Part A – Written Report
You are the CFO of Ethical Trading Group Pty Ltd, working closely with the Financial Controller. The Managing Director has asked you to analyse their financial data and prepare some specific advice for the company, providing a realistic view of the business financial performance and compliance, assessing the financial potential of the business and identifying other important aspects that require attention, such as future funding requirements, risk and taxation issues. The written report, along with a 5 minute presentation will be submitted at the next management meeting.
The analysis and advice is to be formulated into a written report and is to be split into two parts (see below). Please access the Case Study Information for Students, Ethical Trading Group Employee Guidance Materials, Ethical Trading Group Policies and Procedures and Ethical Trading Group Accounting Data which you will need for this assessment. These files are also available in the Ethical Trading Group folder in the Additional Resources for this course.
- You are to calculate the following groups of ratios for 2013 and 2014 and present them in an appropriate table in an Appendix to your report:
- Based on the ratios calculated above you are to advise on the profitability, efficiency and financial stability of the company. In advising the company, ensure that you evaluate and provide options on the following:
- Whether the profit is adequate
- How efficiently the assets are being used to generate sales
- What the reports indicate about the operational efficiency of the business
- Whether there are any short-term financial problems faced by the business
- The extent to which debt funds are used in the business
Ethical Trading Group would also like analysis and advice on the following specific issues. In providing your advice, you must ensure that the analysis is consistent with the company’s business objectives:
- The financial performance, potential and viability of the business and its statutory obligations
- Three major business risks faced by the company and the risk management options relating to these risks, including rights and responsibilities.
- Future cash flows and budgetary control
- Future funding requirements/future sources of funds
- Business compliance and obligations, including those under:
- Corporations Law and Consumer Law (identify and briefly explain 3 compliance and obligation areas under each piece of legislation)
- Tax legislations, identifying significant tax issues of client (identify and briefly explain 4 significant tax issues)