Swinburne Online

Teaching Period 1, 2021

ACC10007 – Financial Information for Decision Making

Assignment 3: Company Analysis Report

Due date: Monday 9th May 2021

MYER HOLDINGS LIMITIED

Group A

Student Name: Student ID:

Lauren Walsh 102694104

Ashmini Fernando 102655800

Georges Monty 102516075

Nyssa Lauritsen 103325926

Table of Contents
Executive Summary......................................................................................................3

Company and Industry Background..........................................................................4

Analysis and interpretation of financial ratios..........................................................5

Profitability................................................................................................................................5

Liquidity.....................................................................................................................................5

Efficiency...................................................................................................................................5

Gearing/solvency......................................................................................................................5

Analysis and interpretation of Cashflow Statements..............................................6

Assessment of other relevant information................................................................7

Summary and Conclusion............................................................................................8

References......................................................................................................................9

Appendices...................................................................................................................10

Appendix 1. Team Contract and Team Contribution Worksheet...................................10

Appendix 2...............................................................................................................................17

a) Profitability..........................................................................................................................17

b) Liquidity...............................................................................................................................18

c) Efficiency.............................................................................................................................19

d) Gearing/Solvency...............................................................................................................19
Executive Summary

 A brief discussion of the aim and scope of the report.

 A brief discussion of the company.
 A brief discussion of key findings and recommendations.

The following report includes a financial analysis and evaluation of the performance
of Myer Holdings Limited over a three year period, from 2017 to 2019. This report will
discuss the company and industry background, an analysis of profitably, efficiency,
liquidity, gearing and cashflow and an investigation into other relevant influences
affecting company performance.

All ratio calculations and related figures are included in the appendices. The results
of the analysis of data indicate that Myer Holding Limited is performing …...

Areas of improvement include....

Limitations of the following report include, but are not limited to, outdated figures
provided, therefore the analysis is on past performance. In addition, the effects of the
current global pandemic, COVID 19, on current company performance are not
reflected and are undiscussed.
Company and Industry Background
Brief company profile of Myer Ltd – include its history, financial highlights, and other
relevant company information such as when and where it started operations; any
major expansions and acquisitions from then to now; types of products/services it
offers, significant business relationships. • Industry – includes identifying which
industry it operates in, an understanding of the state of the industry and identifying
major competitors. • History should include: when and where it started operations, by
who, major expansions and acquisitions from then to now, types of products and
services it offers, significant business relationships, and when it listed on the stock
exchange. • Listed on the ASX as MYR • Revenu generated through 6160
department stores throughout Australia. • Product range is divided into 5 segments:
Fashon, Beauty, Homewares, Electrical and Toys. • Own and operate designer
brands; sass & bide, Marcs and David Lawrence, • 45 sass & bide boutiques located
in Australia and New Zealand. • Operates MYER One loyalty rewards program. Myer
Holdings Limited (MYR) is an Australian department store, currently generating
revenue through 6160 stores across Australia. (Myer 2020). MYR’s extensive product
range can be categorised into 5 segments, including, fashion, beauty, homewares,
electrical, toys and toysgeneral merchandise. MYR distributes national brands,
Australian and international designers and ‘Myer Exclusive Brands’. MYR offers a loyalty
rewards program. MYER One Loyalty Program offers shopping credits and a tiered
level rewards system based on annual spend with Myer. This rewards system
currently has more the 5 million membership cards in circulation Myers online
business is a valuable assets, that continues to expand and grow, and currently ranks
as the third largest ‘store’ by sales revenue (Myer 2018).

Myer Holdings limited is one of the largest department stores in Australia

which provide a range of products categories including womenswear, menswear,
children wear, beauty, electrical goods and etc. The Company owns approximately
60 retail stores across Australia. Myer Holdings Limited controls has several
subsidiaries. Those subsidiaries are,

 Myer Party Limited

 NB Elizabeth Pty LTD
 NB Russell Pty Ltd
 Warehouse Solutions Pty Ltd
 Myer Group Finance Limited
 Myer Group Pty Ltd
 Myer Travel Pty Ltd.
In addition to their department stores, the Company generate revenue through
its subsidiaries. According to the profile of the Myer Holdings Limited, they have a
business plan which mainly focus the customers. That is called as “customer first
Plan”. The values of their customer first plan are as follows.
 Customers come first
 Own our future
 Do what’s right
 One inclusive team
During the year 2018 the company was able to win the “Roy Morgan” annual
customer satisfaction awards for the department stores.
Furthermore, when analysing the financial statements of the Company, it
shows the strong financial stability.

Analysis and interpretation of financial ratios

 Based on the financial reports and other information, undertake financial

statement analysis and interpretation that covers the prior three financial
years ending 30 June 2017, 2018 and 2019, concentrating on the following
aspects:
 Profitability
o Efficiency
o Liquidity
o Gearing/Solvency
o Please note that analysis does not mean just restating the ratios or
their formulas you need to discuss the implications!
o Your analysis should incorporate benchmarking such as
comparison to competitors and industry averages.

