20200513031556key_notes x20200513031553assignment_faqs_sem_1_20201 20200513031548assignment1
20200513031548assignment (1) 20200513031553assignment_faqs_sem_1_2020 (1) 20200513031556key_notes x 20200513031600rubric_assignment_7101_s1_2020 20200513034521egg_2019 20200513034528enero_annual_report_fy17 20200513034531enero_annual_report_fy18
202005130316051.xlsx
202005130344532017 202005130344552018 202005130344572019
please write the financial report and decision making for two companies, there are three question that you need to answer in the report, q1,q3,q4, the part of q2 is the ratio calculation, I have already finish it, you need to use the ratio in the excel workbook. And I write a key notes for you which is the key points in each question, you need to follow it and add some other information. I have attached the annual reports here for year 2019,2018,2017 for both two companies.
the reference style should be harvard style, which you can find how to do it in the assignment
please follow the key notes, it is very important and look at the marking rubric.
(All this notes and important key notes, you can add some other or you need to add some other to perfectly complete my assignment)
My company a is ASP ( Aspermont limited) b is EGG( Enero Group limited)
Task 1:
a) Background analysis : 1. The name of the companies, and what’s the industry?(for example: service industry, manufacturing industry and etc), and what’s the main business. Where is the headquarter located, and etc ( you need to say it in both two companies.)
2, compare the difference and similarity. ( answer both)
( you can find them in the introduction of the companies’ website, and also you can find them in the first pages of the annual report. )
Please remember that you cannot just copy that, you can summary it in your own words and just do a few reference.)
The differences here are just to simply tell us the difference of industry, and their main business and their main market and their main service object and etc.
b) Factor analysis (8 factors)
2 economic factors which could influence both two companies. (for example, labor costs, interest rates, government policy and etc. )
2 industry factors which could influence both two companies ( for example, competition in the industry; potential of new entrants into the industry; power of suppliers; power of customers; threat of substitute products and etc. )
2 special factor to company a
2 special factor to company b (to describe them separately, these factors can be the factors that I list above or other additional factors)
Task 2
Find the date to calculate in balance sheet, income statement, cash flow or their notes on the annual report.
Task 3 ( to consider Whether to give company A a loan) （mainly to see the ability to repay）
To head office
From: lending offer-Xiaoyi
Date:
Subject :loan application
(the main point is not to see whether to give a loan, but to analysis)
a) first to tell the amount of money of the loan
allow or not allow?
Reasons:1) the analysis the ratio(liquidity ratio, solvency ratio and etc. to find ratios which related to interest) to compare the company’s ratio with the Normal reasonable value. To Look at three years Trend change.
This reason is Microscopic analysis
Reason 2):to see the background in task 1 (this reasons is Macro analysis。)
b) Look at the variation trend of three major flows of cash flow, you can put small table if needed, please remember just one is enough, a small one.
c)
To estimate the disadvantage of the ratio analysis.
For example (static indicator: past tense, Unable to reflect future situation. Why cannot reflect)
The specific data in balance sheet represents a specific time.
(maybe I cannot explain it very well, please understand them and to estimate the disadvantages)
And find some other disadvantages)
Task 4: (to invest which company ? a or b?)
a) Profitable ratio, market ratio to compare company a and b to see which financial situation is better, of course you can use other ratio if needed.
b) To make a decision to invest which company(look for task 1 and 2) to consider the factors(background, ratios and etc. )
c) What is the eps and per. And this question please see the following requirement on the assignment sheet. To answer carefully and completely.
ACCT 7101 Accounting – Individual Assignment FAQ’s.
1
FREQUENTLY ASKED QUESTIONS (FAQs)
1. If the end of the financial year of one company is 31 December and the comparative
company is 30 June, can they be compared?
Yes, because you are comparing a one year period for both companies and the same
financial year even though the end of each financial year is different.
2. I am about to do ratio calculations such as Inventory turnover, Receivable turnover,
Return on Assets, etc. Their denominators are all average numbers, so do I need to
download the 2016 annual reports in addition to 2017, 2018 and 2019 annual reports?
Since I need the average of years 2016 and 2017 to calculate these ratios.
