Demonstrate and apply the knowledge and skills covered in lectures/tutorials to a real-world financial analysis scenario.
Perform an analysis of the financial statements for one of the three listed Australian companies that will be randomly assigned through Canvas. These companies are:
- A2 Milk Company (ASX code: A2M)
- Coles Group (ASX code: COL)
- Coca-Cola Amatil (ASX code: CCL)
You will then collect information through public sources in order to critically evaluate the financial performance/position of a company in addition to using the restated financial information in the templates for each company provided on Canvas. Students will be assessed on their ability to formulate an understanding of an entity’s operations using information obtained from completion of the mid-semester assessment and how this is reflected through their financial statements. To succeed in this component, students need to demonstrate their ability to:
• Locate and collect financial and operational information of a company.
• Use pro-forma financial statements of the company to complete a financial analysis template
• Use financial statement information to assess the performance of the company
• Draw insights through analysis of financial ratios to arrive at conclusions on the financial position/performance of the company
• Make simple projections of key financial information - For the company assigned through Canvas, using the respective template also provided on Canvas complete the financial ratio analysis with the traditional and alternative approach to decomposition of profitability. [6 Marks]
- With reference to the condensed financial statements and ratio analysis competed from Part 1, critically evaluate the financial performance of the company. You should evaluate the company’s performance by identifying the key drivers of profitability and incorporate your understanding of the industry and company strategy gained from completion of the mid semester assessment task. [10 Marks]
- Describe an alternate reformulation of the financial information for your allocated company (i.e. a different way of deconstructing the information as compared with the classifications provided in the pro-forma templates). Note: you are not required to perform an alternate reformulation, only to suggest another way of reformulating the financial information given an understanding of the business of your allocated company and its structure. [5 Marks]
- Provide forecasts for the components of ROE calculated from Part 1, to arrive at an estimate of ROE for the 2021 financial year. Provide justifications for your answer, including the assumptions you have made (you will need to make simple projections of revenue and expenses). [5 Marks]
- What additional information would you be interested in as an analyst, in evaluating the company’s performance for 2021? Given the current economic environment, what other financial ratios would you pay particular attention to? [4 Marks]