Profitability

Liquidity
Efficiency
Efficiency Ratios
Calculation of efficiency ratio help to determine how the assets of the Company are
used to generate income. There are several of efficiency ratios including inventory
turnover, settlement period for accounts receivables, settlement period for accounts
payables and assets turnover and the calculation of those efficiency ratios are as
follows.
Inventory Turnover Ratio
Inventory Turnover ratio = Cost of Sales / Average inventory
** In terms of calculating the average inventory following formula is used.
Average Inventory = (Inventory at the beginning of the year + Inventories at the end
of the year) / 2
2017
1,421, 394 / ((372,374 + 396, 297)/2) = 3.70 Times
2018
1, 387, 903 / ((366,839 + 372, 374)/2) = 3.76 Times
2019
1,336,194 / ((346,940 + 366,839) / 2) = 3. 74 Times
Settlement period for Accounts Receivables
Trade Receivables Collection Period = Average Trade Receivable / Credit Sales
*365
2017
= [((5,586 + 11,565) /2) / 3,201, 866] * 365
= 0.98 Days
2018
= [((4,218 + 5,586) / 2) / 3,100,554] * 365
= 0.57 Days
2019
= [((9,512 +4,218) / 2) / 2,991,795] * 365
= 0.83 Days
Trade Payables Payment Period
Trade Payable Payment Period = (Average Trade Payable / credit purchases) *365

2017 2018 2019

Cost of Sales 1,421, 394 1, 387, 903 1,336,194
Opening Stock 396, 297 372,374 366,839
Closing Stock (372,374) (366,839) (346,940)
Purchases 1,445,317 1,393,438 1,356,093

2017
= [((188,511 + 181,917) / 2) / 1,445,317] * 365
= 47 Days

2018
= [((189, 989 + 181,917) /2) / 1,393,438] *365
= 49 Days

2019
= [((187, 570 +189,989)/2) / 1,356,093] *365
= 51 Days

Analysis of efficiency ratios

By looking at the efficiency ratios, it can be seen that the cash cycle of Company is
strong. The reason is that the trade receivable collection period is very shorter while
the trade payable settlement period is longer. This implies that the Company has
sufficient liquidity for paying the trade payables. Usually, a shorter trade receivable
period is acceptable while receiving the longer payment period from the suppliers.
The Company will be able sufficient cash and cash equivalents at the available due
to this efficiency in the cash cycle.
But the inventory turnover is relatively less in the Company, and this implies that
money is blocked in the inventories. When analysing the current assets of the
Company, it can be seen that a huge amount of investment is made in the
inventories which is essentially a cost for the Company.
Therefore, even though the Company has very efficient trade receivable
management, they will not take the benefit of it since the inventories are blocked in
the Company. This will create more problems for the Company in relation to its
liquidity since the inventories are not liquidity in nature.
Gearing/solvency
Analysis and interpretation of Cashflow Statements

 Your analysis should also include a review of Myer Ltd’s operating,

investing, and financing cash flows over the prior three years.
Consider absolute figures, trends and any relevant ratios to assist your
analysis.
Assessment of other relevant information

 An assessment of other information including non-financial that is relevant

to the assessment of Myer Ltd. For example; global events, industry
developments and issues, unusual or one-off events, structural changes to
the company such as changes in board composition, mergers or
acquisitions, economic factors and any other relevant issues which may
potentially impact on the operations of the company.

 Consider also its environmental and social performance.

Summary and Conclusion

 Based on your analysis and findings, summarises Myer Ltd’s current

financial situation, consider its potential outlook and make any
recommendations.
References

Myer 2020, Myer Annual Report 2020,

<https://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/M
yer_Annual_Report_2020.pdf>
 Appendices

Appendix 1. Team Contract and Team Contribution Worksheet

1. Team name
Our team name is: Team A

2. Team members
Please complete for all team members.

Name: Email: Phone Core strengths

number:

Lauren [email protected] 61402550474 Essay writing,

Walsh .au editing, time
management.

Ashmini [email protected] 94760429439 Time

Fernando .au management,
Flexible with work

Georges [email protected]. 61401057865 Numerical, data

Monty au driven and
technical
background.

Nyssa [email protected] 61427552358 Flexible work,

Lauritsen .au research, business
operator

3. Team goals
Our team goals are:
 Distinction standard assessment – achieve 70% grade or higher
 Complete assessment task on time
 Ensure all marking criteria has been addressed to highest standard

4. Team expectations and agreements

Please discuss as a team and complete the following three items below
All team members commit to being good team members and working as a great team by:
 Ensuring clear communication between team members
 Setting expectations and holding ourselves and each other accountable
 Dividing work fairly and equally contributing

During team meetings with team time we expect team members to:
 Contribute thoughts/ideas to all aspects of assignment
 Ensure all team members have a clear understanding
 Support each other if/when needed

With regard to all assignment work we expect team members to:

 Produce work that is of high quality
 Be available to communicate and participate when required
 Complete sections before due date so information can be collated and reviewed

5. Team contribution and rationale

The team assignment requires your team to complete the following table listing the team
members who contributed, and the agreed level of contribution by all team members.
If all team members contribute equally, it is assumed the level of contribution would be
listed as 100%.