If you are required to calculate a ratio such as inventory turnover in 2017, you can rely on
the financial report of 2017 as it contains both results of 2017 and 2016.
3. When I was calculating the current ratio and the quick ratio, I found out that there
are two different Total Current Liability dollar figures for the year 2017. The Total
Current Liability shown on the 2017 annual report is different to the Total Current
Liability shown on the 2018 annual report. Could you explain this for me? I have also
found this to be the case for some other figures in the financial statements.
The difference could be because of some restatements for one year to correct errors
discovered after the annual report is published. Please use the restated amount shown in
the annual report of the following year (latest).
4. Should I use net profit for the year or net profit from continuing operations?
You should use net profit after tax before any other comprehensive income. In your
analysis, if relevant, you can mention the effect of profits from discontinued operations.
5. If the company does not have COGS (or cost of sales) in the income statement, how
can I calculate the gross profit margin?
Service companies do not have COGS, so you cannot calculate gross profit margin.
In the income statement, expenses can be classified by nature or function. When expenses
are classified by nature, manufacturers disclose “Raw materials and consumables used” plus
“changes in inventory of finished goods and work in process”. In that case COGS is equal
to the sum of the two amounts. When expenses are classified by nature, retailers disclose
“finished goods purchased for resale” plus “changes in inventory of goods for resale”, again
COGS is the sum of the two amounts
If expenses are classified by function then COGS (or cost of sales) is required to be shown
separately.
ACCT 7101 Accounting – Individual Assignment FAQ’s.
2
If COGS is not explicitly identified in the income statement as indicated above it is
important that you add a note pointing out what figure you used to calculate the ratio.
6. Which revenue should be considered to calculate gross margin percentage, profit
margin and average days in receivables?
For the calculation of gross margin percentage and average days in receivables use sales
revenue according to the information provided in the income statement excluding “other
revenue”. For profit margin use total revenues.
7. Should “devaluation loss” be included in net profit after tax to calculate ratios?
Devaluation loss should be treated the same as a loss from discontinued operations. It
should be included in net profit after tax but the analysis has to include a comment on their
effect on profits if the effect is relevant.
8. Should I use the formula provided in the “Ratio Calculation and Analysis” to
calculate the ratios?
Yes. You need to refer to the formula provided in the formulae sheet to calculate the ratios
and use the ending balance of the balance sheet accounts included in the ratios if it is not
“average”. In case you cannot use the formula provided so you had to use other formulas,
you must explain this in the Appendix.
9. Should I include the rubric in my assignment?
No. The rubric is included in the Turnitin system for marking your assignment.
10. Why can a company have an increase in accumulated losses in the equity section of
the balance sheet and report a profit in the current period?
A company that has profit in the current period may increase accumulated losses in equity
because of distribution of dividends that may exceed the profit for the period. This
explanation can be confirmed looking at the notes or at the statement of changes in equity
in the retained profits column (accumulated losses).
11. If there is current and non-current inventory and accounts receivable, should I add
the non-current inventory and non-current accounts receivable to calculate days in
inventory / days sales in receivables?
No. You should use only the current inventory and accounts receivable to calculate days
in inventory / days sales in receivables.
12. Should I use “net profit attributable to members of the company” or “net profit after
income tax” to calculate ratios?
You should use net profit after income tax.
ACCT 7101 Accounting – Individual Assignment FAQ’s.
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13. I find the ratios defined in the “Ratio Calculation and Analysis” are different from
other ones from other texts, financial news etc. Which one is correct?
There is no single correct way to define a ratio. A ratio can be defined in many different
ways depending on the purpose of the analysis, on the data you have available and on the
preferences of the analyst etc. What is important is to be consistent in the definition of the
ratio when we compare the ratios at different years or the ratios across different companies.
However, having said that, for the purposes of the assignment we have to standardise the
way to calculate the ratios to have some consistency and for marking purposes between
assignments for the same companies. That’s why, for the assignment, we defined which
formula you have to use to calculate your ratios and also we clarified or provided guidance
on what figures you should use. So, even though it would not be incorrect to define your
ratios in a different way you have to follow the formulas provided in the template
included in the assignment materials.
