Assignment
You are allocated to research an Australian listed company. Please write a well-structured professional report to advise a high net-worth individual who intends to invest in the company. You may consider the following questions in your report.
1. Complete the table below and assess the company's performance over the last three years.
2. Evaluate long-term solvency of the company over the last three years.
3. Assess the liquidity position of the company as at the latest financial year.
4. Discuss the quality of the financial statements.
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FINANCIALSTATEMENTANAYLYSIS--YOURCOMPANY
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Companyname:
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Companyticker:
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Studentname:
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Ratiosand OtherAnalysisMeasures
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Year End (3years)
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ROE andDuPontRatios
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ROE (NI/OEavg)
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Profitability(NI/Sales)
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Efficiency(Turnover =Sales/Assetsavg)
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Leverage(Leverage=Assetsavg/OEavg)
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AdditionalProfitabilityRatios
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GrossProfitMargin%[(netRev-COGS) /netRevenue]
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Selling General &Administration%(SG&A expense/netRevenue)
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ImportantExpensePercentage*(ImportantExpense/netRevenue)
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AdditionalEfficiencyRatios
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ARTurnover(Sales/ARavg)
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DaysReceivablesOutstanding(DRO)[ARavg/(Sales/365)]
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Inventory Turnover(COGS /Inventoryavg)
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DaysInventory (DI) [Inventoryavg/(COGS/365)]
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APTurnover(Purchases/APavg)
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DaysPayables Outstanding(DPO)[365 /(Purchases/Accts Payableavg)]
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CASHCONVERSION CYCLE(DI-DPO +DRO)
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PPETurnover(Sales/NetPPEavg)
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AdditionalLeverageRatios
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Debt-to-Equity(totalLiabilities /totalOE)
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TimesInterestEarned(Earnings beforeInterestExpenseandTaxes /InterestExp)
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ReturnonFinancialLeverage(ROE-ROA)
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LTDebt-to-Assets(LTDebt, includingcurrent portion/totalAssets)
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Cash Liquidity and Cash Sources&Uses
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WorkingCapital(CA-CL)
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CurrentRatio(CA/CL)
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QuickRatio [(Cash+STSecurities+AR)/CL)]
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OCFCL(OperatingCF/CL)
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OCFCX(OperatingCF/CapitalExpenditures)
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Free CashFlow(CashfromOps -NetCap.Expend.)
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Growth
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Salesgrowth[(cynetRev-pynetRev)/ pynetRev]
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NIGrowth[(cyNI-pyNI)/pyNI]
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*Choosethemost"important"non-SG&Aexpense.
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