HI5001 Accounting for Business Decisions (T1, 2015)
\nGroup Assignment (30% of Final Mark)<\/p>\n
The assignment aims to develop an understanding of financial statements structure and their use
\nin decision-making. The task is to choose a publicly listed company from the Australian Stock
\nExchange (ASX) which should be approved by your lecturer as not to have the same
\ncompanies from other groups and analyse the financial statements.
\nThe assignment has two parts namely Part A (46 marks) & B (54 marks). This group project in
\nitself includes several assignments, each of which comprises a part of the students\u2019 task.
\nHowever, it is well encouraged to include any additional information that students may think will
\nbe useful in conducting financial statements analysis of the selected company.
\nGeneral Rules and Requirements:
\nThe report should be prepared by a group with a maximum of four (4) members. Reports must
\nbe confined to 3,000 words (+\/- 5%). For Part A, a title page, table of contents page (based on
\nyour report headings), introduction, conclusion and references should be included. Font type
\nshould be Arial (size 11), paragraph spacing should be 1.5. For part B, read and follow the
\ninstructions mentioned.
\nThe Safeassign maximum matching percentage allowed is 20%. If the group exceeds the
\nmaximum, the assignment will get an automatic 50% deduction.
\nNote: Any additional material from external sources that you \u201ccopy and paste\u201d into your report is
\nNOT included in the word limit. Also, ensure it is appropriately referenced.
\nPART A:
\nPart A1 (6 marks)
\nProvide an executive summary of your company\u2019s background relating to business structure,
\noperations, services and all other business activities that are conducted, etc.
\nPart A2 (10 marks)
\nUse the annual report for the year ending 2013 & 2014. Your group will need to review the
\nmajor sections of this report in order to familiarize yourselves with the content of each of the
\nfinancial statements and appropriate notes to the financial statements.
\nReview the balance sheet of the company and indicate the amount of the following:
\na) Total current assets
\nb) Total non-current assets
\nc) Total current liabilities
\nd) Total non-current liabilities
\ne) Total stockholder\u2019s equity
\nCompare the above figures with the previous year and compute the percentage increase or
\ndecrease and comment on the comparative financial condition of the company.
\nPart A3 (10 marks)
\nReview the income statement and indicate the following:
\na) Total (operating) revenues
\nb) Cost of Goods Sold (if relevant)
\nc) Total expenses (before income taxes)
\nd) Any non-operating (or extraordinary) gains and losses
\ne) Earnings per common share
\nCompare the above figures with the previous year and compute the percentage increase or decrease and comment on the comparative financial operation of the company.
\nPart A4 (10 marks)
\nReview the statement of cash flows for the most recent year and indicate the following:
\na) net cash inflow (outflow) from operating activities
\nb) net cash inflow (outflow) from financing activities
\nc) net cash inflow (outflow) from investing activities
\nd) net increase (decrease) in cash during the year
\nAnalyse the Cash Flow Statements for the last 2 years and comment on the cash position of the company.
\nPart A5 (10 marks)
\nReview the stockholders’ equity section in your chosen company’s most recent year-end balance sheet and compare that with the previous year-end balance sheet. Compare percentage increase or decrease.
\nList the stockholders’ equity account balances and number of outstanding shares from these two balance sheets and compute the increase or decrease for each during this past year.
\nPart B Financial Ratios (54 marks)
\na) Using the same Financial Statements of the company your group has chosen, determine the profitability, activity, liquidity and leverage using all the ratios below. Use the end of the year financial statements. (14 marks)
\nb) Give a 300 word analysis for each of the following:
\nI. Profitability (10 marks)
\nII. Activity (10 marks)
\nIII. Liquidity (10 marks)
\nIV. Financing (10 marks)
\nRatio Calculations
\nRatio Numerator Denominator
\nA. Profitability ratios
\na) Return on equity Operating profit after tax Shareholders\u2019 equity
\nb) Return on assets Operating profit after tax Total assets
\nc) Profit margin Operating profit after tax Sales\/Revenue
\nd) Cash flow to total assets Cash provided by operations Total assets
\ne) Price-to-earnings ratio Market price per share Earnings per share
\nB. Activity (turnover) ratios
\na) Total assets turnover Sales Total assets
\nb) Debtors turnover Credit sales Average trade debtors
\nc) Days in debtors 365 Debtors turnover ratio
\nC. Liquidity ratios
\na) Current (working capital) ratio Current assets Current liabilities
\nb) Quick ratio Cash + Accounts receivable + Current liabilities
\nShort-term investments
\nc) Interest coverage ratio Earnings before interest & tax Net interest expense
\nD. Financing ratios
\na) Debt-to-equity ratio Total liabilities Total shareholders\u2019 equity
\nb) Debt-to-assets ratio Total liabilities Total assets
\nc) Leverage ratio Total assets Total shareholders\u2019 equity<\/p>\n
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