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