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· Capilano Honey Limited (ASX code: CZZ) https://www.asx.com.au/asx/share-price-research/company/CZZ · Select Harvests Limited (ASX code: SHV)...

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· Capilano Honey Limited (ASX code: CZZ)
https:
www.asx.com.au/asx/share-price-research/company/CZZ
· Select Harvests Limited (ASX code: SHV)
https:
www.asx.com.au/asx/share-price-research/company/SHV
200910: Financing Enterprises
Assignment 2: Numerical problem-solving
Word limit: 1500 (excluding reference list and appendix)
Weighting: 20%
Due date: 10am AEST Tuesday 21st August (Week 10)
After you have read this information, head over to the Assignment 2 Q&A discussion board to ask any questions and see what your peers are saying about this assignment.
Make sure you download the Formula sheet (PDF 167 KB) for this unit's assignments.
Assignment overview
This individual assignment requires the analysis of the financial position and performance of the assigned companies for two financial years (2016 and XXXXXXXXXXIn this scenario, you are a financial analyst working for Elite Banking Corporation. You need to determine whether the companies are eligible for a loan from the bank. This involves answering the following 5 questions in your own words (i.e. do not simply 'cut and paste' information from the Annual report or another source). You must apply critical thinking concepts when explaining and justifying your choices.
Assignment details
Step 1: How to access the data:
1. Go to e-resources on WSU Li
ary and from the alphabetical list click on 'D' and then pick DatAnalysis Premium database. Once you are in the database go to the search engine on the top right and enter each of the following company's ASX code:
· Capilano Honey Limited (ASX code: CZZ)
· Select Harvests Limited (ASX code: SHV)
For each company, the displayed page summarises general information about the company including the sector and industry in which it operates, total market capitalisation of the firm, latest closing share price, etc. Both firms are operating in the same sector and industry group (food, beverage & tobacco) and same industry (food products).
2. On the left hand side, click 'Financial Data'. The displayed page shows annual and interim information for your assigned company (in the view bar, make sure you choose annual and not interim data). On the page's control bar at the topic, you will see the first three icons which displays the company's summarised annual financial statements (income statement, balance sheet and cash flow statement). Additional information, such as the number of shares outstanding at end of period is also given in these statements for different years.
3. The figures shown on the 'Financial Data' page are rounded figures and are not to be used in the calculation of ratios. To access the raw figures, select the relevant time period from the ‘year range’ drop down bars, and click on ‘go’. Once the figures appear, click on download spreadsheet. This will download an Excel file that contains all the relevant financial statements i.e. Profit & Loss Statement, Balance Sheet, etc.
4. In the downloaded Excel file, you will see a sheet titled 'Revenue Expense' in which you can locate the Cost of goods sold (COGS) for each company for the different years. For some companies, the COGS is the 'Materials and other input costs'. 
5. For more detailed information about how to obtain the data required for your individual assignment, please watch the 'How to obtain data for the individual assignment' video'.
Step 2: The five (5) questions you must answe
Based on the information you obtained for your assignment company answer all of the following questions. 
Question 1:
Analyse the sources of finance for each of the two companies in 2017 as compared to 2016. Use two capital structure ratios to support your answer and provide an explanation regarding the changes in the composition of the sources of finance for each enterprise. Note: ensure that you analyse in this question, not just describe the ratio values. (10%)
Question 2:
For each of the two companies, analyse their ability to successfully manage their operating and total expenses in 2017 as compared to 2016. Use two margin ratios to support your answer and explain any change in the ability of each company to control costs. Note: ensure that you analyse in this question, not just describe the ratio values. (15%)
Question 3:
Analyse the ability of management to manage their total assets for each of the two companies in 2017 as compared to 2016. Use one Asset Management efficiency ratio to support your answer and explain any change in each companies’ ability to use their total assets to generate sales. Note: ensure that you analyse in this question, not just describe the ratio values. (10%)
Question 4:
Analyse the profitability of invested capital for each of the two companies in 2017 as compared to 2016. Based on your calculations and your answers to questions 2 and 3, explain the main reason(s) for the change in the profitability for each company over the two years. Note: ensure that you analyse in this question, not just describe the ratio values. (15%)
Question 5:
Given your answers and analysis in questions 1 to 4, what is your final recommendation: an approval or denial of the loan to each and/or both firms? Discuss the basis for your recommendation. (20%)
Please note
1. Ratios must be selected from those identified in your prescribed eText (Bakry XXXXXXXXXXThe use of ratios other than those identified in the textbook and discussed in class will not gain any marks. 
Include all supporting calculations for any values shown in Questions 1 to 3 in the Appendix. This is not included in the word count.
Note: Marks will not be awarded if no supporting ratio calculations are shown in the Appendix.
2. In questions 1-4, an analysis is required and not just a description of the ratio. That means you need to explain how the ratio changed over time and the main reason(s) responsible for that change, and how that will impact your company’s financial position.
3. In calculating the ratios, 'Operating Revenue' located in the profit and loss statement (Income Statement) is the 'Sales Revenue'.
4. In calculating the ratios, ignore abnormals. You should only use figures before abnormals such as ‘Net profit after tax before abnormals’.
5. Ratios calculated by the Morningstar analyst and available in the database are not to be used as guidance for calculating your ratios. The analyst calculated some of the ratios using formulas different than the one covered in this unit.
6. The assignment does not require the obtainment of industry/peer group averages for any of the calculated ratios. The objective of the assignment is to compare each of the two companies’ financial performance over the specified two-year period.
7. Reference List
Includes any references you have used and cited. Make sure all answers are fully referenced using the Harvard referencing system and include a reference list at the end of your assignment (for guidelines on using the Harvard referencing system see Harvard WesternSydU (PDF 2.4 MB).
Note: the reference list is not included in the word count
Assignment criteria
1. Critical use and integration of evidence
2. Use co
ect financial tools to decribe the problem and addresses the requirements of questions 1-4
3. Addresses the requirements of question 5 and CLO 3.1
4. Co
ectly using Harvard Western Sydney referencing style
5. Uses a professional level of English
Answered Same Day Aug 20, 2020

