Major Assignment Answers – MBS 539 Accounting for Managers

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Financial Analysis on CSL, Australian Public Listed Company

The major assignment creates a contextual link between theory and practice by requiring you to apply concepts from the unit to investigate and analyse the financial performance and financial position of a real corporate entity. The assignment will also develop the skills sought by employers:

1. The ability to convey information concisely,
2. Teamwork (internal students) and
3. Analytical skills.

 

Assignment Instruction: 

A).  Internal students – form a team of 2-3 max.

External Students – Individually or a team of 2-3 max.

Use the LMS Internal Students Discussion Forum to form a group.

 

B).   Select a publicly listed company (SG students may choose SG from SGX)

You must select a company to analyse. You may choose any publicly listed company (i.e. a company listed on a stock exchange). Due to the different terminology and reporting periods used in other countries, you are encouraged to select an Australian company to analyse.

Hint: go to the ASX website or Google search the list of companies by industry list in ASX.

It is recommended that you take the latest report as in this current 2020 Pandemic condition, you may find companies/ industries develop unexpected direction, and therefore, interesting comparative financial statements.

So that you can compare pre and post pandemic condition

C).  Financial Statement Analysis Report

You are required to submit a report showing the analysis of company performance to be used to comment on its viability for investors’ decision-making. Use the consolidated figures of the comparative financial statement (if one year is not available use quarterly or half yearly results).

1).  The Business (15%)

Use the company’s annual report and other relevant research, i.e. from the news or website and other online media sources, to discuss the business and the state of the industry to which the company belongs (look for GICS Code), outline the Chairman’s outlook for the future (contained within the Chairman’s Report) and provide your own opinion of the company’s prospects (approx. 250 words);

• Company background
• Structure
• Outlook of the company – refer to Chairman’s report
• In your opinion conclude on the company’s prospect

 

2).  Income Statement and Balance Sheet (20%) (use the Group numbers)

Perform horizontal and vertical analysis on both the comparative income statement and balance sheet, place this in a table as an appendix to your report (using Excel is recommended).

Based on your horizontal and vertical analysis, select one account from the income statement and one from the balance sheet that is of interest to you (e.g. it has increased or fallen sharply compared to previous years, or, it is very significant compared other income statement or balance sheet accounts). Explain why you have selected these accounts and discuss why they are significant (e.g. what may have caused them to increase or decrease compared to previous years) (approx. 300- 400 words);

Horizontal analysis:

Select one account each to explain the difference and discuss reasons for the change.

Income statement	Current	vs	Previous	Difference
For example, Sales or large expense
Balance sheet	Current	vs	Previous	Difference
For example, Cash or Loan

 

Vertical analysis

Select one account each to explain the difference and discuss reasons for the change.

Income statement	Current	vs	Previous	Difference
Base- Revenue
For example, large expense
Balance sheet	Current	vs	Previous	Difference
Base – Total assets
For example, Cash or Loan

 

3).  Using Ratios for Financial Statement Analysis (40%)

Calculate or take from the database (see Library Database Guide on LMS), analyse and briefly comment on the following ratios based on your company comparative financial statements. Use a similar table format as provided below.

Choose two ratios that best represent your company in the category of:

a.  Compare own company with previous period as below:

Current             vs      Previous       Difference

Profitability

• For example:
• -Gross profit margin
• -Profit margin
• ROE
• ROA

Liquidity

• For example:
• Current ratio
• Quick ratio Operating Capability

For example: Inventory turnover Debtors turnover

Financial Flexibility

• For example;
• Debt ratio
• Debt to equity

Steps:

1. Calculate ratios
2. Work out difference between the two periods
3. Explain the difference and discuss the reasons for the change

Hint:

• Choose ratios that suit your company’s industry sector; for example, if your company is a bank, then inventory turnover ratio may not be a suitable indicator for analysis.

