Finance Assignment Help on the Financial analysis depicting health of the company

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Finance Assignment Question

Assignment

This assignment seeks to assess your ability to:

  • Evaluate the performance of a company through a critical analysis of its published financial statements over the two latest years, as follows:

Locate, extract and analyse data from the published financial statements  to provide a comprehensive analysis of a company’s operations and performance;

Structure an argument about performance based on the analysis of five aspects of performance evaluation:

  • Profitability
  • Efficiency
  • Short-term solvency
  • Long term solvency
  • Market based ratios
  • Present a clear, well-structured report using appropriate style and language.

CASE SCENARIO

You are a managerial accountant who has been asked to analyse the latest Annual Report and Financial Statements (it must contain two years information) of a publicly listed company that is listed on the Australian Stock Exchange (www.asx.com.au). You must choose the publicly listed company and produce a comprehensive report for distribution to the company’s management to comply with all the requirements listed below.

Note that the calculation of ratios does not earn many marks. While they are expected to be accurate, most marks will be earned by demonstrating your understanding of ratio analysis and its uses. This will be apparent to the reader from your analysis of the implications of the ratios you present and your ability to provide some explanation through the recognition of the interaction between ratios. You are also expected to make some recommendations to management based on your analysis.

REQUIRED

Prepare a word-processed report containing the following:

  1. An analysis of the information contained in the latest Annual Report and Financial Statements of the company, commenting on the strengths and weaknesses of the company over two years by applying ratio analysis in the categories listed above;
  2. Suggestions or recommendations for improving the business, based on the analysis;
  3. Full referencing of your sources of information, which may include any external sources such as the financial press, commentators and the internet that you may have used to strengthen your analysis.

You should put the ratio calculations in an appropriate appendix so that the body of the text only states the result of the calculation (e.g. ‘…argument is supported by a debtors collection period of 26 days’) and not the process of calculating it. Pay attention to the presentation of this appendix so that it is user friendly and it is easy to locate any ratio. Do not calculate every ratio in the list in your textbook—you should be selective and only go beyond the major ratios, which are discussed in the textbook, if you have decided that further detailed analysis of an aspect of the statements will better enable the development or justification of a recommendation to management. The quality of the analysis is more important than the quantity of ratios.

Please submit a copy of the annual report with your assignment.

Important Instructions

  1. Assignments must contain proper citations and referencing using the Harvard style referred to in the AIB Style Guide, that is: a. citations (or in-text references) of quoted and paraphrased materials to support your arguments/comments, and
  2. a reference list relating specifically to your in-text references.
  1. Your grade will be adversely affected if there is no/poor citations and/or reference list, as referred to above.
  1. Assignments of this nature normally contain between 6 and 12 relevant references from different sources in the reference list.
  1. All references must be from credible sources. Journals sourced from the EBSCO Host library (see Online Library User Guide on the next page) should be used first, then books, company documents and other media.
  1. You are encouraged to make use of the AIB online library which can be accessed through the AIB website.

  1. AIB checks assignments with anti-plagiarism software. Please carefully check your assignments before final submission to ensure that all quoted and paraphrased materials are properly cited and referenced.
  1. The total number of words should not exceed 2500 words (excluding your cover page, an executive summary, table of contents, list of references or appendices.) Penalties may apply if you exceed the word limit (please refer to the Assessment Policy on AIB website). You may place any supporting material that exceeds this word limit in the appendices. However, a reader should not have to look at an appendix to determine the main thrust of the points you are making in your assignment. So make sure all your main points are in the body of your assignment and refer to the appendices that will support the points you are making.

Finance Assignment Solution on the  Financial Analysis Depicting Health of the Company

Introduction:

Woolworths are the largest food retailer in Australia and New Zealand. It is an Australian based company. The company has targeted, achieved and maintained strong investment grade credit ratings by S&P and also Moody’s. The Company opened its first store in 1924 and is now the market leader in terms of market capitalization and sales in Australia. The company meets the diverse needs of the customer and is into almost five businesses. It is in the business of food, liquor, petrol, home entertainment and hotels

In the food market, the company operates with the low price strategy. It is regarded as the Australia’s lowest price full range super market. The company reinforced the price leadership with the best value added for the customer.It also operates in the Australia’s online retailer space and enjoys the leading position. The company plays proactively by acquiring the firms of a particular segment to expand its operations and also for the earnings per share to increase. The idea of exploring to the new markets and also the existing markets by acquiring the existing players is an added advantage to the company. As the company operates in the retail segment, it is also appreciated that the company has a strong property pipeline for its extended operations. As the company enjoys the high volume base, its cost of doing business as a percentage of sales is low and acceptable.The business also takes the advantage of data driven approach by using the big data, which allows the company to price, promote and also make the necessary product available for the customers in the right time.

Read more in the complete solution PDF document at the end of this page.

Woolworths also enjoys the leadership in the liquor market in all segments and channels. The sales growth in this particular business is high and is almost in the double digits. Hence it is one of the profitable businesses from the company.

The company in the home entertainment business tries to add value to the product by innovative methods, so that the customer enjoys the full product. The company should develop necessary core competencies in this business to enjoy leadership. As this is an innovative and fast changing industry, working with the latest technology platforms is crucial. Research and development of these technologies should be the prime focus so that

The company also operates in the hotel business and it is expanding in this business by acquiring the existing players in this sector. The company showcases and promotes itself as the responsible hotels in Australia.Acquiring existing players help the company to get a hold on the competition to some extent and gives more freedom to price their services.

Meanwhile the company dis-invested in the unprofitable businesses and where it failed to upgrade and advance in terms of competitiveness. It has come out of the consumer electronics business in Australia, New Zealand and Indian. This makes complete sense as, a company should invest in those sectors which are its core competencies, in order to get a higher return over investment. However, this does increase risk by reducing diversification in the business portfolio but other forms of risk management can be leveraged to even out this drawback.

Read more in the complete solution PDF document at the end of this page.

Analysis using the ratios:

When profitability of the company is to be examined, the following ratios can be calculated and the interpretation can be taken from the ratios. The ratios calculated are Return on equity, Return on asset, operating margin sales percentage and return on invested capital. These ratios typically show us how the resources are profitably used.

  • Return on equity: It is the ratio of net income to the shareholder’s equity. Return on equity for the year 2012 and 2013 are 23.02 and 26.25 respectively (star, 2013). It is basically the net income as a percentage of shareholders equity. In general, higher value of the ratio means the company is able to generate income from the new investments. There is an increase in the return on equity from 2012 to 2013. This ratio shows us that the company’s performance is good.
  • Return on asset: It is the ratio of Net income to the total assets of the company. Return on assets for the year 2012 and 2013 are 8.51 and 10.31 respectively (star, 2013). This ratio shows us how far the company can generate income effectively using the assets it has. Also, there is an increase in the ratio, so it is known that the company’s ability to use the assets has increased…..

Read more in the complete solution PDF document at the end of this page.

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