Accounting and Finance - Financial Position of a Real Corporate Entity - Investigate and Analyse the Financial Performance - Report Assessment Answer

Internal Code: 1AHGCI

Accounting and Finance Assessment Answer

Assignment Task: Purpose The major assignment creates a contextual link between theory and practice by requiring you to apply concepts from the unit to investigate and analyse the financial performance and financial position of a real corporate entity. You are required to: A. Team Formation (internal students) The major assignment must be completed in pairs or a team of three. B. Teamwork (internal students) You should avoid simply allocating tasks within the major assignment, working on them individually and then collating the work of each team member. You should instead work collaboratively on each aspect of the assignment, ensuring that you: (i) plan your approach together, (ii) discuss, debate and share ideas and (iii) collaboratively edit and refine your report. C. Select a Company to Analyse Your team must select a company to analyse. You may choose any publicly listed company (i.e. a company listed on a stock exchange) but, due to different terminology and reporting periods used in other countries, you are encouraged to select an Australian company to analyse. D. Financial Statement Analysis Your team is required to: 1. Use the company’s annual report and other relevant research to discuss the state of the industry in which the company belongs, outline the Chairman’s outlook for the future (contained within the Chairman’s Report) and provide your own opinion of the company’s prospects. 2. Perform horizontal and vertical analysis on both the income statement and balance sheet; 3. Based on your horizontal and vertical analysis, select two accounts from the income statement and two from the balance sheet that are of interest to you (e.g. they have increased or fallen sharply compared to previous years, they are very significant compared with other income statement or balance sheet accounts). Explain why you have selected these accounts and discuss why they are significant (e.g. what may have caused them to increase or decrease compared to previous years); 4. Calculate (or take from the database), analyse and comment on the following ratios based onb your company comparative financial statement; and another company in the same industry for benchmark. Note that you can choose different ratios that suit your company’s industry sector. i. Profitability Ratios a. Gross Profit Margin b. Profit Margin c. Return on Assets d. Return on Owner’s Equity ii. Liquidity and Operating Capability Ratios a. Current Ratio and Quick Ratio b. Inventory Turnover or Accounts Receivable Turnover iii. Financial Ratio a. Debt to equity ratio iv. Market Performance Ratio a. Earnings per share 5. Using the ratios you have calculated, prepare a written summary of your financial analysis (i.e. what are the company’s financial strengths and areas of concern).

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