ACC10707
Session 1, 2020 Assessment 2
Business
Analysis and Interpretation. Due 14 April 2020 via Turnitin.
You
are required to calculate key financial ratios for an ASX listed
company and its competitor and interpret this information in the
context of your allocated competitor company over time.
You
will be allocated two ASX listed companies to study for this
assessment. You must do your allocated companies in the order they
are allocated to you. You can look up your allocated companies under
‘You/Competitor’ in MyGrades in week 2.
Imagine
you work for the FIRST of these companies. The second is one of
your company’s competitor.
Your
boss has asked you to calculate and assess the
company’s key (your boss’s opinion) ratios relative to that of
its competitor and provide recommendations for
improvement if required.
The
key ratios you need to calculate for your company and your competitor
are net profit margin, asset turnover, current
ratio, quick ratio and debt ratio. Your boss also wants you to
calculate the cash cycles. All workings for
ratios and the cash cycles are required.
You
focus your analysis and commentary on the companies’ 2017, 2018 and
2019 ratios mentioned above firstly in terms of their trend changes
and also in comparison to your competitors ratios and benchmarks
wherever possible. Recommendations for improvements if considered
necessary should also be made.
In
making your assessment also consider potential differences between
your company and its competitor that could explain divergent
results. Where relevant, these should be noted. (For example,
although the companies may compete in some of thesame
markets, they may also have different areas of business).
Chapter
8 of your textbook
(http://www.wileydirect.com.au/buy/accounting-business-reporting-decision-making-6th-edition/)
will give you a background explanation on these ratios and you should
in your own words explain a) the issues
involved and relevance of using ratios, b) benchmarking and c) the
relevance of your particular identified ratios as part of your
discussion.
To
undertake this task you will need to get some background information
on the companies and collect some data to create ratios. Information
required is available from DatAnalysis found by following the
links from the SCU homepage to the ‘Library’ and ‘Databases’.
For the calculation of ratios aspect of this assessment use the
‘Financial Data icon and then across the top, Profit and Loss and
also Balance Sheet as necessary. You must use DatAnalysis for
the ratios in your report.
Since
your boss is a busy person and has little time to read lengthy
reports, your submission for this task preferably should be up to
1,000 words. Of course it can be shorter than 1,000 words. Some
upward leeway is also allowed (+20 %?).Structure your submission as a
short report that excludes title and contents pages. Refer to
note 1 below for further advice on report structure. Ensure
you fully reference any non-text book or non DatAnalysis sources of
extra information that may help develop your report.
Marks
for this task are in accord with the separately provided marking
guide.
PLEASE
READ THE NOTES BELOW
In
essence students should carefully study chapter 8 of the textbook and
then describe and calculate ratios and
the cash cycle for their company and its competitor from DatAnalysis.
Next describe the meaningfulness of these calculations firstly
theoretically (text book chapter 8) and then actually and relate the
findings to their company and in contrast to their competitor
company. Discuss trends. Wherever possible industry or accepted
standards might assist your contrast as well. Then outline possible
company improvements/recommendations highlighted by the ratios
and cash cycle and any weaknesses in
using ratios.
Note
also as follows –
1. The
report should be presented as follows.
At the very beginning of your report should be a Table
with headings as depicted below. You should place (complete) each of
your ratio outcomes in the table below using the relevant headings in
Table form so the reader/marker can initially see the actual ratio
numbers you have arrived at. See also the marking guide where we
demonstrate a similarly headed table.
At
the end in the appendix (not counted in word count) there should be
another table which demonstrates formulas, completed workings
(calculations) and ratio outcome for each ratio for both companies.
Your
Appendix table could use the same headings this time with the ratio
name including the formula and the years 2017, 2018, 2019 having the
calculated formula numbers used and the final ratio.
Returning
to the body of the report you should after the initial table have
headings (with subsequent discussion) as follows –
• Introduction
• Financial
Analysis of Ratios – Begin with sub – heading for each ratio.
Here is where you demonstrate an understanding of ratios by
describing the meaningfulness of these ratio calculations firstly
theoretically (text book chapter 8 helps here) and then actually.
Next relate the ratio findings to their company and in contrast to
their competitor company. Discuss trends. Then wherever possible
discuss industry or accepted ratio standards which might assist your
companies contrast as well. This demonstrates an ability to assess
and apply knowledge to calculated outcomes.
• Recommendations
– outline possible company improvements highlighted by each ratio
outcomes and cash cycle calculations and comment on any weaknesses in
using ratios. If you find that some of your calculated ratios are
within appropriate benchmarks you can say that.
• Conclusion.
It
is essential that you set your report up as prescribed by note 1
above.
2. The
Cash Cycle can be a little confusing and some text books use
different methodologies for calculating the three elements of the
Cash Cycle. For your convenience the formulas are a) Inventory being
Current Inventory / Operating Revenue * 365 = ???? b) Accounts
Receivables being Debtors / Operating Revenue * 365 = ???? c)
Accounts Payables being Creditors / Operating Revenue * 365 = ???
Note that you still need to work out the cash cycle from these
calculations.
3. For
the net profit margin ratio use Net profit after tax before abnormals
as the numerator.
4. This
is a Turnitin assessment so while we acknowledge that some Turnitin
score will relate to the cover page and calculations which may be
common to some other students you need to take due care with the
actual original (yours) commentary of the report. This includes
putting into your own words some theoretical discussion of the ratios
which you may originally derive from the text book. If concerned then
by all means use Harvard referencing.
5. Use
the Discussion Board forum to raise any issues you may have with this
assessment. This method ensures that students and tutors can get an
idea of any questions that students may have. Try not to publish
answers to your assessment if at all possible.
6. Note
that your assessment will not be marked if you do not do your
allocated companies and in the order they are given to you.
The post ACC10707 Session 1, 2020 Assessment 2 appeared first on My Assignment Online.