Enero Group Limited - Marketing And Communication Services Provider

(Source: Annual Report, 2017;2016;2015). 

1. Plant and equipment are computed at cost less accumulated depreciation less impairment losses.
2. Depreciation is charged as per straight line basis.
3. Goodwill amount is measured at cost less impairment losses. Goodwill carrying amount has increased from 2016 due to acquisition of East wick Communications.
4. Other intangible assets other than goodwill amortised as per SLM basis over its useful lives.

• Statement of cash flows

(Source: Annual Report, 2017;2016;2015).

Comment: It has been observed from the above table that net income is very low as compared to operating cash flows. In other words, overall cash generated from operations is very high although profit after tax is very less because of incidental expenses occurred during the year.

(Source: Annual Report, 2017;2016;2015).

Comment: In year 2017, it has been observed that Enero group has acquired a business of AUD $ 6328000 and thus the amount of acquisition is highest among the three years.

• The most important source of financing is “interest bearing loans and borrowings”. The reason being that the amount has increased tremendously in 2017 from 2016. Further the group has paid dividend to equity shareholders due to which net cash used in financing activities has increased considerably.
• Overall cash and cash equivalents has decreased in 2017 in comparison to 2016 but had increased from 2015.

• Ratios
• Liquidity Ratios

1. Working capital/ current ratio:

                        (Source: Annual Report, 2017;2016;2015).

 Comment: It is seen from the above calculation that current ratio or working capital ratio of year 2017 is lowest than 2016 but more than 2015. In other words, group can easily pay off its current debts from short-term assets. Hence, liquidity performance of Enero group limited is sound. The trend is downward sloping in 2017.

* Average accounts receivable = (opening accounts receivable balance + closing accounts receivable balance)/2

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is upward sloping. Higher ratio is favourable. Higher ratio determines the efficiency of the company to collect its receivables more frequently.

Formula = 365/ Receivables turnover

(Source: Annual Report, 2017;2016;2015). 

Comment: It is seen from the above calculation that the trend is downward sloping which is good. Further it shows that in 2017 amount was collected from the customers much early than in 2016 and 2015. Therefore, it indicates a positive sign.

Inventory turnover:

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above table that Enero group has no inventories.

• Profitability Ratios

(Source: Annual Report, 2017;2016;2015)

Comment: It is seen from the above calculation that profit margin is less from 2016 but more than 2015. Trend is downward sloping. Further, the profitability position is not adverse but it is satisfactory.

Asset Turnover: 

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is adverse. This means that the Enero group is not using its assets efficiently.

 (Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is adverse. Thus, company is not earning effectively on its assets.

Formula as per Du Pont Equation= Net profit margin * Asset turnover ratio * financial leverage ratio

(Source: Annual Report, 2017;2016;2015).

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is adverse. Thus the company is not effectively meet its financial obligations. Thus, capital structure of the group should be taken into consideration.

• Long-term solvency ratios

(Source: Annual Report, 2017;2016;2015). 

Comment: It is seen from the above calculation that the trend is upward sloping which is adverse because it is considered as risky position. Thus, investors do not fund its capital due to bad performance of the company.

Interest Coverage ratio:

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is adverse. This means that group is making interest payments in 2017 but not better than 2016. The situation is average.

• Cash Flow Adequacy

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping but it is considered as average. This means that group is average in generating cash from operations.

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is categorized as unsatisfactory. This ratio determines the effectiveness of the company to transform company’s revenue into cash.

Free cash flows to assets:

(Source: Annual Report, 2017;2016;2015) 

Comment: It is seen from the above calculation that the trend is downward sloping which is categorized as unsatisfactory. This ratio determines the effectiveness of the company to transform company’s assets into cash.

Free cash Flow:

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that the trend is downward sloping which is categorized as unsatisfactory. This means that the group is not efficiently generating cash from its operations.

• Market Strength ratios

(Source: Annual Report, 2017;2016;2015). 

Comment: It is seen from the above calculation that the ratio is improving which is a positive sign. This ratio determines earnings covered from per share price.

(Source: Annual Report, 2017;2016;2015).

Comment: It is seen from the above calculation that dividend is declared only in 2017 which is a positive sign.

According to the analysis, the performance of the company is average in 2017 as compared to 2016. The profitability position is satisfactory. Therefore, the Enero group limited is not a strong performer.