14. If I could not find interest expense in those statements yet I found it in the expense
note, should I use the figure in notes or I have to make assumption on interest expense
as financial cost which listed in the statement?
You should use the interest expense disclosed in the expense note. If it is not disclosed in
the notes you can assume the financial cost provided in the income statement is the interest
expense but you have to indicate what you assume in the footnotes of Appendix.
15. Do I need to have any cover sheet when I submit my assignment?
No
16. I need a help in calculating ratios for market value measures but I am unable to find
the values of share market price and book value per share. Could you please advise
from where will I get these values?
You could find market value from ASX website, Google Finance or other sources as it is
on the fiscal period end, while you are expected to calculate book value per share based on
what you have learned in the course. You should use the share price at the end of the
financial year (e.g. if financial year ends on Sunday, you have to use the share price of
Friday).
17. How do I obtain “Net Credit Sales” if the company does not report credit sales, but
only reports total net sales instead? I find both “net credit sales” and “net sales” in
the formula template, but I am not able to find them both for the most of the time in
annual reports.
ACCT 7101 Accounting – Individual Assignment FAQ’s.
4
You could use net sales if credit sales is not available. Please indicate what you assume in
the footnotes or Appendix.
18. How do I define “Net receivable”? Could I use net trade receivables?
It is okay to include other receivable or only focus on net trade receivable. If you include
other receivable, you may include other revenue or sales to define net credit sales.
19. How do I define “profit before interest and tax” if company only reports “interest
expense”, “tax expense”, and “profit after tax”? Could I define it as the sum of them?
I find it is not 100% right as I cannot get the tax effect from interest expense.
You could calculate in the following way: Add together “interest expense”, “tax expense”,
and “profit after tax” to get “profit before interest and tax”. Please indicate how you
calculate in the footnotes or Appendix.
20. Does “interest expense” include the effect of “interest income”? Can I use “net
financial cost”?
Yes, you can. Please indicate what you assume in the footnotes or Appendix.
21. If a company has “assets classified for sale” in current assets, should they be deducted
from current assets to calculate quick assets?
Yes, they should be deducted from current assets (the same as inventories) to calculate
quick assets.
22. Should I present ratios in decimals or percentages?
You can present ratios in decimals using 3 decimals (e.g. 0.143) or in percentages using 1
decimal place (e.g. 14.3%).
23. Should we base our analysis only in the information provided by the financial
statements?
No, you also have to look at any factors in the economy or the industry that may have
affected the financial performance of the companies. For example, in the mining industry,
if the price of commodities such as copper has gone down in the last three years it may
affect the financial performance of copper mining companies. You can gain some
indication about the challenges faced by your companies from reading the chairman’s or
CEO’s reports and once identified you can google for some references that explain the
challenge and its effect in the industry of your companies (do not forget to include the
references of your sources).
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ACCT7101 Accounting – Assignment #2
Financial Report Analysis and Business Decision Making
Due Date for Submission: 12 pm Monday 18th May 2020
(Weight: 25% of Final Grade – Total 40 marks)
Aims of this assignment
This assignment aims to develop your
a) ability to understand and analyse financial reports,
b) skills and knowledge to compare financial information of two listed companies, and
c) capacity to evaluate financial information and synthesise financial and non-financial
information to make business decisions.
This assignment is to be completed on an individual basis.
Your submitted assignment must be entirely your own work. You may seek guidance from
lecturers, tutors or fellow students to clarify concepts or the application of concepts to the
financial statements in general. In addition, please look at the “Frequently Asked Questions
(FAQs)” document uploaded on Blackboard, which may have the clarifications you need.
Advice that is clearly associated with the assignment tasks cannot be sought or provided.
Plagiarism is the submission of work or ideas which are not your own but for which academic
credit is claimed. It is important that you review the University’s policy on plagiarism. The
originality of your assignment will be assessed by the Turn-it-in system. Information from the
course profile relating to plagiarism is reproduced
below.
