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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...

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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 evaluation of the company - please cite your sources!

ACC00724 Accounting for Managers, Assignment 1, S2 2018 Page 1 of 1

Answered Same Day Aug 11, 2020 ACC00724 Southern Cross University

Solution

Aarti J answered on Aug 12 2020
145 Votes
Financial Analysis of Cash Converters Ltd
Course Name
Course Date
Student’s Name
Financial Analysis of Cash converters
Introduction
Cash converters international limited is a company which is listed at the ASX and is a leading company in the retail and the financial services stores. In this project we will do the financial analysis of the company from different perspectives like its performance, its profitability and performance over the last five years.
Horizontal Analysis
    Horizontal Analysis
    
    2017
    2016
    2015
    2014
    2013
    Continuing operations
    
    
    
    
    
    Franchise fee revenue
    -6.98%
    55.93%
    -1.54%
    4.93%
    -1.57%
    Financial services interest revenue
    -17.78%
    -10.61%
    17.05%
    70.67%
    -99.87%
    Sale of goods
    3.56%
    -38.68%
    7.78%
    20.64%
    6.65%
    Other revenues
    -32.69%
    19.82%
    0.88%
    -64.25%
    5.90%
    Total revenue
    -12.43%
    -17.31%
    13.03%
    21.61%
    16.37%
    Financial services cost of sales
    -21.97%
    
    
    
    
    Cost of goods sold
    6.39%
    
    
    
    
    Other cost of sales
    3.81%
    
    
    
    
    Total cost of sales
    -10.34%
    -21.21%
    16.48%
    26.24%
    22.53%
    Gross profit
    -13.56%
    -15.02%
    11.11%
    19.17%
    13.37%
    Employee expenses
    2.32%
    -18.23%
    12.41%
    25.54%
    -16.51%
    Administrative expenses
    -6.22%
    
    
    
    
    Advertising expenses
    -14.11%
    70.44%
    -3.68%
    50.30%
    7.79%
    Occupancy expenses
    -3.86%
    -28.57%
    7.74%
    29.80%
    18.07%
    Other expenses
    -42.94%
    -26.89%
    
    -100.00%
    5.60%
    Finance costs
    -2.64%
    6.47%
    5.77%
    194.24%
    22.07%
    Share of net profit / (loss) of equity accounted investments
    -85.44%
    2853.42%
    -278.05%
    
    
    Profit before income tax
    -9.54%
    -288.06%
    -151.73%
    -32.78%
    15.06%
    Income tax expense
    43.64%
    3.29%
    -53.16%
    -26.27%
    23.19%
    Profit for the year from continuing operations
    -20.38%
    219.41%
    -202.62%
    -35.71%
    11.74%
In the horizontal analysis, we analyse and compare the cu
ent year results with the previous year. So, the change is calculated as
Change = (P1-P0)/P0
Example: For calculating the changes in the total revenue for year 2013 we will calculate it as:
Change in total revenue in 2013 = Total revenue in 2013 – Total revenue in 2012 / Total revenue in 2012.
= (272722-234354) / 234354
= 16.37%
From the above analysis, we can see that revenues of the company has been decreasing over the last five years along with the decrease in the profitability of the company. The sales over the period has decreased particularly with the decrease in the financial services of the company. In the year 2016 and 2017, the cost of goods sold also decreased as compared to the previous year. But as the total revenue decreased, the gross profit of the company also decreased for the year 2017 and 2016. In the year 2017, other expenses also decreased as compared to the previous year. In the year 2015, the company incu
ed heavy losses because of increased expenses and cost of goods sold. In 2016,the company was able to cover the losses and the profit increased by 219%. Thus, the overall revenues and the profitability of the company decreased in the year 2017 as compared to the previous years.
Ratio Analysis
Ratio analysis is one widely used financial analysis which helps in analysing the financials of the company as well as the performance of the company from different perspective.
Profitability ratios:
Profitability ratios helps in telling, how profitable the company is and how much return does the shareholder’s...
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