ACC10007 Financial Information for Decision Making - Assignment 3

Assignment Details

Team formation

You are required to form teams made up of three or four members by the end of Week 4. If you have not joined a team by the end of Week 4, your eLA will allocate you to a team. You can organise your teams on the team formationLinks to an external site. discussion page.

All team members are expected to make a fair and balanced contribution to the report. It is strongly recommended that you keep a record of all the team communications and notes produced in the course of this assignment. This can be done via the team discussion your eLA allocates you to. 

As a team, decide on the responsibilities each team member will manage and how your team will collaborate to complete this assignment.

If you are experiencing any difficulties within your team, please contact your eLA for guidance and support as soon as possible.

You will be marked on both your team's submission, and the degree to which you contribute to your team.

• The review must be essentially the work of the teamand any material used from other sources (particularly reports from banks, investment analysts/brokers, etc.) must be acknowledged and appropriately referenced.
• You are required to complete the Assignment 3 Team contract and team contribution worksheet (DOC 62 KB) Download Assignment 3 Team contract and team contribution worksheet (DOC 62 KB). It is an essential part of establishing a common focus for this task and will affect your team grading. It should be appended to your report.
  • An example of the team grade: If team 'Ace' receives a score of 80% for their team assignment, and all team members saw a 100% contribution level recorded, then all team members would receive the full 80% team score. A team member who had a 50% contribution level recorded would receive an adjusted mark of 40% (50% of the 80% team result). As a formula, the individual mark received for a team assignment is: Individual Mark = (Level of Contribution) * Group Mark. Any contribution score significantly lower than other team members will be reviewed and investigated. 
• Where any student in the team has previously undertaken work in relation to the nominated company for assessment in another subject, this needs to be discussed with your eLA before any work commences.

Report requirements

Based on your analysis of relevant information relating to the company, you are required to prepare a structured report (see recommended structure detailed below) with a focus on the profitability, operating efficiency, liquidity, gearing and cash flows of the company. The profitability, efficiency, liquidity and gearing of the company should be analysed using the required ratios. Firms are accountable for generating profit with the assets employed. In addition, the firm must pay its debts as and when they fall due. An analysis of the Statement of Cash Flows is also required. Use the data from the financial statements in the annual report to calculate the ratios.

Your report should cover a 3-year period for the years ending 29 June 2017 to 27 July 2019, and should be sufficiently broad in scope to demonstrate your understanding of findings following the analysis.

Your ratio calculations and the focus of your report are to be based on the following annual reports:

• Myer annual report 2019(Links to an external site.) (Myer 2021a)
• Myer annual report 2018(Links to an external site.) (Myer 2021b)
• Myer annual report 2017(Links to an external site.) (Myer 2021c).

Ensure that you make an effort to address writing conventions such as format and structure, spelling, grammar and punctuation. If you need some help with how to structure a report, take a look at the guides on report writing on the Academic writing and presenting (Links to an external site.) page of the Student Hub.

Also, here is a Suggested structureLinks to an external site. to help you with this assignment.

1. Company and industry background

Briefly profile Myer Holdings Limited—its history, financial highlights and other relevant company details. Summarise the nature and current state of the industry in which it operates. This section of work will help contextualise the report in terms of key company information and the industry (and wider) environment in which the firm operates. 

History should include: when and where it started operations, by who, major expansions and acquisitions from then to now, types of products and services it offers, significant business relationships, and when it listed on the stock exchange.

Industry should include: identifying which industry it operates in, an understanding of the state of the industry and identifying major competitors.

2. Calculation of required ratios  

The minimum ratios to be manually calculated for each of the three years are as follows (provide two decimal points for your ratios):  

• Profitability:
  • Return on shareholders’ equity.
  • Return on total assets¹.
  • Gross profit margin.
  • Net profit margin¹.
• Efficiency:
  • Inventory turnover.
  • Settlement period for accounts receivable².
  • Settlement period for accounts payable³.
  • Asset turnover.
• Liquidity:
  • Current ratio.
  • Quick ratio.
  • Cash flow from operations.
• Gearing/Solvency:
  • Debt Ratio.
  • Debt to Equity Ratio.
  • Equity Ratio.
  • Interest Coverage.