Plagiarism
The University has adopted the following definition of plagiarism:
Plagiarism is the act of misrepresenting as one’s own original work the ideas, interpretations,
words or creative works of another. These include published and unpublished documents,
designs, music, sounds, images, photographs, computer codes and ideas gained through
working in a group. These ideas, interpretations, words or works may be found in print and/or
electronic media.
Students are encouraged to read the UQ Student Integrity and Misconduct policy
(http://ppl.app.uq.edu.au/content/3.60.04-student-integrity-and-misconduct) which makes a
comprehensive statement about the University’s approach to plagiarism, including the
approved use of plagiarism detection software, the consequences of plagiarism and the
principles associated with preventing plagiarism.
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Assignment overview
You have been randomly assigned two ASX listed companies that operate in the same
industry (Company A and Company B). See the file “Companies allocated to students” under
the Assessment tab on Blackboard to find your companies.
Obtain each of your company’s annual reports for the 2017, 2018, and 2019 financial years
from the company’s website or www.asx.com.au. The annual reports contain the chairperson’s
report, directors’ report and financial statements (Statement of Financial Position, Statement
of Profit or Loss, Statement of Changes in Equity, Statement of Cash Flows and Notes to the
Financial Statements). The financial statements include comparative figures from the prior
year, therefore, you will have data for three financial years: 2017, 2018 and 2019.
Research the financial press and other sources of available information to familiarise yourself
with the industry in which your allocated companies operate and with company specific factors
that may have or will affect either company’s performance.
Two business scenarios are described below. Scenario 1 relates to Company A only and
Scenario 2 involves Company A and Company B. Knowledge of the industry, company specific
context and their financial data will be important inputs that inform the decision that you
recommend in relation to each scenario.
Scenario 1
Company A has submitted an application to the Brisbane Bank for a loan. The amount of the
loan is equal to 40% of total shareholders’ equity at the end of the 2019 financial year. The
purpose of the loan is to fund expansion of Company A’s operating capacity. The loan term
sought is 10 years and the loan would be secured against company property.
Assume you are a branch lending officer of Brisbane Bank who assesses loan applications.
The lending officer must make a recommendation to the head office lending manager advising
whether the loan application from Company A should be accepted or rejected.
Scenario 2
Both Company A and Company B have offered Capital Investments Limited, a listed
investment company (LIC), a private placement of ordinary shares. The amount of share offer
is equal to 30% of total shareholders’ equity of each company at the end of the 2019 financial
year. Capital Investments Ltd can afford either of the two private placements. The purpose of
an increase in equity for each company is to raise funds to finance an expansion of operating
capacity.
Assume you are an investment manager at Capital Investments Ltd who evaluates private
equity placements. Capital Investments has limited funds available for investing decisions.
The manager must make a recommendation to the board of directors advising whether to
accept Company A’s offer to sell to Capital Investments a new issue of ordinary shares and
reject Company B’s offer, or accept Company B’s offer to sell to Capital Investments a new
issue of ordinary shares and reject Company A’s offer or alternatively reject both offers.
3
Assignment tasks
Before commencing work on the tasks below, refer to the marking rubric for the criteria and
standards that will be applied in the assessment of your assignment. See Blackboard.
1. Company background research (8 marks)
Review Company A’s and Company B’s annual reports, articles in the financial press and
other sources of information. Write a short response to each item below to build background
knowledge of each company and their industry.
a) Describe the operating activities of each company noting similarities and differences
between Company A and Company B.
b) Identify two economy wide factors and two industry factors that could impact on the
financial performance and position of two companies and two specific factors which could
impact on the financial performance and position of company A and B, respectively. (In total,
you should identify and analyse, at least, eight factors.)
2. Financial ratio analysis (8 marks)
Calculate financial statement ratios for the 2019, 2018 and 2017 years for Company A and
Company B. Use the Excel template provided on Blackboard under the Assessment tab to
present the analysis in a table. Obtain data for the ratios from the financial statements and
notes to the accounts. You may add to this template (calculate additional ratios). See further
instruction in the template.
