Report on financial statements
• Evaluate the performance of a company through a critical analysis of its published financial
statements over the two latest years, as follows:
o Locate, extract and analyse data from the published financial statements1 to provide a
comprehensive analysis of a company’s operations and performance;
o Structure an argument about performance based on the analysis of five aspects of performance
evaluation:
Profitability
Efficiency
Short-term solvency
Long term solvency
Market based ratios
• Present a clear, well-structured report using appropriate style and language.
CASE SCENARIO
You are a managerial accountant who has been asked to analyse the latest Annual Report and
Financial Statements (it must contain two years information) of a publicly listed company that is listed
on the Australian Stock Exchange (www.asx.com.au). You must choose the publicly listed company
and produce a comprehensive report for distribution to the company’s management to comply with
all the requirements listed below.
Note that the calculation of ratios does not earn many marks. While they are expected to be accurate,
most marks will be earned by demonstrating your understanding of ratio analysis and its uses. This
will be apparent to the reader from your analysis of the implications of the ratios you present and
your ability to provide some explanation through the recognition of the interaction between ratios.
You are also expected to make some recommendations to management based on your analysis.
REQUIRED
Prepare a word-processed report containing the following:
1. An analysis of the information contained in the latest Annual Report and Financial Statements of
the company, commenting on the strengths and weaknesses of the company over two years by
applying ratio analysis in the categories listed above;
2. Suggestions or recommendations for improving the business, based on the analysis;
3. Full referencing of your sources of information, which may include any external sources such as the
financial press, commentators and the internet that you may have used to strengthen your analysis.
You should put the ratio calculations in an appropriate appendix so that the body of the text only
states the result of the calculation (e.g. ‘…argument is supported by a debtors collection period of 26
days’) and not the process of calculating it. Pay attention to the presentation of this appendix so that
it is user friendly and it is easy to locate any ratio. Do not calculate every ratio in the list in your
textbook—you should be selective and only go beyond the major ratios, which are discussed in the
textbook, if you have decided that further detailed analysis of an aspect of the statements will better
enable the development or justification of ©Australian Institute of Business. V11Jan13– BH:2013:8ed 10
a recommendation to management. The quality of the analysis is more important than the quantity of
ratios.
Please submit a copy of the annual report with your assignment.
Important Instructions
1. Assignments must contain proper citations and referencing using the Harvard style referred to in
the AIB Style Guide, that is: a. citations (or in-text references) of quoted and paraphrased materials to
support your arguments/comments,

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