Financial Statement Analysis

a    Calculate and present in a table the following ratios for the three years. Show your calculations (use Excel and show formulas if you can).
i    Gross profit %, Net profit %, Return on equity %
ii    Inventory turnover (times per year), Inventory turnover (days)
iii    Accounts receivable turnover (times per year), Accounts receivable turnover (days)
iv    Current ratio, Liquidity ratio, Equity ratio %.            (8 marks)
b    Comment on the ratios calculated above, and the financial statement results for Rupert’s Department Store during the years 20X3–20X5 inclusive, in the following areas:  
•    profitability
•    managerial performance
•    financial stability.                            (22 marks)
c    Recommend to Rupert what you consider to be the 6 most important things to do to correct his financial position and performance.         (3 marks)
d)    Explain two key benefits to a company for undertaking financial statement analysis.                                (2 marks)

[Note: You are not required to measure or report on any share market ratios.]




PART B                                    (5 marks)

Select The Warehouse Group Ltd (WHS.NZ) listed on the NZ Stock Exchange and print the graph of ‘last share price’ over time for the most recent 12 months.
Your graph must have a title and clearly labeled axes. 
You are also to give a possible explanation for the trend you observe.
Comment on how Return on Assets and Return on Equity from the Warehouse Group Ltd compare to Rupert’s Department Store in part A.
You can find the company the web site for NZX Data, which you can access from the Unitec Library:  On-Line Resources, Databases A-Z. Or access the data on https://nz.finance.yahoo.com.

Financial Statements


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