Research Methods in Finance 1

Research Methods in Finance 1 The tax charge in the Statement of Profit or Loss of a company often bears little resemblance to the profit before tax figure multiplied by the tax rate. This is because there is a difference in the computation of accounting profits and taxable profits. Therefore , company financial statements usually report an "effec tive" tax rate which is calculated by dividing the tax ation by the profit before tax figure, see example below. In your assigned groups 1 , submit a report, using information from the most recent financial returns for 100 companies of your choice , indicating the effective tax rate. Y our report should highlight some differences across the companies and reasons for these differences . Your analysis may consider (b ut is not restricted to) company s ize, sector or location. (Please include workings in appendix.) _______________________________________________________________________ A good report will justify the use of the data, the choice of companies and present relevant table(s) and graph(s). The objective of this project is: o to communicate effectivel y and clearly in a written format using a quantitative and qualitative approach ; and o to demonstrate your ability to identify, analyse and present data . To get a good grade, you will need to demonstrate a good level of competency in the analysis, interpretation and presentation of financial data. ? You will need to use tables and graphs to illustrate your points. ? All sources must be referenced and may be checked in Turnitin. ? Use UL’s Cite it Right for ref erencing details. Accessing data is a critical part of this assignment . Useful sources e.g. : Annual reports, Bloomberg, DataStream, CSO, Eurostat, FAME, Kompass, TaxFind , FED. The final written report should be between 1,500 and 2, 000 words (1.5 line spacing, font 12 Times New Roman). All tables and graphs should be sequentially numbered, have a heading, source and mentioned in the text. Please submit a hard copy in the box marked FI6111 Research M ethods in Finance on Level 3 , KBS. On the title page of your report include the name and student number of each person in the group. Students will be penalised 10% per day if submitted after the deadline. The assignment is worth 25% of module gr ade . 1 Groups are listed on PDF document. Page 2 of 2 Please staple the top left hand corner of your report ( do not use bind ing or folders etc.) No need for colour printing. With company accounts you will not see expenses broken down like below which is for illustration purpose. They will appear as ‘ operating expenses ’ . Company Accounts Statement of Profit or Loss for Company A € € Sales 1,074,000 Cost of sales 395,000 Gross profit 679,000 Other income R & D grants 10,000 Discounts received 4,000 14,000 693,000 Operating expenses Salaries 120,000 Insurance 30,000 Depreciation 25,000 Entertainment expenses 2,000 Other 400,000 577,000 Profit before tax 116,000 Taxation 16,625 Profit after tax 132,625 Note 1 : 116,000 12.50% 14,500 Effective tax rate 16,625 116,000 14.33% Note 2 : Revenue Approach € Accounting profit 116,000 Less R & D grant - 10,000 Depreciation 25,000 Entertainment expenses 2,000 Taxable profit 133,000 Tax expense 12.50% 16,625