Accounting For Business Decisions Assignment T1 2015

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HI5001 Accounting for Business Decisions (T1, 2015)

Group Assignment (30% of Final Mark)


The assignment aims to develop an understanding of financial statements structure and their use
in decision-making. The task is to choose a publicly listed company from the Australian Stock
Exchange (ASX) which should be approved by your lecturer as not to have the same
companies from other groups and analyse the financial statements.
The assignment has two parts namely Part A (46 marks) & B (54 marks). This group project in
itself includes several assignments, each of which comprises a part of the students task.
However, it is well encouraged to include any additional information that students may think will
be useful in conducting financial statements analysis of the selected company.
General Rules and Requirements:
The report should be prepared by a group with a maximum of four (4) members. Reports must
be confined to 3,000 words (+/- 5%). For Part A, a title page, table of contents page (based on
your report headings), introduction, conclusion and references should be included. Font type
should be Arial (size 11), paragraph spacing should be 1.5. For part B, read and follow the
instructions mentioned.
The Safeassign maximum matching percentage allowed is 20%. If the group exceeds the
maximum, the assignment will get an automatic 50% deduction.
Note: Any additional material from external sources that you copy and paste into your report is
NOT included in the word limit. Also, ensure it is appropriately referenced.
PART A:
Part A1

(6 marks)

Provide an executive summary of your companys background relating to business structure,


operations, services and all other business activities that are conducted, etc.
Part A2

(10 marks)

Use the annual report for the year ending 2013 & 2014. Your group will need to review the
major sections of this report in order to familiarize yourselves with the content of each of the
financial statements and appropriate notes to the financial statements.
Review the balance sheet of the company and indicate the amount of the following:
a) Total current assets
b) Total non-current assets
c) Total current liabilities
d) Total non-current liabilities
e) Total stockholders equity
Compare the above figures with the previous year and compute the percentage increase or
decrease and comment on the comparative financial condition of the company.

Part A3

(10 marks)

Review the income statement and indicate the following:


a)
b)
c)
d)
e)

Total (operating) revenues


Cost of Goods Sold (if relevant)
Total expenses (before income taxes)
Any non-operating (or extraordinary) gains and losses
Earnings per common share

Compare the above figures with the previous year and compute the percentage increase or
decrease and comment on the comparative financial operation of the company.
Part A4

(10 marks)

Review the statement of cash flows for the most recent year and indicate the
following:
a)
b)
c)
d)

net cash inflow (outflow) from operating activities


net cash inflow (outflow) from financing activities
net cash inflow (outflow) from investing activities
net increase (decrease) in cash during the year

Analyse the Cash Flow Statements for the last 2 years and comment on the cash
position of the company.
Part A5

(10 marks)

Review the stockholders' equity section in your chosen company's most recent year-end
balance sheet and compare that with the previous year-end balance sheet. Compare percentage
increase or decrease.
List the stockholders' equity account balances and number of outstanding shares
from these two balance sheets and compute the increase or decrease for each
during this past year.

Part B Financial Ratios

(54 marks)

a) Using the same Financial Statements of the company your group has chosen, determine
the profitability, activity, liquidity and leverage using all the ratios below. Use the end of
the year financial statements. (14 marks)
b) Give a 300 word analysis for each of the following:
I.
Profitability (10 marks)
II.
Activity (10 marks)
III.
Liquidity (10 marks)
IV.
Financing (10 marks)

Ratio Calculations
Ratio

Numerator

Denominator

A. Profitability ratios
a)
b)
c)
d)
e)

Return on equity
Return on assets
Profit margin
Cash flow to total assets
Price-to-earnings ratio

Operating profit after tax


Operating profit after tax
Operating profit after tax
Cash provided by operations
Market price per share

Shareholders equity
Total assets
Sales/Revenue
Total assets
Earnings per share

B. Activity (turnover) ratios


a) Total assets turnover
b) Debtors turnover
c) Days in debtors

Sales
Credit sales
365

Total assets
Average trade debtors
Debtors turnover ratio

C. Liquidity ratios
a) Current (working capital) ratio Current assets
b) Quick ratio
Cash + Accounts receivable +
Short-term investments
c) Interest coverage ratio
Earnings before interest & tax

Current liabilities
Current liabilities
Net interest expense

D. Financing ratios
a) Debt-to-equity ratio
b) Debt-to-assets ratio
c) Leverage ratio

Total liabilities
Total liabilities
Total assets

Total shareholders equity


Total assets
Total shareholders equity

Due Date:
Friday 29th May, 2015. Dont forget to upload the softcopy to the Safeassign
both self-check and final submission, one per group. In the safeassign, please
identify the assignment by the student number. Do not upload more than one
copy. Attach the first page of the final safeassign report to the assignment
after the official cover page. The Lecturer will give the instructions where the
hard-copy should be submitted.

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