Financial Information for Decision Making Assignment 3: Company analysis report Report requirements Based on your analysis of relevant information relating to Shaver Shop Group Limited , you are...

Financial Information for Decision Making

Assignment 3: Company analysis report

Report requirements

Based on your analysis of relevant information relating toShaver Shop Group Limited, you are required to prepare astructured report(see recommended structure detailed below) with a focus on the profitability, operating efficiency, liquidity, gearing and cash flows of the company. The profitability, efficiency, liquidity and gearing of the company should be analysed using the required ratios. Firms are accountable for generating profit with the assets employed. In addition, the firm must pay its debts as and when they fall due. An analysis of the Statement of Cash Flows is also required. Use the data from the financial statements in the annual report to calculate the ratios.

Your report shouldcover a 3-year period for the years ending 30 June 2016 to 2018, and should be sufficiently broad in scope to demonstrate your understanding of findings following the analysis.

Your ratio calculations and the focus of your report is to be based on the following annual reports:

· Annual report 2018:Shaver Shop (PDF 3.6 MB)(Links to an external site.).

· Annual report 2017:Shaver Shop (PDF 2.6 MB)(Links to an external site.).

· Annual report 2016:Shaver Shop (PDF 1.6 MB)(Links to an external site.).

Ensure that you make an effort to address writing conventions such as format and structure, spelling, grammar and punctuation. If you need some help with how to structure a report, take a look at the guides onReport writing(Links to an external site.)from the Student Portal.

Also, here is aSuggested structureto help you with this assignment.

1. Company and industry background

Brieflyprofile Shaver Shop Group Limited—its history, financial highlights and other relevant company details. Summarise the nature and current state of the industry in which it operates. This section of work will help contextualise the report in terms of key company information and the industry (and wider) environment in which the firm operates.

Historyshould 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.

Industryshould include: identifying which industry it operates in, an understanding of the state of the industry and identifying major competitors.

2. Calculation of required ratios

The minimum ratios to be manually calculated foreachof the three years as follows (provide 2 decimal points for your ratios):

· Profitability:

o Return on shareholders’ equity.

o Return on total assets¹.

o Net profit margin¹.

· Efficiency:

o Inventory turnover.

o Settlement period for accounts receivable².

o Settlement period for accounts payable³.

o Asset turnover.

· Liquidity:

o Current ratio.

o Cash flow from operations.

· Gearing ratio:

o Gearing ratio⁴.

Footnotes for calculating ratios:

1. Terminology in Shaver Shop Group Limited financial statements:

o Profit or Loss Statement useConsolidated Statement of Comprehensive Income.

o Balance sheet useConsolidated Statement of Financial Position.

o Cash flow statements useConsolidated Statement of Cash Flows.

o Accounts receivable useTrade and other receivables.

o Accounts payable useTrade and other payables.

o Interest expense useFinance Cost.

o Cost of Goods solduse Cost of goods sold.

2. Assume that 10% of sales are credit sales.

3. Assume 100% of inventory (stock) purchases are on credit. As the purchases figure is not available you will need to calculate it. (HINT: Use your COGS formula)

4. To calculate the gearing ratio use the following formula:

(Noncurrentliabilities)(Noncurrentliabilities+TotalEquity)×100

3. Analysis and interpretation of financial performance, position, and market standing

Based on the ratios you have calculated, the financial reports and other information, prepare an analysis that covers thepast three financial years ending 30 June 2016, 2017 and 2018, concentrating on the following aspects:

· Profitability.

· Efficiency.

· Liquidity.

· Gearing.

Analysis and Interpretation of Cash Flow Statements

· Your analysis should also include a review ofShaver Shop LimitedGroup'soperating, investing and financing cash flowsover the three years.

Note: Analysis is not a re-statement of the ratios or their formulas—it's an overview of the results and trends, and an interpretation of them. For guidance on how to interpret ratios, and what to consider, refer to theRatios case study - Atrium Enterprises (DOC 149 KB).

4. Assessment of other relevant information

· An assessment of other, typically non-financial, information relevant to the assessment of the company’s current state of financial affairs (for instance; global events, industry developments and issues, 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).

· While your report will focus on the financial performance ofShaver Shop, consider also its environmental and social performance.

5. Summary and conclusion

Based on your analysis and findings, summariseShaver Shop Limited'scurrent financial situation and consider its potential outlook and make recommendations. This section is worth 5% so make sure you address the requirements of the rubric below.

Supporting resources

The following will assist you with completing this assignment:

· Helpful hints—Use of figures and tables in analytical reports.

· DatAnalysis Premium(Links to an external site.)—A Database accessible through Swinburne Library that is useful for things such as ASX Announcements, company history, annual reports, and directors and management.

· Industry context:Australian Bureau of Statistics (ABS)(Links to an external site.)and(Links to an external site.)IBIS(Links to an external site.)(Swinburne University Library has access to some, but not all, ABS and IBIS information).

· Market:Australian Securities Exchange (ASX)(Links to an external site.).

· Newspapers: Australian Financial Review, other newspapers and business publications (such as BRW) (e.g. through the Factiva database available through the Swinburne University Library).

· Newslettersissued by stockbrokers and fund managers.

· View theStudy Resources(Links to an external site.)Links to an external site.section with in the Student Portal for additional support with presentation, academic and report writing skills, as well asTeamwork tips(Links to an external site.)and support for working in high performing teams.

Please note: You arenot expected to purchase industry or company specific reports from commercial suppliers. Only resources available through the Swinburne University Library, those on corporate or other websites (or other media such as newspapers electronically available for example), and which are free of charge are expected to be used.

Assignment Criteria

1. Contract/Agreement

2. Company and industry background.

3. Calculation of required ratios.

4. Analysis and interpretation.

5. Assessment of other relevant information.

6. Summary and conclusion.