Team member name Level of contribution (0– Comments

100%)

Lauren Walsh

Ashmini Fernando

Georges Monty

Nyssa Lauritsen

How does your team agree to attribute level of contribution by team members?
For example, your team might map out what 0%, 25%, 50%, 75%, or 100% contribution
means to your team.

Level of contribution Agreed meaning of contribution (actions,

behaviours, outputs)

100%

75%

50%
 25%

0%

How will your team manage any conflict around this process?
 Team contribution table conversation worksheet
Activity 1A: Level of confidence
On a scale of 1–10 please rate (individually) how confident you feel in working together as
a team using the team contribution table (where 10 is the maximum level of confidence you
can feel).

1 2 3 4 5 6 7 8 9 10

Lauren: 8
Ashmini:
Georges:
Nyssa: 8

Activity 1B: Exploring team strengths

As a team, discuss individual ratings, and in particular explore why N and not N-1. For
instance, a team member may have listed they feel a ‘6’ level of confidence. In this case
the conversation is to explore why do you feel ‘6’ instead of ‘5’? What are the strengths,
resources, abilities that help you to be at the rating you have chosen? As a team, make a
list of these strengths below.
Lauren: experience with completing team assignments, organised, wants to contribute fairly
and produce a high quality of work, committed to delegating time to the completion of
assignment before the due date, willingness to communicate openly and offer feedback and
support to team
Ashmini:
Georges:
Nyssa: organised, wish to contribute my share before due date. Happy for open
communication happy to complete what is required to get the assignment completed 1 week
before the due date.

Activity 1C: Exploring 10

As a team, discuss what it would mean for the whole team to be at 10—the highest level of
confidence in using the team contribution table. What would this mean for your team? What
would your team be seeing, hearing, feeling with this level of confidence? Make a list of
these attributes below.
Lauren: for our team to be completely confident working with one another, we would all need
to be contributing equally, participating in team meetings and communicating regularly,
producing work of a high standard, supporting one another and offering any individual ideas
or expertise.
 Activity 1D: Exploring a small step improvement
Individually, imagine that you take a step and whatever your confidence rating of using the
team contribution table was, it is now one notch higher—closer to 10. Discuss as a team
what would help you each individually to feel one step more confident in working together.
Make a list below of what these items are.
Please write your answer here
Team conversation worksheet
Activity 2A: Defining agreed meanings of contribution
Having discussed how your team can work confidently with the team contribution table, the
final step is for your team to discuss, define and agree on the meaning of the differing
levels of contribution. Following the different bands (100%, 75%, 50%, 25%, and 0%),
discuss as a team what your expectations are regarding actions, behaviours and outputs
for each of the contribution levels. Aim to be as specific and concrete as possible.
For example: How many team meetings do you expect team members to attend? How
many meetings do you expect team members to attend? What responsiveness to emails
do you expect for planning team meetings and other important work?
Remember that this will be a living document for your team to update as the Teaching
Period proceeds and as your team learns through experience.

Level of contribution Agreed meaning of contribution (actions, behaviours,

outputs)

100% Individual has demonstrated a significant amount of time

devoted to the assignment
Individual has actively contributed to all areas of
assignment with a positive attitude
 Individual has attending 90% of team meetings
 Individual has had a high level of responsiveness to
emails and Microsoft team chat conversations
 Individual has offered constructive feedback and
supported team members
 Individual has completed delegated area of work in
the agreed timeframe
Individual has produced work that is of high quality

75% Individual has demonstrated a reasonable amount of time

devoted to the assignment
Individual has contributed to areas of assignment with a
positive attitude
 Individual has attended 75% of team meetings
 Individual has had a reasonable level of
responsiveness to emails and Microsoft team chat
conversations
 Individual has offered constructive feedback and
supported team members
 Individual has completed delegated area of work in
a suitable timeframe
Individual has produced work that is of acceptable quality

50% Individual has demonstrated a small amount of time

devoted to the assignment
Individual has contributed to some areas of assignment
 with a positive attitude - team meetings/conversations,
offered feedback, supported team members, completed
delegated area of work in a suitable timeframe
Individual has produced work that is of below average
quality

25% Individual has demonstrated an inadequate amount of

time devoted to the assignment
Individual has contributed to some areas of assignment
with a positive attitude
Individual has not completed delegated area of work in a
suitable timeframe
Individual has produced work that is of acceptable quality

0% Individual has demonstrated no time devoted to the

assignment
Individual has not contributed to all areas of assignment
Individual has not produced work

How will your team manage any conflict around this process?
Our team will manage conflict around this process by maintaining regular open productive
communication with team members. We will be continually updating one another in regard to
what we are working on and if we have any issues or concerns. We will be holding one
another accountable and setting clear expectations of individuals and the team. If any
serious problems or issues arise we will be seeking advice from the ELA.
Appendix 2.

a) Profitability
b) Liquidity
c) Efficiency
 Current Ratio
 Quick Ratio
 Cash Flows from Operations

d) Gearing/Solvency
 Debt Ratio
 Debt to Equity Ratio
 Equity Ratio
 Interest Coverage