Subject Title

Financial and Commercial Literacy

Subject Code

ACC101A

Assessment Title

Financial Statement Analysis

Graduate Capabilities

List the graduate capabilities being developed in this assessment

GC1 - Professional Expertise

GC3 - Innovative Problem Solving

GC6 - Independent self-management

GC7 - Technology and information literacy

Learning Outcome/s (found in the Subject Outline)

b. Summarise financial statements to support business decision making

c. Explain the information needs of management

Assessment type (group or individual)

Individual

Weighting %

30%

Word count / Time limit

900 words

Due day

Week 7 Sunday 23.55pm

Submission type

Turnitin ☒

Format / Layout of

Assessment

Report inclusions:

ICMS Cover Page

Table of Contents

Introduction

Body

Recommendations

Reference List

Excel template P&L, Balance Sheet and Ratio analysis

Assessment instructions

Businesses of all kinds are required to provide financial statements as part of  their annual reports.  Although   university/college graduates are   not expected to understand all components of the annual report, it is important that students understand the key financial statements and how they can inform a variety of stakeholders of the state of the business.

Your task is to conduct financial statement analysis on two (2) companies as nominated by the lecturer. Using the annual reports for each company (link located in Moodle Assessment 2) You are required to complete the excel template analysing the 2 companies and write a 900-word report answering the questions below.

Your report must include:

• Table of Contents.

• Introduction: An introduction that explains what each company

does. i.e., What does each business do to earn their revenue? In this section explain what each business’ core activity is, where are they located, etc., (200 words, the information is contained in the respective annual reports)

• Body: An analysis of each of the 2 nominated companies.

Answering the following 4 questions and sub-questions (600 words in total).

• 1. Net Profit Margin. Explain what ‘Net Profit Margin’ represents in these 2 companies. Compare the Net Profit Margin for the 2

companies. Which company has a better Net Profit Margin, and why is it better? What was the reason for Woolworths’ jumpin profit between 2021 and 2022.

• 2. Inventory Turnover Ratio. Explain what ‘Inventory Turnover Ratio’ means in relation to these 2 companies. Compare the

Inventory Turnover Ratio for the 2 companies. Which company

has a better Inventory Turnover Ratio. Is it better to have a higher or lower inventory turnover ratio and why?

• 3. Explain what the Average Collection period means in relation to these 2 companies? Which company has the

better Average Collection period, and why is it important to monitor and control the Average Collection period.

• 4. Debt to Equity Ratio. Explain what ‘Debt to Equity Ratio’ is in the context of these 2 companies. Compare the ‘Debt to Equity’ ratio for the 2 companies. What is the implication of a high ‘Debt to Equity’ ratio on Net profit?

• Recommendation: Based on the information you have in the annual

reports and the analysis you have done above, nominate which company would you invest in. Explain. (100 words).

• Reference List: A list of references using the latest APA referencing style.

•    You  are required to   upload 2 files,   i.e.,  the completed excel spreadsheet and the 900-word report in pdf format.

During class in Week 5 and Week 6, you will be given the opportunity to perform financial statement analysis on the companies, including the excel calculations. This will thereby allow all students who attend the opportunity to both begin thisassessment and learn exactly what is required for the task. The class recording will assist those students who are unable to attend the class.

Readings for the assessment

Refer to your resources for Topics 3 – 5