Solution

Aarti J answered on Aug 21 2020
143 Votes
Financial Analysis of Capilano Honey Limited and Select Harvests Limited
Course Name
Course Date
Student’s Name
Financial Analysis of Capilano Honey Limited and Select Harvests Limited        8
Introduction
Financial Analysis is the analysis of the financial statements of the companies through different tools like common size statement, comparative analysis and ratio analysis. In this paper we will be analysing different aspects of the Capilano honey Limited and Select Harvests Limited.
Sources of the finance
The company has different sources of finance which include short term debt, long term debt and equity. Both the sources of finance has different benefits and drawbacks.
    
    Capilano
    Select Harvest
    
    2017
    2016
    2017
    2016
    Cu
ent Ratio
    2.62
    2.33
    1.05
    1.90
    Cu
ent Assets
    69837666
    77940680
    136610
    155521
    Divide: Cu
ent liabilities
    26619405
    33411510
    130371
    81783
    
    
    
    
    
    
    
    
    
    
    Debt ratio
    35.31%
    44.09%
    42.13%
    35.32%
    Total liabilities
    34016918
    43971098
    202072
    158871
    Divide: Total Assets
    96348883
    99735220
    479691
    449772
(Annual report of Capilano, 2017 and Annual report of Select harvest, 2017)
The liquidity ratio like cu
ent ratio helps in analysing the short term debt of the company and the ability of the company to pay off its short term debts. For the year 2017, the cu
ent ratio of Capilano is 2.62 which means that the company holds around 2.62 times of cu
ent assets as compared to its cu
ent liabilities. So, the company has the ability to pay off the short term debts easily. As compared to the year 2016, the cu
ent ratio of Capilano has improved which states that the company’s ability to pay off the short term debts has improved.
Looking at the cu
ent ratio of Select harvest, we can see that the cu
ent ratio of the select harvest for the year 2017 is 1.05 which is quite less as compared to Capilano. As compared to year 2016, the cu
ent ratio of select harvest has gone down which states that the ability of the company to pay off the short term debts has decreased.
Now looking at the debt ratio. Debt ratio tells about the proportion of assets that has been financed by debt. From the above analysis we can see that the debt ratio of Capilano for the year 2017 is 35.31% which means that around 35% of the assets of the company is financed by debt and the remaining assets i.e. 69% is financed by equity. In the year 2016, the debt ratio of the company was 44% which means that 44% of assets of the company was financed by debt. Comparing the year 2017 with 2016, we can see that company’s debt ratio has improved which states that the capital structure of the company has improved.
Looking at Select harvest, we can see that 42% of the assets...
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