Task Information

Task Information

A list of ASX listed companies has been compiled along with links to the company websites from which you will be able to access their annual reports. You have been allocated one of these companies to form the basis for your report.You will find your company in a separate document within the Task 2 Assessment area on Blackboard.  Please ensure that you conduct your analysis on your allocated company.

To complete the below requirements, you need to locate the income statement and balance sheet for your company in its annual reports for 2016 and2018. Note: The financial statements in the 2016 annual reports will alsoinclude the financial data for 2015 which you will need to calculate some of the ratios for 2016. Furthermore, the financial statements in the 2018 annual reports will also include the financial data for 2017 as comparative figures.

Task 2 Requirements

Requirement 1 (approx. 200 to 300 words):

Provide a brief overview of your company which includes information that will help you to make decisions regarding the company’s financial situation (e.g., when it was established, what industry/s are they in, what type/s of product/s do they sell or what service/s do they perform).

Requirement 2 (approx. 300 to 400 words):

  • Explain what a trend analysis is and how it is useful in analysing a company’s financial performance.
  • Prepare a trend analysis* for your allocated company for 2015, 2016, 2017 and 2018**using the following income statement items:
    • Sales revenue (or Revenue)
    • Grossprofit (if not shown on the income statement, it will need to be calculated, ie Sales revenue less Cost of sales. Additional information to assist in this calculation will be provided during the semester)
    • The 3 largest expense categories appearing in the 2018 income statement
    • Profit/(loss) after tax***

* The trend analysis should include absolute dollar figures as well as analysis of the trend for the years ended 2015, 2016, 2017 to 2017, and 2018.

** The 2016 and 2015 income statement amounts will be in the 2016 annual report. The 2018 and 2017 income statement amounts will be in the 2018 annual report.

***This will normally be the last profit figure shown in the income statement.

(c)  Analyse the results of the trend analysis and explain what it says about your allocated company’s financial performance.

Requirement 3 (approx. 500 to 600 words):

  • For 2016*, 2017 and 2018,calculate the following ratios for your allocated company:
    1. Return on Assets (Profit/Average total assets x 100)
    2. Return on Equity (Profit available to owners/Average equity x 100)
  • Debt to Equity ratio (Total liabilities/Total equity x 100)
  1. Current Ratio (Current assets/Current Liabilities)
  2. Asset Turnover ratio (Sales revenue/Average total assets)

Note: both the ratio calculations and results should be presented in table/s in your report.

* Some ratios for 2016 will require you to use some financial statement items from 2015.

  • Prepare an analysis of each ratio calculated in (a) above, on the following basis:
    1. Categorise each ratio into the relevant group (profitability, efficiency, liquidity or capital structure)
    2. Describe the purpose of each ratio i.e. how does each ratio assist decision makers; and
  • Analysis the results of each of your calculations in (a) by explaining what each ratio says about your allocatedcompany’sprofitability, asset efficiency, liquidity or capital structure.

Requirement 4 (approx. 100 words):

Provide two recommendations which could lead to an increase in your chosen company’s financial performance in the future.

NOTE: The remainder of the word count for your report will be used for your introduction and conclusions.

Appendix A – Report template[For more guidance on the various parts of the report structure, refer to chapter 3 in the Communications Skills Handbook (2014, 4th edn) by Summers and Smith. The e-text of this book can be accessed via the USC Library website]

1st page: Cover Page (use your artistic flair to dress this up and include your name, student ID and company name)

2nd page: Executive Summary

3rd page:Table of Contents (use the Microsoft Word Template tool)

Note:Format page numbers (Executive summary i, Table of Contents ii)

Below is the structure and headings that you should use for your report:

1.0       Introduction

1.1       Purpose

1.2       Scope

1.3       Limitations

2.0       Company Overview

3.0       Trend analysis

4.0       Ratio Analysis

4.1       Return on Assets

  1. Ratio calculation
  2. Analysis

4.2       Return on Equity

  1. Ratio calculation
  2. Analysis

4.3       Debt to Equity ratio

  1. Ratio calculation
  2. Analysis

4.4       Current ratio/Working capital

  1. Ratio calculation
  2. Analysis

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