ACCY801 Accounting and Financial Management

Task:

Description

You are required to analyse the annual reports and financial statements of two companies in the Retailing industry and write a report based on the results of your analysis. Your analysis will include a discussion of each company’s objectives, liquidity, capital structure, asset utilisation efficiency, profitability and capital expenditures. All of the necessary information for your report is contained in the 2019 annual reports of the two companies you will be analysing. All of the background knowledge necessary to successfully complete the report has been covered in the lectures, tutorials and readings for ACCY801 before week 5. 

A description of the requirements of each section follows.

i. Executive summary

A brief section that summarizes the important parts of the rest of the document, including the analysis conducted, key results or findings, recommendations and limitations of the report.

ii. Objectives and long-term plans

Discuss the objectives and long-term plans of each company. Include references to any relevant page numbers in the Annual Reports.

iii. Financial ratios

Using the relevant financial statements for the 2019 year, calculate the following ratios for each company:

Current ratio Quick ratio

Receivables turnover Inventory turnover

Fixed asset turnover Total asset turnover

Debt ratio Interest coverage

Gross profit margin Operating profit margin

Net profit margin Return on assets

Equity multiplier Return on equity

iv. Liquidity, capital structure and asset management efficiency 

Discuss the differences between your company and its competitor in terms of:

Liquidity

Capital Structure

Asset management efficiency

v. Operating profitability 

Explain how your company (with the lowest ROA) might be able to improve its operating profitability, relative to its main competitor (as identified by management). Also discuss any favourable aspects of your company’s operating performance relative to its competitor.

vi. Returns on shareholders’ investment

Explain and discuss any differences in return on equity for your company and its competitor.

vii. Capital expenditures

Discuss the extent of each company’s capital expenditures in 2019, and how each firm financed the capital expenditure.

viii. Conclusion and recommendations

Summarise the main points you wish to draw the reader’s attention to, and provide recommendations to management about possible courses of action.