ACC601 Accounting For Management Decisions

Group Assignment – Date due: End of Week 12

Financial Statement Analysis

This assignment involves analysing the financial statements and other information relating to a number of Australian public companies. These companies are listed below.

Your group of a minimum of 3 and no more than 6 students must allocate these companies within the group to a group member and that group member is responsible for the calculations and analysis of that individual company. Some group members may be responsible for more than one company if you have less than 6 people in your group.

The assignment is divided into several tasks, some of which must be completed individually, that is, each member of the team is responsible for drafting an answer in respect of at least one of the listed companies. Other tasks require that the team come together to analyse the results provided by individual group members on each of the listed companies to provide a group answer.

Please note: it is a group assignment - so prior to submission - it is the responsibility of every member of the team to confirm that they agree with the answers provided by the team in relation to all companies. This provides an opportunity for all team members to help each other develop some analytical and interpretative skills.

ACC601 Accounting for Management Decisions

FACT SET

• Go to the website for your allocated company and obtain the Income Statement and Balance Sheet for the company for the 2015/16 (Year 0) and 2017/18 (year 3) financial years. You will find this information in the relevant Annual Reports. I have provided links to some of these Reports.

TASKS 1.

Based on the information contained in these statements calculate for each company for the relevant financial years. You must show the formula used and your calculations.

a. The Net Profit Margin;

b. Current Ratio;

c. Inventory Turnover;

d. Asset Turnover Ratio;

e. Leverage Ratio;

f. Return on Equity;

g. Return on Total Assets;

h. Earnings per share (EPS);

i. Net Debt to Equity Ratio; and

j. Total Return to Shareholders. [40 Marks]

2. Demonstrate and explain what would happen to the 2018 Return on Equity and the Net Debt to Equity Ratios if your allocated company just prior to the end of the 2018 financial year raised an additional $200 million loan from the bank, which it invested entirely in new plant and equipment. Assume that the immediate effect on sales and net profit was zero. [10 marks]

3. Using the ratios calculated in Task 1 of this case study, compare and contrast the financial performance of the companies over the period of your analysis. [Provide a single agreed answer per team.] [15 marks]

4. Use your analysis of the financial performance of the companies over the past 3 years to explain any differences in the Total Return to Shareholder between the companies over the past 3 years. [Provide a single agreed answer per team.] [15 marks]

5. Compare and contrast the current market value of each company. Use the ratios you have collected, other information from the media to provide observations about the value of these companies (i.e. cheap or expensive?) [Provide a single agreed answer per team.] [20 marks]