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Evaluate long-term solvency of the company

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Reference no: EM13831352

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.

FINANCIALSTATEMENTANAYLYSIS--YOURCOMPANY

Companyname:

Companyticker:

Studentname:

 

Ratiosand OtherAnalysisMeasures

Year End (3years)

 

 

 

ROE andDuPontRatios

 

 

 

ROE  (NI/OEavg)

 

 

 

Profitability(NI/Sales)

 

 

 

Efficiency(Turnover =Sales/Assetsavg)

 

 

 

Leverage(Leverage=Assetsavg/OEavg)

 

 

 

 

AdditionalProfitabilityRatios

 

 

 

GrossProfitMargin%[(netRev-COGS) /netRevenue]

 

 

 

Selling General &Administration%(SG&A expense/netRevenue)

 

 

 

ImportantExpensePercentage*(ImportantExpense/netRevenue)

 

 

 

 

AdditionalEfficiencyRatios

 

 

 

ARTurnover(Sales/ARavg)

 

 

 

DaysReceivablesOutstanding(DRO)[ARavg/(Sales/365)]

 

 

 

Inventory Turnover(COGS /Inventoryavg)

 

 

 

DaysInventory (DI) [Inventoryavg/(COGS/365)]

 

 

 

APTurnover(Purchases/APavg)

 

 

 

DaysPayables Outstanding(DPO)[365 /(Purchases/Accts Payableavg)]

 

 

 

CASHCONVERSION CYCLE(DI-DPO +DRO)

 

 

 

PPETurnover(Sales/NetPPEavg)

 

 

 

 

AdditionalLeverageRatios

 

 

 

Debt-to-Equity(totalLiabilities /totalOE)

 

 

 

TimesInterestEarned(Earnings beforeInterestExpenseandTaxes /InterestExp)

 

 

 

ReturnonFinancialLeverage(ROE-ROA)

 

 

 

LTDebt-to-Assets(LTDebt,  includingcurrent portion/totalAssets)

 

 

 

 

Cash Liquidity and Cash Sources&Uses

 

 

 

WorkingCapital(CA-CL)

 

 

 

CurrentRatio(CA/CL)

 

 

 

QuickRatio [(Cash+STSecurities+AR)/CL)]

 

 

 

OCFCL(OperatingCF/CL)

 

 

 

OCFCX(OperatingCF/CapitalExpenditures)

 

 

 

Free CashFlow(CashfromOps -NetCap.Expend.)

 

 

 

 

 

Growth

 

 

 

Salesgrowth[(cynetRev-pynetRev)/ pynetRev]

 

 

 

NIGrowth[(cyNI-pyNI)/pyNI]

 

 

 

 

 

 

 

*Choosethemost"important"non-SG&Aexpense.

 

 

 

Reference no: EM13831352

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