Highlights
Go to the website for your allocated company and obtain the Income Statement and Balance Sheet for the company for the 2014/15 (Year 0) and 2016/17 (year 3) financial years. You will find this information in the relevant Annual Reports. I have provided links to some of these Reports.
1. Based on the information contained in these statements calculate for each company for the relevant financial years. You must show the formula used and your calculations.
a. The Net Profit Margin;
b. Current Ratio;
c. Inventory Turnover;
d. Asset Turnover Ratio;
e. Leverage Ratio;
f. Return on Equity;
g. Return on Total Assets;
h. Earnings per share (EPS);
i. Net Debt to Equity Ratio; and
j. Total Return to Shareholders.
2. Demonstrate and explain what would happen to the 2017 Return on Equity and the Net Debt to Equity Ratios if your allocated company just prior to the end of the 2017 financial year raised an additional $200 million loan from the bank, which it invested entirely in new plant and equipment. Assume that the immediate effect on sales and net profit was zero.
3. Using the ratios calculated in Task 1 of this case study, compare and contrast the financial performance of the companies over the period of your analysis.
4. Use your analysis of the financial performance of the companies over the past 3 years to explain any differences in the Total Return to Shareholder between the companies over the past 3 years.
5. Compare and contrast the current market value of each company. Use the ratios you have collected, other information from the media to provide observations about the value of these companies (i.e. cheap or expensive?)
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