• Refer to the three-step process (see Topic 7 Module 2 slides) in analysing your ratios. You may need to use a previous financial year annual report for ratio/s that requires an average figure-denominator.
• Use the components of a ratio (nominator and denominator) to help your analysis.

 

b).  Compare with benchmark

Select 2 ratios and repeat part a

Own company       vs   Competitor       Difference

 

Profitability

• For example:
• -Gross profit margin
• -Profit margin
• ROE
• ROA

Liquidity

• For example:
• Current ratio
• Quick ratio

Operating Capability

• For example:
• Inventory turnover
• Debtors turnover

Financial Flexibility

• For example;
• Debt ratio
• Debt to equity

 

4).  Summary (25%)

Using the ratios, prepare a written summary of your financial analysis (i.e. what are the company’s financial strengths and areas of concern). This section should include a summary of your review regarding the company’s current year Profitability, Operating Capability; and Financial Flexibility. This summary section needs to be concise yet informative. (approx. 500 words)

Summary:

Always compare current period’s numbers with previous periods.

Highlights the company’s strength and weaknesses using the ratios computed.

Your summary to incorporate your interpretation of the company’s Profitability, Operating Capability; and Financial Flexibility be concise but precise.

Additional Information:

List any references you use in your report. You can use any formally known referencing style _ APA/ Chicago/ MLA. http://our.murdoch.edu.au/Student–life/Study–successfully/Study–Skills/Referencing/

Assignment Submission

Use 11 font size with 1.5 spacing, tables or graphs that are necessary to show your work or support your arguments can be put as appendices.

Due Monday in the week of Session 11. Submit via the LMS Assignment Submission tab; do not forget to click the “Submit” button. One submission for each team. Include a cover sheet containing the name and student number of each team member. Each group need to register the group and members on LMS (see LMS group self-selection tab).

To see your mark, return to the Assignment submission tab to find your grade and read feedback from your lecturer/tutor.

All assignments will be sent to the text-matching system Urkund, which will produce a report assessing your assignment for original writing.

Team/Peer Evaluation. Team/Peer Evaluation Form is posted on LMS – (ONLY) to be used when there is a dispute in the team regarding members’ contributions. It is of course much preferable that any group problems can be solved earlier. There will be no due date extension given based on group issue. If an evaluation form is to be submitted, then the member/s initiating the evaluation need to let the rest of the members know that a group evaluation is submitted. Each member of the team will then need to submit the form to the tutor. The mark of each member will then be adjusted based on the evaluation.

 

Attachment: Template – Financial Statement Analysis; Assignment Marking Rubric

Template- Financial Statement Analysis (as a guide)

Ratio	Year	Name of Business	Brief analysis comment (guide: 50 -100 words each ratio)
Profitability
(Ratio 1 & formula)	Y -1Y- 2

(Ratio 2 & formula)	Y -1Y- 2
Liquidity
(Ratio 1 & formula)	Y -1Y- 2
(Ratio 2 & formula)	Y -1Y- 2
Operating Capability
(Ratio 1 & formula)	Y -1Y- 2
(Ratio 2 & formula)	Y -1Y- 2
Financial Flexibility
(Ratio 1 & formula)	Y -1Y- 2
(Ratio 2 & formula)	Y -1Y- 2

 

MBS539 Accounting for Managers Major Assignment – Report – 20% Marking Rubric

Comments:

1. The Business (15%)	Score	Sub-total	Total Score
–  Description-  News-  Opinion/discussion
2. I/S and B/S (20%)
–  Horizontal & Vertical analysis-  Accounts-  Discussion
3. Ratios (40%)
– Table-         Profitability

–                  Liquidity-                  Operating Capability-                  Financial Flexibility-  Comparison-  Use of benchmark – Industry or competitor-  Discussion
4. Summary report (25%)
–  Table-  Profitability-  Liquidity-  Operating Capability-  Financial Flexibility-  Informative discussion (15)
5. Bonus (+)/penalty (-) (if applicable)
			………./100
Mark			……./20

 

 

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