Footnotes for calculating ratios:

1. Terminology in the company's financial statements:
   • Profit or Loss Statement use Consolidated Statement of Comprehensive Income.
   • Balance sheet use Consolidated Statement of Financial Position.
   • Cash flow statements use Consolidated Statement of Cash Flows.
   • Accounts receivable useTrade and other receivables.
   • Accounts payable useTrade and other payables.
   • Interest expense useFinance Cost.
   • Cost of Goods sold use Cost of goods sold.
2. Assume that 10% of sales are credit sales.
3. Assume 100% of inventory (stock) purchases are on credit. As the purchases figure is not available you will need to calculate it. (HINT: Use your COGS formula.)
4. To calculate the gearing ratio use the following formula:

(Noncurrentliabilities)(Noncurrentliabilities+TotalEquity)×100

Please note: The manual calculations of these ratios involve detailed workings (show your steps in both the formulas and the figures) for all ratios calculated for each of the three years. All detail should appear in the appendices, not in the body of the report. For guidance on which ratios to use, and how to calculate them, please refer to the Ratios case study - Atrium Enterprises (DOC 26.5 KB)  Download Ratios case study - Atrium Enterprises (DOC 26.5 KB). 

3. Analysis and interpretation of financial performance, position, and market standing

Based on the ratios you have calculated, the financial reports and other information, prepare an analysis that covers the past three financial years ending 30 June 2017, 2018 and 2019, concentrating on the following aspects:

• profitability
• efficiency
• liquidity
•  

Analysis and Interpretation of Cash Flow Statements

• Your analysis should also include a review of the company's operating, investing and financing cash flowsover the three years.

Note: Analysis is not a re-statement of the ratios or their formulas—it's an overview of the results and trends, and an interpretation of them. 

4. Assessment of other relevant information

• An assessment of other, typically non-financial, information relevant to the assessment of the company’s current state of financial affairs (for instance: global events, industry developments and issues, structural changes to the company such as changes in board composition, mergers or acquisitions, economic factors and any other relevant issues that may potentially impact on the operations of the company).
• While your report will focus on the financial performance of the company, consider also its environmental and social performance.

5. Summary and conclusion

Based on your analysis and findings, summarise the company's current financial situation and consider its potential outlook and make recommendations. This section is worth 5% so make sure you address the requirements of the following rubric.

Supporting resources

The following will assist you with completing this assignment:

• Helpful hints—Use of figures and tables in analytical reportsLinks to an external site..
• DatAnalysis Premium(Links to an external site.)—A Database accessible through Swinburne Library that is useful for things such as ASX Announcements, company history, annual reports, and directors and management.
• Industry context: Australian Bureau of Statistics (ABS)(Links to an external site.) (Commonwealth of Australia 2021) and IBIS (Links to an external site.) (IBISWorld 2021) Note: Swinburne University Library has access to some, but not all of ABS and IBIS information.
• Market: Australian Securities Exchange (ASX)(Links to an external site.) (ASX Limited 2021). 
• Newspapers: Australian Financial Review, other newspapers and business publications (such as BRW) (e.g. through the Factiva database available through the Swinburne University Library).
• Newslettersissued by stockbrokers and fund managers. 
• For help with your Team contract and contribution table, review this Team contract exemplar (PDF 203 KB) Download Team contract exemplar (PDF 203 KB).
• View the Study Resources(Links to an external site.) section in the Student Hub for additional support with presentation, academic and report writing skills, and Teamwork (Links to an external site.) tips and support for working in high-performing teams.

Please note: You are not expected to purchase industry- or company-specific reports from commercial suppliers. Only resources available through the Swinburne University Library, those on corporate or other websites (or other media such as newspapers electronically available, for example), and which are free of charge are expected to be used.