AFA1105 ACCOUNTING FOR MANAGEMENT
TASK:
Download from LMS a copy of Joyce Corporation Ltd (the Company) annual reports for the financial years 2015 and 2014 and write a report of the Company under the following sections.
A) EXECUTIVE SUMMARY (Approximately 200 words)
This section should be written up after your report has been written. It should give a summary of your main findings about Joyce Corporation Ltd in terms of its Profitability, Liquidity, Asset Efficiency, Capital Structure and Market Performance.
B) COMPANY OVERVIEW (Approximately 200 words)
This section should give the reader a broad sense of the Company's operations (for example what its main operations are, the number of stores, the regions they operate in, the industry and competitors etc). Such information is easily available from the internet and also from the Chairman and Managing Director's Review of the 2015 annual report. Please reference your sources.
C) PROFITABILITY (Approximately 200 words)
From the Company's 2015 and 2014 financial statements and notes to financial statements, calculate the following ratios based on what you were taught.
Use the 2015 and 2014 figures from the 2015 annual report, and use the 2013 figures from the 2014 annual report. Remember to use average numbers for some ratios as taught in class.
|
|
|
2015
|
2014
|
|
Return on Equity (ROE)
|
Net Profit After Tax / Average Equity (%)
|
|
|
|
Return on Assets (ROA)
|
Net Profit After Tax / Average Assets (%)
|
|
|
|
Gross Profit Margin
|
Gross Profit / Sales Revenue (%)
|
|
|
|
Net Profit Margin
|
Net Profit After Tax / Total Revenue (%)
|
|
|
- Explain what the ratios mean in general and comment specifically on what they tell about the Company's performance.
- Examine how the ratios are trending and comment/explain if the trend is favourable or not. Offer suggestions why a change in the ratio may have occurred by looking at how its components change in relation to each other.
D) ASSET EFFICIENCY (Approximately 200 words)
Calculate the Company's ratios below based on what you were taught.
|
|
|
2015
|
2014
|
|
Asset Turnover Ratio
|
Total Revenue / Average Assets (times)
|
|
|
|
Days Inventory
|
(Average Inventory / Cost of Goods Sold) x 365 (days)
|
|
|
|
Days Debtors
|
(Average Debtors/ Sales Revenue) x 365 (days)
|
|
|
- Explain what each ratio measures in general, and comment on how efficient Joyce Corporation was.
- Examine how the ratios are trending and comment/explain if the trend is favourable or not. Offer suggestions why a change in the ratio may have occurred by looking at how its components change in relation to each other.
E) LIQUIDITY (Approximately 200 words)
Calculate Current Ratio and Quick Asset Ratio for the years 2015 and 2014. Show it in a table as in the previous sections and comment on the Company's liquidity position.
F) CAPITAL STRUCTURE (Approximately 200 words)
Calculate the following ratios (1) Debt/Equity ratio, (2) Debt ratio (3) Equity ratio. Show it in a table similar to the previous sections and comment on the Company's capital structure.
Below are the ratios of rival companies Fantastic Holdings Ltd and Nick Scali Ltd. Use this information in your comments about the Company's capital structure.
|
Fantastic Holdings Ltd
|
Nick Scali Ltd
|
|
2015
|
2014
|
|
2015
|
2014
|
|
Debt Equity Ratio (TL/TE)
|
70.3%
|
64.7%
|
Debt Equity Ratio (TL/TE)
|
108.4%
|
100.4%
|
|
Gearing/Debt Ratio (TL/TA)
|
41.3%
|
39.3%
|
Gearing/Debt Ratio (TL/TA)
|
52%
|
50.1%
|
|
Equity Ratio (TE/TA)
|
58.7%
|
60.7%
|
Equity Ratio (TE/TA)
|
48%
|
49.9%
|
(G) Interest Servicing ratio (Interest Cover) (No more than 50 words)
Calculate and comment on the Company's Interest Servicing Ratio for 2015 and 2014.
(H) Cash Flow (No more than 50 words)
Examine the Company's Statement of Cash Flow and answer the following short answer questions:
(a) What are the names of the three sections that show the Company's net cash flows?
(b) Which section shows the strongest net cash inflow for the Company?
(c) What is the reason for its strong net cash inflow from investing activities?
(I) Market Performance (Approximately 100 words)
From https://au.finance.yahoo.com or elsewhere, obtain the Company's share prices on 30 June 2015 and 2014.
Using these market prices and the Earnings per Share (EPS) for the Company shown in Note 7 of its 2015 annual report, calculate the company's Price Earnings ratio (P/E ratio).
What does the Company's P/E ratio indicate compared to the P/E ratios of competitors as shown below?
|
|
P/E ratio of Fantastic Holdings Ltd
|
P/E ratio of Nick Scali Ltd
|
|
2015
|
17.7 times
|
16.1 times
|
Attachment:- Annual reports.rar