Reference no: EM132891631

ACCG3050 Financial Statement Analysis - Macquarie University

Report

This is a group assignment of three or four students. You are required to evaluate and report on the most recent (FY2020) annual report of an Australian company listed on ASX, Adairs Limited (ADH), as if you were investment analysts making a recommendation on whether your clients should invest in it.

The group report includes the following sections:

1. Introduction, providing a clear statement of the objective of the report and describing what each analysis covers in one or two sentences for each analysis (i.e., this outlines the structure of the report).

2. Environment and Industry Analysis, including:

• Discussion of the environment: 1) identify the economic or other relevant factors, 2) discuss how these factors affect the company's operating environment, and 3) explain how the trends in these factors affect the company in the future.
• Discussion of competitive forces within an industry using the five forces framework.

3. Strategy Analysis, need to:

• Classify the company's strategies into competitive and corporate strategies.
• Discuss the company's competitive and corporate strategies, respectively.
• Discuss the company's growth potential based on the key factors identified in the Economic and Industry Analysis, and choose TWO factors from the Economic and Industry Analysis to discuss whether the strategies that the company implements can meet the opportunities and challenges represented by these factors.

4. Accounting Analysis, need to:

• Identify the company's ONE key accounting policy.

• Discuss how this accounting policy relates to the company's business operations and strategies. In other words, why it is considered as "key" based on your knowledge of the company's operation.
• Identify areas that require the use of management judgment, and provide explanations. Conclude the level of accounting flexibility.
• Compare this accounting policy with a competitor's, discuss the difference and what factors may cause the difference, and evaluate the quality of disclosure for both companies.

5. Financial Analysis, need to:

• Present an overview of the company's operational performance over the past three years, including analysis of the underlying drivers of the change in the company's ROE by decomposing ROE.
• Discuss the company's operating management. Provide common-sized income statement to decompose Net Profit Margin to evaluate operating management. Provide explanations of the possible cause of sales growth, change in margins and expense ratios. The explanations should be related to the company's environment, business operation and strategy.
• Discuss the company's asset management. Provide explanations of the possible cause of change in operating working capital and long-term operating asset turnover ratios. The explanations should be related to the company's environment, business operation and strategy.
• Discuss the company's financial management. Provide explanations of the possible cause of change in liquidity and solvency ratios. The explanations should be related to the company's environment, business operation and strategy.

Conclusion Section is optional for the group report as the individual report requires a conclusion section (See the requirement for an individual report on page 3).

The group report should be word-processed and professionally presented. It is to be approximately 15 - 20 single line or 1.5-lines spacing pages in length, excluding references and appendices. Page limit rather than word limit is imposed for the group report.

Attachment:- Financial Statement Analysis.rar