Accounting for Managers Assessment Task Report-
Task: Financial Statement Analysis
To consolidate your learning in ACCT5021 Accounting for Managers, you are to undertake a financial analysis of Santos Ltd (ASX Code: STO) and Woodside Petroleum Ltd (ASX Code: WPL), two Australian Securities Exchange (ASX) listed companies. Apart from examining each company's annual reports, all other relevant disclosures made (e.g., quarterly and half yearly reports), ASX disclosures and other information relevant to the performance and position of each company and the industry report for Oil and Gas Extraction in Australia. It is expected that your research effort will extend beyond each company's annual reports and Morningstar DatAnalysis. Accordingly, your team will need to identify and evaluate other sources of information such that a thorough and well-founded analysis of each company's past performance and position adequately supports the provision of a well-argued investment recommendation (e.g., to buy, hold or sell shares in either company and the Australian industry sector to which they belong).
Accordingly, your team may choose to access and interpret publicly available information on each company from sources such as the ASX, the Australian Accounting Standards Board; online databases such as ABI, IBIS World, ORBIS, ProQuest, Factiva, Morningstar DatAnalysis Analysis, etc; stock broker research reports; relevant websites such as https://www.bloomberg.com.au; business publications such as the Australian Financial Review and business oriented periodicals.
Group Project Report
The product of your research and collaborative effort is a report that is to be submitted to the senior management group of ABC Equities Ltd (ABC), a very large client firm who is currently undertaking a due diligence on both companies. The report must include the following:
1. Covering letter, table of contents and executive summary.
2. Introduction: including company profile and strategic overview.
3. Profitability and market based ratios - where relevant financial data is available, which company has performed better over the past five (5) years? Why?
4. Where appropriate, which company has better managed the working capital management relationship between inventories, accounts payable and accounts receivable? Why? Comment on the relevance of the three ratios of (a) days inventory, (b) days payable and (c) days receivable to understanding the working capital financial management practices of ASX listed companies operating primarily in the Australian Oil and Gas Extraction industry.
5. Comment on and compare the short-term liquidity (i.e., current and quick) positions of both companies.
6. Comment on and compare the long term debt/equity positions of both companies.
7. Identify and discuss the significance of the differences between the net profit after tax and operating cash flows of both companies in the 2013 - 2015 financial years. What are the accounting variables that are the most significant in explaining the difference between the cash versus accounting measures of each company's operating performance for the 2013 - 2015 financial years?
8. Identify and discuss each company's investing and financing activities during the 2013 - 2015 financial years. In particular, explain what might be the impact of the current global and domestic economic environment upon each company's (a) decision to invest in new property, plant and equipment and (b) in the valuation of existing investments in property, plant and equipment and other significant tangible and intangible non-current assets?
9. Corporate responsibility practices and disclosures.
10. Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis of each company.
11. Investment Recommendation - which company would you recommend that ABC Equities Ltd invest in? Why?
12. References and appendices (include all sources i.e. annual reports, databases etc).
Please note the following:
- Presentation standards: As indicated in the marking guide, approximately 9% of the assessment of Group Report is weighted towards the presentation quality of the submission made. Apart from drawing upon relevant ratios in support of the provision of concise yet clear discussion of the issues posed in each question, the team should give proper consideration to the benefit of using graphs and other exhibits to illustrate the team's response to each question.
- Report format: Your report should include a cover page (see Blackboard/Assessment Folder/Report 2), brief executive summary, introduction, body (using sub-headings based upon questions 1 to 6 above) and a conclusion (with the recommendation to ABC). The report use 12 point Times New Roman font, 1.5 line spacing, with 2.5cm margins, and printed single-sided using A4-sized paper.
- Report length: The maximum of the report is 2,500 words, excluding cover page, figures, graphs, tables, references, and appendices). Do not exceed the word Note, that it is the quality, not the length of the report that determines the grade of the assignment.
- Referencing: You can refer to real world cases, recent news, book chapters, research papers, and annual reports to support your arguments or analysis. Do NOT use another student's paper or a website as your reference. This report must be your own work.
All your references must be properly cited in your content and included in the reference list at the end of report.
Group Presentation
Each group will do a presentation of its project report. The topic of the presentation will be provided early in the semester. The presentation is not to exceed 12 minutes (each student has 3 minutes) and should demonstrate in-depth research and a good understanding of the topic. All group members are required to be actively involved both in preparation and in the presentation itself. Students will be marked according to the presentation-marking guide (see Blackboard Assessment Folder). Note: Some marks are allocated individually and some to the group collectively. Each group must hand in a hardcopy printout of their PowerPoint slides (showing 3 slides per page) and a presentation marking guide, complete with names and student numbers, to their tutor prior to presenting. The Presentation marking guide is shown on the next page. Groups must encourage and be prepared to answer questions at the end of their presentation.
Do not just read your report. Your presentation will cover the same topic and material but you will have to be selective about what is included and how it is presented. Be creative with your handouts and your approach to your presentation.
Your Lecturer cannot preview or pre-mark your work but they will be happy to provide general advice about presentation skills and the structure of your talk. The marking guide indicates how marks will be allocated for your presentation - make sure you read the guide before you prepare your talk and use it as a checklist after you have planned your presentation.
Only report of 2500 words needed.