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Analyse the profitability of the companies

Assignment Help Accounting Basics
Reference no: EM132142717 , Length: 4000 Words

FUNDAMENTALS OF VALUE CREATION IN BUSINESS ASSIGNMENT - ACCOUNTING

Requirements -

1. The following is a list of companies from the latest ASX. These companies are carefully chosen to suit this project and the learning outcomes of the unit.

ASX Code

Company

GICS sector: Health care

RHC

Ramsay Health Care

SHL

Sonic Healthcare Limited

PRY

Primary Health Care Limited

GICS sector: Information technology

XRO

Xero Ltd

IRE

Iress Ltd

IRI

Integrated Research Ltd

GICS sector: Consumer discretionary

WEB

Webjet Limited

FLT

Flight Centre Travel Group Limited

2. You are pre-assigned with a company by your teaching lecturer. If you are working in a group, and each member is assigned with a different company, you must choose only one company for your group.

3. If you choose to complete the assignment in a group, please observe that the maximum number of members in a group is 4.

4. Download the company financial data from DatAnalysis (also known as Morning Star) for your analysis. The data shall include items from balance sheet, income statement, cash flow statements and relevant ratios for the latest 6 years. Note that you will have to download 1 year extra to be able to run a 5-year analysis. You may want to refer to DatAnalysis data download guide in this document.

Tasks -

1. For the latest 5-year period, analyse the following aspects of the companies:

Ratio categories

Example of ratios to analyse

Profitability

e.g., 1. Return on equity (ROE), and 2. Net profit margin.

Liquidity

e.g., 1. Current ratio, and 2. Acid test (also known as quick ratio).

Solvency

e.g., 1. Debt ratio, and 2. Net interest cover.

2. Present your analyses in a form of a professional report for a manager of a company. Charts and tables are encouraged. Your report should have the following sections (maximum possible marks are in the parentheses).

2.1. Cover sheet which clearly identify all group members, class/campus, and your teaching lecturer.

2.2. Executive summary.

2.3. Introduction.

2.4. Profitability analysis.

2.5. Liquidity analysis.

2.6. Solvency analysis.

2.7. Conclusion.

3. Other criteria for the report: Must not exceed 4000 words, excluding table of content, references and appendices, but inclusive of item 2.2 to 2.7. The report will be graded on the first 4000 words of item 2.2 to 2.7.

Attachment:- Assignment File.rar

Reference no: EM132142717

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Reviews

len2142717

10/16/2018 10:21:52 PM

Other criteria for the report: Must not exceed 4000 words, excluding table of content, references and appendices, but inclusive of item 2.2 to 2.7. The report will be graded on the first 4000 words of item 2.2 to 2.7. Line spacing: 1.5. Font-face and size: Calibri, Arial, or Times New Roman with 12-point (for body). Citations and referencing style: APA 6th Edition. See ECU Library Guide for APA 6th referencing style. Submission: Via Turnitin on Blackboard. Only one copy of the report should be submitted for every group.

len2142717

10/16/2018 10:21:45 PM

Note: Each ratio does not sit in a vacuum. One ratio is interlinked with other ratios of different categories. Therefore, you may need to draw in more than 2 ratios in each category to provide substantive reasons and discussions. Industry average and competitors’ data also form a good platform to put your discussion into perspective. For example, a large difference between current ratio and quick ratio can be explained by inventory build-up. This can be confirmed by looking at inventory turnover (in days) which is longer compared to its competitors or the industry average. In that case, it could mean the company has difficulties to attract customers, which can also explain why it provides a longer credit term (receivable turnover).

len2142717

10/16/2018 10:21:38 PM

You may need to calculate more than 2 ratios to provide substantive reasons and discussions for the trend captured in a ratio. For example, a steady increase in revenue over a 5-year period can be explained by a rapid expansion of the company. However, revenue per store indicates a negative growth which can be detrimental for the company. This revenue per store is a ratio that is not readily available and will have to be calculated manually.

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