5. How to Find the List of Companies on the ASX – at March 2012 there are about 2300
Companies listed on the ASX
- or go to Google and Type
ASX code list – you can then download this a around 2180 companies

6. Go to Google type “Yahoo Finance” then Click Here

7. Then Click Here

8. Then Click Here

9. Discuss All Ord Index – how it is calculated then go Live to Excel File to see the Download
16/08/2011
4349.1
17/08/2011
4320.1
Say Market Value of Australian Shares 16/8/11 was
$ ,000,000,000,000,000,000,000,000,000,000,000.00
Then the value of Australian Shares on 17/8/11 must be
$ ,933,319,537,375,550,000,000,000,000,000,000.00
That is to calculate the New All Ord Index we get….
Yesterdays index times todays share value / yesterdays share value
Try this just using the first few numbers of the assumed value below
10,000,000
9,933,319
x 9, /10,000,000 = 4320

10. This graph takes about 2 minutes to create … test me on this …
This graph takes about 2 minutes to create … test me on this …. (this will help for your assignment work)

11. So imagine you had a Share Portfolio (mix of share investments) that tracked fairly closely with the All Ord Index.
If it was worth $450,000 on 17/8/2011 when the All Ord Index was 4320 (three and a half years ago) what is it worth today?
So what is your investment in shares worth today?
So let’s work it out - All Ord Index as at 12 February 2015 is 5731 – what is it worth?

12. The answer is $450,000 x 5731 / 4320 = $596,979
OK so our capital gain is $146,979.
What is our annual return – PV , FV /-, N=3.5 Comp i = 8.4% just straight capital gains – we would have earned approximately 5% dividends as well – so we have earned around 13% p.a.
What if the companies you have invested in are still making profits and paying you dividends. Say in 2011 they paid dividends of $33,000 and were still able to pay these dividends in 2015.
What is your dividend % return based on the value of your investment?
Your turn to calculate this….

13. The answer is for 2011 = 33,000 / 450,000 = 7%
For 2015 = / 596,979 = 5.5%

14. Ok imagine on 23/7/03 you borrowed $100,000 to invest in a range of Australian shares on this day the All Ord Index was 3050, then you sold them four years later 23/7/07 when the index was 6448.
If your dividend payments were running at around 5% per year and the interest on your loan was around 8% the net cost to you of servicing the loan has been 3 % per year. What about the tax deduction available for interest?
What is your investment worth on 23/07/07 ?
What is your capital gain?
What is your average return per year?

16. Have a look at the recent report from IAG Insurance – received via e-mail

18. Note this could be a concern for creditors if the company was struggling because shareholders would be jumping the queue – being paid some funds before the creditors could get their hands on it.
Thus the reason dividends should only be paid out of Profits or retained earnings

19. The accounting entry for this is Dr Share Capital
Cr Bank

22. Note a higher gearing ratio means higher debt to equity – more risk, tax deduction for the interest expense and more return for shareholders – that is less shareholders to share the profits with

24. To encourage investors to take up the offer of bonus shares they are often offered at a discount from the current market price – this has the effect of diluting the value of the shares – which we will see in a later topic

26. Note – there is no Accounting Entry for this – it could be likened to Printing money – instead of having one share worth 5$ we have 5 shares worth $1 each.
There is a perception or an expectation that future dividend returns will be higher – not sure if this is necessarily the case.

36. Hang on I though the ex-dividend date was four days before the date of record … it is four business or trading days before the date of record. Check out the calendar below ….
If I purchased a bundle of shares on Wednesday 1 June..will I receive the latest dividend?

37. Answer is … No I would need to have purchased them on Tuesday 31st May to receive the latest dividend.

38. Note .11 / = 2.45
That is if you know the div per share and the div yield you can work backwards to find the market price

39. So grab the div per share and divide by the yield percentage (as a decimal ) and we should be able to work out the market price.
What is Billabongs market price? AGL Energy?
Who would you invest in if you were chasing the best dividend returns?

62. So we can pay fully franked dividends out of our $700,000 profit of $466,667 because we have paid $200,000 in tax, we can still pay an extra $233,333 in dividends if we want to but they won’t be fully franked dividends

63. One last comment on Capital Gains tax
Builders buy property and live in it as their principal place of residence for six months then sell it and avoid capital gains tax.
A worst scam which is allowable is an investor buys a property lives in it for six months, (while they rent out their “other principal place of residence”) then rents out their investment property for seven years, they can then move back in for another six months and the property will not incur Capital Gains tax.
That is as long as the investor moves in first when they have purchased the property for six months and then moves in for another six months every seven years the property is deemed to be the investors principal place of residence.

64. Past Papers