ACCT3610 Business Analysis and Valuation Assignment

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ACCT3610 Business Analysis and Valuation Assignment - University of New South Wales, Australia

Question 1 - (i) Briefly apply the Porter's five forces to the management consulting industry.

(ii) Using your analysis from (i), explain whether you think the consulting industry would, on average, generate low, medium or high levels of profitability. Explain why.

Question 2 - Linda's Clothing is a retailer of contemporary women's clothing. Selecting financial information appears for Linda's below.

2016 2015 2014

Net Income $56,759 $31,150 $15,375

Average Net Operating Assets for the year $381,500 $246,250 $145,490

Weighted Average number of shares Outstanding 84,215 80,546 77,965

Average Net Debt for the year 205,967 119,657 60,522

Average Common Stockholders' Equity for the year $175,533 $126,593 $84,968

Interest Expense 165 195 258

Required - Use the Alternate DuPont decomposition method to calculate:

1. The return on equity ROE for the each of the years from 2014-2016.

2. The return on net operating assets (RNOA) for 2014, 2015 and 2016. Linda's has an effective tax rate of 30%.

3. Interpret the changes in RNOA versus ROE for the three year period.

Question 3 - Many people view the balance sheet as representing a firm's economic position. State three issues that reduce the quality of this representation, and why each issue might reduce the quality of the representation.

Reference no: EM132453118

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