 45900 47500      
Short-term loan 14950 11550 12120      
             
Fixed assets 68990 72750 76750      
Current assets 21160 25970 24120      
             
Revenue 39352 46990 52750      
Expenses 36290 45160 50160      
Gross Profit 3062 1830 2590      

 

Task

You are the manager of the Loans Department of the Rich Bank, which is an Indonesia-based bank.  As a manager, you need to process Black Gold’s loan application and submit an internal report to Mr. Widodo who is the Managing Director of the bank.    The focus of the report will be the potential risks and returns for the bank. Together with the financial aspect, you will need to consider various other relevant aspects and analyse this proposal.  Based on the analysis, make your recommendation.

 

Word limit

Minimum 1350 words – maximum 1500 words.  This excludes tables, annexures (if any) and reference list.  You must use double-line spacing, or you will lose 3 marks for this assignment.  Write word count on the cover sheet.  Submit the file online in Moodle drop-box.

 

Extension

Students who are unable to submit the Report assignment within two weeks of the due date, due to medical or other special reasons, have produced the appropriate documentation (see 6h), and have been approved by the unit convener, will be required to submit another piece of assessment on a topic to be selected by the unit convenor.  No assignments will be accepted for marking on the same topic after the solution or marked assignments have been returned to the class.

 

If an extension is not granted, a late penalty of 10% per day will apply after the due date.

 

 

Important

This is a research-based assignment.  The topic pertains to the lending activity and related risks and returns for a commercial bank. In addition to your text-book, you will need to collect data and information from books, journals, magazines, reports and/or any other relevant resources (print and online material) available.  Minimum seven references are required – no limit for maximum references. Write your recommendations at the end of the report.  Also note, this report will focus on the finance side (risks and returns) and there will be very little accounting analysis of the firm (very brief accounting data has been provided).

 

The information on report-writing is available in the communications skills handbook which is available in the UC Library (see recommended reading on p. 5).

 

Please note that you must write the essay in your own words.  Copy-paste from various websites is not allowed.  You need to provide in-text references and a reference list in Harvard style.  Please read University of Canberra policy on plagiarism.

 

Assessment criteria:

Information gathering: maximum 9 marks

Logical and analytical ability: maximum 9 marks

Analysis of accounting information: 4 marks

Presentation including Harvard style referencing: 3 marks

 

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