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You need to choose a company that is currently listed on the ASX.

You are required to write a report interpreting the company’s most recent annual report. This report will need to be written for a potential investor.

You will also be required to source additional information about the company’s performance, for example, via credible articles that discuss the management of the company.

Please note that where the annual report may have both group and parent company financial statements, you should use the group financial statements.

It is important that you refer to financial analysis measures in your report. See “Workbook: The Tools we use”file which can be found in Supplementary Resources at the bottom of the subject resources page on the portal.This provides further elaboration and for examples of analysis measures that you can use. These can be selected from any analysis measures stated in the annual report and/or your own calculations based on financial statements in the annual report or those provided to you by your workshop leader. It is important to source financial information relevant to your stakeholder.

Gross Margin

The report is here is to analyse the financial position and performance of SEEK LIMITED so as to help the investor in making investment decision. SEEK is a top 100 company listed on Australian Securities Exchange. The company is in the business of online recruitment service provider. It was founded in 1997 in Australia with business operation spanning in 16 countries. The analysis here will be covering various components of financial statements and various significant ratios for the business. It is an attempt to cover internal and external factors that might have an impact on the business performance.

Gross Margin: The Company’s gross margin improved from 2012 to 2015 but it has been declining since. There is increase in direct cost of services still the company and the gross margin has declined over the years.

('$Mn)

2012

2013

2014

2015

2016

2017

Revenue

            445.2

        626.6

        724.2

        872.5

        965.4

     1,053.2

Direct cost

              35.4

          43.9

          29.2

          29.2

          42.0

           64.3

Gross margin

            409.8

        582.7

        695.0

        843.3

        923.4

         988.9

 

92.1%

93.0%

96.0%

96.7%

95.6%

93.9%

Return on Equity: It can be defined as the return which is expected on the investments which are made on equity share capital (Heikal, Khaddafi and Ummah, 2014). The company has a strong ROE position at 17.75% but has declined over the years.

Asset Turnover ratio: There has been a steady decline in asset turnover ratio implying that the company is not employing the assets efficiently. Higher assets turnover ratio is more favorable as it then shows that the business is using the assets effectively (Delen, Kuzey, and Uyar, 2013).

Debt/Equity ratio:

There has been reduction in debt-equity ratio over time

('$Mn)

2012

2013

2014

2015

2016

2017

Debt

            771.1

    1,296.6

    1,468.6

    1,800.9

    1,824.6

     2,039.9

Equity

            405.2

        550.6

        478.8

        900.8

        878.8

     1,093.1

 D/E

                1.9

             2.4

             3.1

             2.0

             2.1

             1.9

Below is the list of key ratios for the company.

2012

2013

2014

2015

2016

2017

Equity

A

771.1

1296.57

1468.6

1800.9

1824.6

2039.9

Average Equity

B

1033.85

1382.585

1634.75

1812.75

1932.25

Net Income

C

313.67

223.4

315.2

399.4

362

NOPAT

D

315.217

231.87

321.5

419.91

379.5

Sales

E

626.61

724.2

872.5

965.4

1053.2

NOA

F

975.4

1589.5

1636.4

2535

2429.3

2861.3

Average NOA

G

1282.425

1612.95

2085.7

2482.15

2645.3

ROE

H=C/A

24.2%

15.2%

17.5%

21.9%

17.7%

PM

I=D/E

50.3%

32.0%

36.8%

43.5%

36.0%

ATO

J=E/G

        0.489

        0.449

        0.418

        0.389

        0.398

RNOA

K=IxJ

24.58%

14.38%

15.41%

16.92%

14.35%

2012

2013

2014

2015

2016

2017

Cash & cash eq.

A

92.7

184.8

323

449.6

504.9

652

Av. Cash & cash eq.

B

138.75

253.9

386.3

477.25

578.45

Current Liabilities

C

223.4

356.86

284.8

599.4

575

550

Av. Current liabilities

D

290.14

320.83

442.1

587.2

562.5

Current Assets

E

320.88

446.1

642.2

737

841.9

Accounts Receivable

F

71.27

82.61

96.5

120.2

98.5

111.7

Av. Accounts rec.