3. Lending decision (12 marks)
Write a business memorandum to the Brisbane Bank head office loan manager from the
branch bank lending officer in Scenario 1. The memorandum must address the following points
below.
a) Evaluate and discuss your assessment of the ability of Company A to repay the loan and
interest. Make a recommendation to accept or reject the 10-years term loan application
from Company A and justify your recommendation. Use knowledge that you have acquired in
your company research from Q1 and refer to relevant ratios calculated in Q2.
b) Briefly discuss Company A’s net cash flows from operating, investing and financing
activities and the trends evident over the last three years. Explain how this analysis is
consistent with your accept or reject recommendation.
c) The use of estimates, cost, alternative accounting methods, the presence of atypical data,
and diversification of firms have been cited as factors that limit the usefulness of financial
statement analysis. In your recommendation, please discuss the limitation of your financial
statement analysis. Identify ratios and explain how one or more of the limiting factors can
4
affect the usefulness of that ratio with reference to literature (accounting texts excluding
Carlon et al. or journal articles).
4. Investment decision (12 marks)
Write a business memorandum to Capital Investments Limited’s board of directors from the
investment manager in Scenario 2. The memorandum must address the points below.
a) Use the most relevant financial ratios to analyse and compare trends in profitability and risk
of Company A and Company B for the 2019, 2018 and 2017 years. Discuss your assessment
of relative profitability and risk of both companies.
b) Recommend whether Capital Investments should invest in Company A or Company B or
alternatively reject both offers. Justify the recommendation based on the evaluation of risk and
profitability of each company and other relevant background information obtained from the
annual reports and other sources. Use knowledge that you have acquired in your company
research from Q1 and refer to the relevant ratios calculated in Q2.
c) Explain with reference to literature (accounting texts other than Carlon et al. or journal
articles) the meaning of the price earnings (PER) ratio and EPS. Describe three year trends
in these ratios for Company A and B and discuss their relevance to the investment decision.
Assignment administration
Format
Submit your work as a single PDF document. Include your student number and name as a
header to the document.
Your written responses to Assignment tasks 1, 3 & 4 are limited to a maximum of 4 pages
(Times Roman 12 point type, 1.5 line spacing and minimum, 2 cm on each margin). Any
submitted text exceeding this limit will not be assessed.
Attach the Excel table of financial ratios for Assignment Task 2 as the 5 th & 6th pages of the
document (excluded from page limit).
Attach a Reference List as the 7th page of the document. All sources used must be referenced
using a consistent academic reference style (e.g. Harvard Style of referencing). See
Blackboard for information on the UQBS preferred format (Writing Guide). To reference from
an annual report use the ASX Code of the company, year of the annual report and page
number, e.g. COL 2019, p23).
Submission
Submit your assignment before or on the due date. Follow the instructions below.
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a) Submit the assignment electronically as a PDF to the Turn-it-in link in the course Blackboard,
under the “Assessment” tab, then under “ACCT7101 Turn-it-in Assignment Submission
Folder”. Follow the submission instructions. The title of your assignment in the “Turn-it-in
Submission Page” must be the ASX code of your assigned Company A. Do not add
anything else in the title. For example, Coles Group Ltd title would be: COL.
b) The assignment can be submitted once only. Once submitted your assignment
cannot be modified and re-submitted. However, before submitting the assignment you
can test it for text matching through a draft submission in the “Draft Turn-it-in
Assignment – To Test Originality” folder.
Late submission
An assignment submitted after the due date and time for which no extension has been granted
prior to the due date will incur a late submission penalty. The penalty is applied at the rate of
5% of the total available marks for the assignment (i.e. 2 marks out of 40 marks) for each
calendar day or part thereof that the assignment remains overdue.
Extension of due date
Requests for granting an extension to the due dates must be made in writing and signed (not
via email) to the Course Coordinator at least 24 hours prior to the submission date. The
request must contain documentation satisfactorily supporting the request. If an extension is
approved, the new agreed date for submission will be noted on the application together with
the Course Coordinator’s and the student’s signatures and a copy returned to the student.
Assessment criteria
The criteria and standards that will be applied in the assessment of this assignment are
available on Blackboard (under the “Assessment” tab). Review the rubric before you
commence work to ensure you understand the requirements of the assessment and how it will
be assessed.
Feedback on the assessment of your assignment will be available via Turn-it-in.
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