ACC8105 : Financial Statement Analysis - Finance Assignment - Audit Report

Internal Code: MAS3328

Finance Assignment Help

Audit Report To calculate the ratios required below, please use the ratio formats discussion in seminars and workshops questions. Please write your answers based the ratios and the trends in these ratios. 1. Use the Gross profit from continuing operations on page 56 of the report to calculate the gross profit margin ratio for 2015 and 2016. Is the level of profitability of Woolworths acceptable to you; if so, why, or if not, why not (e.g., what change(s) has to cause this impact on Income and expenses)? 2. Use the Profit from continuing operations before income tax expense on page 56 of the report to calculate the net profit margin ratio for 2015 and 2016. Is the level of profitability of Woolworths acceptable to you; if so, why, or if not, why not (e.g., what change(s) has occurred in the operating expenses and impairment expenses to cause this impact on this year’s profit figure)? 3. Use the Total current assets and the Total current liabilities (and the items within these categories where relevant) on page 56 of the report to calculate the (1) current ratios and (2) quick (acid test) ratios for 2015 and 2016. . Is the level of liquidity of Woolworths acceptable to you; if so, why, or if not, why not (e.g., what change(s) has occurred in the current assets to cause this impact on this year’s liquidity)? Have recent events with Masters Home Improvement has an impact. 4. Use the Total current assets and the Total current liabilities and the items within these categories expense on page 26 of the annual report for Reece Limited Group to calculate the (1) current ratios and (2) quick (acid test) ratios for 2015 and 2016. 5. Use the relevant information on pages 56 and 58 for the annual report of Woolworths and pages 25 and 26 of the annual report for Reece Limited Group to calculate the (1) Days’ Sales in Inventory, (2) Inventory Turnover, and (3) Inventory Turnover in Days. You note that Woolworths operate every day except Christmas day and Good Friday from 8 am to 9 pm Mon day to Friday, with a 5.30 pm closing times on Saturday and Sunday. Reece operates only Monday - Friday 08:00 am - 04:30 pm, Saturday 08:00 am - 12:00 pm. For comparison consistency, you decide to use 365 days as the operating period for the denominator of any calculations for both companies. 6. Use the ratios you calculated in requirement 3, 4, and 5, explain the difference in the level of liquidity of Woolworths compared to Reece Limited Group. Provide an explanation in your report to the board of directors why the level of liquidity of Woolworths acceptable to you; if so, why, or if not, why not acceptable to you. 7. Use the information on page 58 to calculate the debt to equity and debt to total assets for 2015 and 2016. Is the level of long-term solvency of Woolworths acceptable to you; if so, why, or if not, why not? (e.g., impact of changes in debt, assets and/or equity levels)?