Assignment

You will see you have been allocated a company name. You must only use the company you have been allocated.

• Access the annual reports for your allocated company for the years 2018 and 2020 in the Assessment folder of the MySCU unit site. The annual reports provided will give you four years of financial statements for 2017, 2018, 2019 and 2020.

• You should only use the figures from the annual reports provided - do not access your reports or figures from any other source.

• Before you start analysing the financial information, undertake general background research on the company. (What does it do? Any significant events?). This background will help you contextualise your financial analysis. Reading the Chairman/Managing Director/CEO’s reports in each annual report will get you off to a good start with this.

• In your answers to Parts B and D, you should also refer to information in the company annual reports and/or financial press coverage to understand business events and activities that help explain your observations and evaluation of the financial information. Cite your sources.

• In your answers to Parts B and D, you may like to present tables, graphs or diagrams to help summarise and communicate your analyses. Ensure you briefly explain these, particularly what conclusions can be drawn from them to assist in evaluating the company.

• All parts will be marked using the rubric attached to the end of this document.

• Ensure you carefully follow these instructions and those in the parts below. If not, you may lose marks unnecessarily.

Required

A. Short answer questions

(i) Refer to the annual report for 2020 for your allocated company. What method of depreciation does the company use? What is the note number for where you have obtained this information?

(ii) What is an intangible asset? Provide two (2) examples of intangible assets for your allocated company from the 2020 annual report.

(iii) What is the difference between bad debts and provision for doubtful debts?

(iv) Does your allocated company have a provision for doubtful debts in the 2020 financial year and, if so, what is the amount of the provision? Where did you source this information in the annual report?

(v) Refer to the notes to the financial statements for your allocated company and provide four (4) examples of property, plant and equipment.

B. Cashflow Analysis

Analyse the Statements of Cash Flows of your allocated company for 2020 (comparing to 2019 where relevant). What are the major sources (inflows) and uses (outflows) from operating, investing and financing activities? You should also provide brief information about any significant business events and activities that help explain your observations from the cash flow statements and provide a conclusion evaluating the health of the company from a cash flow perspective. 

C. Calculation of Ratios

Calculate the following six (6) ratios for the three years 2018 - 2020 (2017 financial information will assist you in calculating averages, where necessary). You are to use only those ratio formulas that are contained within the unit resources; i.e. in the prescribed textbook and PERCI content.

1. Return on equity

2. Operating Profit Margin

3. Inventories turnover period

4. Current ratio

5. Debt to assets ratio

6. Interest cover ratio

For each of the ratios:

• write out the ratio formula that you used;

• provide the source (textbook, PERCI) for that formula;

• show the numbers that you used to calculate your answer. These numbers should only come from the financial statements or notes to the accounts, not earlier sections of the annual report; and

• show your answer. These should be given to two decimal places and given in a format that indicates whether it is in %, times, ratio or days.

D. Further Company Analysis

Based on the ratios over three years you have calculated, along with additional ratios available in your company’s folder on the ACC81210 MySCU site, analyse and evaluate the company’s profitability, efficiency, liquidity, financial gearing and investment performance. Ensure you also provide an overall summary that links together your major findings for each category of ratios.

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