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ACC00724 Accounting for Managers, Assignment 1, S2 2018 Page 1 of 1 ACC00724 (Accounting for Managers) S2, 2018 ASSIGNMENT 1 (20 MARKS) In gradebook you will see a section “Company number” with a...

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ACC00724 Accounting for Managers, Assignment 1, S2 2018 Page 1 of 1 ACC00724 (Accounting for Managers) S2, 2018 ASSIGNMENT 1 (20 MARKS) In gradebook you will see a section “Company number” with a number between 1 and 6. This is the number of the company that you are allocated for this assignment. 1. Aristocrat Leisure Ltd (ALL) http://www.aristocrat.com 2. Bega Cheese Ltd (BGA) http://www.begacheese.com.au 3. Cash Converters International Ltd (CCV) http://www.cashconverters.com 4. JB Hi Fi Ltd (JBH) http://www.jbhifi.com.au 5. Retail Food Group Ltd (RFG) http://www.rfg.com.au 6. Woolworths Ltd (WOW) http://www.woolworthsgroup.com.au Required: A. Access the annual reports for your allocated company for the years 2013, 2015 & 2017. These reports are usually available on the company’s website under “Investors”. Alternatively, if you cannot locate each of the years, you should be able to access them at asx.com.au. B. The annual reports will provide you with six years of financial statements for 2012, 2013, 2014, 2015, 2016 & 2017. C. Prepare a horizontal analysis of the Income statement for the five years XXXXXXXXXXComment on the changes over the five years. (Approximately 300 words) (5 marks) D. Calculate the following ratios for the five years XXXXXXXXXXfinancial information will assist you in calculating averages, where necessary). 1. Return on total assets (not in text - search in Google and cite your findings) 2. Rate of return on ordinary equity 3. Operating profit margin 4. Gross profit Margin 5. Inventories turnover period 6. Settlement period for debtors 7. Current ratio 8. Quick ratio (acid test ratio) 9. Debt to assets ratio (not in text - search in Google and cite your findings) 10. Interest cover ratio (Times interest earned) 11. Assets turnover (not in text - search in Google and cite your findings) 12. Earnings per share 13. Price-earnings ratio (refer to Blackboard for stock price history for five years). 14. Dividend yield (refer to Blackboard for the dividend history for five years). (7 marks) E. Given the ratios over five years, comment on the company’s profitability, efficiency, liquidity, financial gearing and investment ratios. Approximately 1,000 words. (8 marks) Note: You may also refer to coverage in the financial press that is related to your company. This might help you in an evaluation of the company - please cite your sources!
Answered Same Day Jul 18, 2020 ACC00724 Southern Cross University

Solution

Shakeel answered on Jul 22 2020
140 Votes
Introduction
Bega cheese is an Australian dairy company based in South Wales. It was started functioning in 1899 but became public limited company in 2011 when its stocks first listed on Australian stock exchange. It is one of the largest Australian dairy companies in Australia with cu
ent valuation of 1.57 billion. Half of the Bega’s revenue comes from the retail cheese and powdered cheese products while rest half comes from other core dairy ingredients like powdered milk, cream cheese etc. Bega’s cheese covers almost 16% cheese market in Australia. Its product is not only consumed in Australia and New Zealand but also exported to 40 different countries.
A glimpse of financial position of Bega is given in the following table -
    market cap
    1.25 Billion
    Enterprise value
    1.57 Billion
    Revenue
    1.31 Billion
    Profit margin
    10.96%
    Return on Assets (ROA)
    4.13%
    Return on Equity (ROE)
    29.63%
    Beta
    1.37
    P/E ratio
    7.94
    Dividend yield
    1.84%
    Dividend payout ratio
    13.24%
    Growth rate
    21.89%
Source: http:
au.finance.yahoo.com
The stock price movement over past five years can be observed in the following graph -
Horizontal Analysis
Financial statement analysis is all about analyzing the different components of financial statement to know the strength and weakness of the firm. Horizontal analysis is one of the tools financial analyses. According to Ravindra & Anitha (2013), “It is the analysis of changes in different components of the financial statements over different periods with help of a series of statements. Such an analysis makes it possible to study periodic fluctuations in different components of the financial statements.”
For Bega Cheese Company, the horizontal analysis has been done over the past five years from 2013 to 2017. The analysis reveals that the revenue growth is 8.95% in 2013 that reduces to 4.12% in 2015. Further it rises to 7.46% in 2016 but significantly declines to 2.59% in 2017. The similar fluctuations are thus observed in gross profit. Sales, general and administrative expenses reports highest growth of 238.60% in 2013 but merely 0.52% and 10.82% in 2014 and 2015. In 2016, there is negative growth of 66% but again in 2017, the growth rate astonishingly surges to 237. Thus, there is mixes reflection of ups and downs in CAGS items.
On considering other operating expenses, the growth in total operating expenses reduces from 146% in 2013 to 0.93% in 2014 but again marginally rises to 9.72% in 2015. In 2015 and 2016, operating expenses reduce drastically with negative growth rate of 122% and 1067%. Consequently, operating income’s growth rates are 24% and 18.37% in 2014 and 2015 but -276% in 2016 and -266% in 2017.
Earnings before income and taxes (EBIT) reports 20.7% growth in 2013 that further rises to 168.6% in 2014. In 2015, it declines by 83% but again there are 150% and 395% growth in 2016 and 2017. Similarly, the net income grows by 13.6% and 164% in 2013 and 2014 but declines by 81.8% in 2015. Again, net income rises by 150% and 395% in 2016 and 2017.
Thus, there is a significant fluctuation in business operation, making revenue and income. Company performs poorly in 2014 and 2015 but then improves its position in subsequent years.
Ratio Analysis
Ratio Analysis is one of the most efficient and widely accepted tools of financial analysis of any firm. Different...
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