G

76.94

89.555

108.35

109.35

105.1

EBIT

H

397.161

282.6

414.6

598.3

466.6

Equity

I

1296.57

1468.6

1800.9

1824.6

2089.9

Current ratio

J=E/C

        0.899

        1.566

        1.071

        1.282

        1.531

quick Ratio

K=(B+G)/D

        0.743

        0.719

        0.688

        0.797

        0.668

Cash Flow Ratio

L=A/C

        0.518

        1.134

        0.750

        0.878

        1.185

Operating Cash Flow Ratio

M=H/C

        1.113

        0.992

        0.692

        1.041

        0.848

SEEK was founded in Australia in 1997. The company’s growth since foundation can be defined in four phases (1. ANZ online employment marketplace; 2. International online employment marketplace and education; 3. Talent sourcing/placements; 4. Human Capital management). It now has operations in 16 countries. In 2017, the revenue in ANZ Employment and Zhaopin has increased by 14% and 13% respectively with EBITDA growth of 11% and 0% respectively. Whereas, the revenue has declined in SEEK Asia and Brasil Online by 1% and 5% coupled with reduction in EBITDA margins. This clearly indicates the company is not able to perform on international front. Substitutes to SEEK within this industry are quite limited but slowly growing. Printed media is slowly fading as the market turns more towards digital advertisements, thus giving the rise of other digital competitors.

SEEK has developed its aggregate obligation levels over the most recent a year, from AU$825.90M to AU$969.90M – this incorporates both the present and long haul obligation. With this development, SEEK as of now has AU$730.10M staying in real money and here and now speculations for putting into the business. Moreover, SEEK has produced money from activities of AU$280.40M over the most recent a year, prompting a working money to add up to obligation proportion of 28.91%, flagging that SEEK's obligation is fittingly secured by working money. This proportion can likewise be an indication of operational proficiency as a contrasting option to return on resources. For SEEK's situation, it can produce 0.29x money from its obligation capital (Boyd, 2018).

Conclusion:

Based on the ratios above it is not recommended to invest in the stock as the company’s position is not strong with respect to fundamentals over the past few years.

References

Boyd, J. (2018, May 31). What You Must Know About SEEK Limited’s (ASX:SEK) Financial Strength. Retrieved from Simpy Wall Street News: https://simplywall.st

Heikal, M., Khaddafi, M. and Ummah, A., 2014. Influence analysis of return on assets (ROA), return on equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current ratio (CR), against corporate profit growth in automotive in Indonesia Stock Exchange. International Journal of Academic Research in Business and Social Sciences, 4(12), p.101.

Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.

Cite This Work

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My Assignment Help. (2020). Financial Performance Analysis Of SEEK LIMITED For Investment Decision-Making (essay).. Retrieved from https://myassignmenthelp.com/free-samples/mba403-financial-and-economic-interpretation-and-communication/potential-shareholder.html.

"Financial Performance Analysis Of SEEK LIMITED For Investment Decision-Making (essay).." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/mba403-financial-and-economic-interpretation-and-communication/potential-shareholder.html.

My Assignment Help (2020) Financial Performance Analysis Of SEEK LIMITED For Investment Decision-Making (essay). [Online]. Available from: https://myassignmenthelp.com/free-samples/mba403-financial-and-economic-interpretation-and-communication/potential-shareholder.html
[Accessed 29 March 2024].

My Assignment Help. 'Financial Performance Analysis Of SEEK LIMITED For Investment Decision-Making (essay).' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/mba403-financial-and-economic-interpretation-and-communication/potential-shareholder.html> accessed 29 March 2024.

My Assignment Help. Financial Performance Analysis Of SEEK LIMITED For Investment Decision-Making (essay). [Internet]. My Assignment Help. 2020 [cited 29 March 2024]. Available from: https://myassignmenthelp.com/free-samples/mba403-financial-and-economic-interpretation-and-communication/potential-shareholder.html.

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