Case Study 3
FACT SET
Go to the website for each company and obtain the Income Statement and Balance Sheet for the company for the 2009/10 (Year 0) and 2014/15 (Year 5) financial years. You will find this information in the relevant Annual Reports.
TASKS
1. Based on the information contained in these statements calculate for each company:
a. The annual growth in Earnings per Share over the five years to 30th June 2015, using the following formula.
EPSYear 5/EPSYear0(1⁄5)-1
The Net Profit Margin, Asset Turnover Ratio, Leverage Ratio, Net Debt to Equity Ratio and Return on Equity for the company for both financial years.
2. Demonstrate and explain what would happen to the 2014/15 Return on Equity and the Net Debt to Equity Ratios if your allocated company just prior to the end of the 2015 financial year raised an additional $50 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.
3. Demonstrate and explain what would happen to the 2014/15 Return on Equity and the Net Debt to Equity Ratios if your allocated company just prior to the end of the 2015 financial year instead of raising the additional loan raised an additional $50 million through the sale of new shares to the public, which it used to pay for the new plant and equipment. Assume that the immediate effect on sales and net profit was zero.
4. Using the ratios calculated in Task 1 of this case study, compare and contrast the financial performance of the companies over the past 5 years. [Provide a single agreed answer per team.]
5. Use your analysis of the financial performance of the companies over the past 5 years to explain any differences in the Total Return to Shareholder between the companies over the past 5 years, which you have calculated in Case Study 2.
Task 1a - Annual growth in EPS
From the Annual Report for each company, find the Earnings per Share (EPS) for financial year 2010 and 2015. Enter the EPS into the table below.
|
Financial
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2015
(year 5)
|
|
|
|
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2010
(year 0)
|
|
|
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Calculate the annual growth in Earnings per Share over the five years to 30th June 2015, using the following formula.
EPSYear 5/EPSYear0(1⁄5)-1
|
Company
|
Annual growth in earnings per share
|
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ARP
|
|
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AHG
|
|
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APE
|
|
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SUL
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Go to the website for each company and look up the Annual Reports for the 2009/10 (Year 0) financial year. Find the pages containing the Income Statement and Balance Sheet then fill in the table below to assist you in calculating the ratios in Task1b.
Remember values must be in consistent units ($1,000s, $100,000s etc) for all four companies. (i.e. thousands, millions of dollars).
| 2010 |
ARP |
AHG |
APE |
SUL |
| Revenue |
|
|
|
|
| Net Profit |
|
|
|
|
| Total Assets2010 |
|
|
|
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| Total Assets2009 |
|
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| Average Total Assets |
|
|
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| Equity2010 |
|
|
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| Equity2009 |
|
|
|
|
| Average Total Equity |
|
|
|
|
| Total Debt* |
|
|
|
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| *Total debt refers to long term borrowings (interest-bearing debt) |
| Cash |
|
|
|
|
Go to the website for each company and look up the Annual Reports for the 2014/15 (Year 5) financial year. Find the pages containing the Income Statement and Balance Sheet then fill in the table below to assist you in calculating the ratios in Task 1b.
Remember values must be in consistent units ($1,000s, $100,000s etc) for all four companies. (i.e. thousands, millions of dollars).
| 2015 |
ARP |
AHG |
APE |
SUL |
| Revenue |
|
|
|
|
| Net Profit |
|
|
|
|
| Total Assets2015 |
|
|
|
|
| Total Assets2014 |
|
|
|
|
| Average Total Assets |
|
|
|
|
| Equity2015 |
|
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|
|
| Equity2014 |
|
|
|
|
| Average Total Equity |
|
|
|
|
| Total Debt* |
|
|
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| *Total debt refers to long term borrowings (interest-bearing debt) |
|
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| Cash |
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Task 1b - Calculating Ratios (Net Profit Margin)
Write the equation for Net Profit Marginas per the subject Format Sheet, then calculate the Net Profit Margin for financial years 2010 and 2015. Round your answer to two decimal places. Show your workings.
|
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2010
|
|
|
|
|
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2015
|
|
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Write the equation for Asset Turnover as per the subject Formula Sheet, then calculate the Asset Turnover for financial years 2010 and 2015. Round your answer to two decimal places. Show your workings.
|
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2010
|
|
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2015
|
|
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Write the equation for Leverage Ratio as per the subject Formula Sheet, then calculate the Leverage Ratio for financial years 2010 and 2015. Round your answer to two decimal places. Show your workings.
|
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2010
|
|
|
|
|
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2015
|
|
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Write the equation for Net Debt to Equity Ratio as per the subject Formula Sheet, then calculate the Net Debt to Equity Ratio for financial years 2010 and 2015. Round your answer to two decimal places. Show your workings.
|
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2010
|
|
|
|
|
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2015
|
|
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Write the equation for Return on Equity as per the subject Formula Sheet,then calculate the Return on Equity for financial years 2010 and 2015. Round your answer to two decimal places. Show your workings.
|
Year
|
ARP
|
AHG
|
APE
|
SUL
|
|
2010
|
|
|
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2015
|
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