Financial analysis report

The expected outcomes of the course
On successful completion of this course, students should be able to:
1. record transactions and prepare financial reports for partnerships
2. describe the conceptual accounting framework and apply the concepts financial
3. record transactions relating to the management of receivables and inventories
4. describe and account for non-current assets and liabilities
5. identify the profit effects of inventory costs methods
6. prepare properly classified financial statements
7. undertake financial analysis.

Requirement Details:
Consider the following scenario. 25 Marks
Assume your best friend has come into some money to the amount of $10,000. They have decided to
invest this $10,000 into shares in one company listed the stock market. You have just started an
accounting degree so your friend offers to share the $10,000 equally with you if you will prepare a
report on the following three companies they are interested in investing in. As you do feel fairly
competent reading financial statements, you accept the offer. The three companies chosen by your
friend are:
ANZ Banking Group Ltd (Public, ASX: ANZ)
Virgin Blue Holdings Ltd (Public, ASX: VBA)
Wesfarmers Ltd (Public, ASX: WES)
To decide how to allocate the $10,000 among shares of the three companies, you should collect and
analyse information on both the quantitative and qualitative aspects of these companies, and produce
your report from this information.
Ensure your final report is professionally presented in the correct format (including a table of contents)
and is easy to follow. Please use the correct system of referencing (note: You do not have to reference
your figures used in your ratio calculations). You do not need to attach the companies? annual reports or
financial statements as appendices. Ensure you write in academic language, including using correct
spelling, grammar and punctuation.
Your required report should include the following:
Course Profile for: ACCT19084, 2010 Term Three – Page 7
1. Executive Summary (200 words): You must provide a brief overview of what the report (your
assignment) is about, and your conclusion.
2. Introduction (300 words): This should include an accurate but succinct and concise description of
each company. Aspects that may be addressed include the industry the company is in; size (broad);
time it has been in business; any recent changes to the company. You also need to explain briefly
what you are hoping to achieve with your analysis.
3. Body:
a. Quantitative Analysis (600 words): This is achieved by financial statement analysis,
calculating the ratios below. You are to utilize the 2009 annual financial reports of these
companies (you can access these via the Connect4 online library database, or via the
respective companies? websites). You will need to clearly explain what each ratio means, in
addition to your calculation. You may calculate other ratios in addition to those below, but be
aware that penalties will be applied if you have calculated every ratio you have learnt. You
need to justify the use of any extra ratios with respect to what you are trying to achieve by
your analysis (eg. You are interested in investing).
i. Earnings per ordinary share
ii. Price Earnings ratio
iii. Dividend yield
iv. Book value per ordinary share
v. ROA or ROE
vi. Liquidity ratio/acid ratio
Please place your calculations/workings as an Appendix to your report, rather than within the
body of your report.
b. Qualitative Analysis (600 words): You are to utilize the qualitative information contained in
the 2009 annual reports of the companies in addition to other information you may find about
each company. Further qualitative information may be acquired online via the respective
companies? websites or from other resources, such as business press (eg. Australian Financial
Review, the business section of the Age or magazines like Business Review Weekly).
Qualitative characteristics you may consider include: general information about corporate or
business segments; latest key information about a company (eg. Stock or capital market
media releases); strategic direction and corporate focus of the company; social or
sustainability practices (environmental, community/employee programs, etc); industry or
economic factors pertinent to the company; unique attributes or practices of the company.
4. Discussion (500 words): Based on the analysis you have performed above, comment on each
company and whether or not they have been profitable (eg. Have they provided good returns to
shareholders in the past?). Ensure that your comparisons between the companies are valid (eg.
Allowed for differences between industries or utilized industry averages for benchmarking). Also
ensure that you give equal consideration in your discussion to both qualitative and quantitative
aspects. Finally, you need to address any shortcomings or limitations of your analysis.
5. Conclusion (300 words): You need to state your investment decision about which company you
would recommend investing the money in. Then summarise your analysis and discussion above to
justify your decision.
Course Profile for: ACCT19084, 2010 Term Three – Page 8
Marking Scheme
Maximum marks Marks Received
Content (20 marks):
Executive Summary: Reason for report and recommendation. 2
Introduction: Concise summary of companies. 1.5
Quantitative Analysis: calculation of ratios 3
Quantitative Analysis: explanation of ratios 3
Qualitative Analysis: accuracy of answer 1.5
Qualitative Analysis: comprehensiveness of answer 2
Discussion on each company based on analysis: Accuracy of
interpretations 3
Discussion on each company based on analysis:
Shortcomings of analysis. 1
Conclusion: State investment decision 1
Conclusion: Justification of investment decision 2
Presentation (5 marks):
Correct report format 2
Correct in text & end list referencing 2
Correct academic language, spelling, grammar, punctuation 1
Total 25
Grade: HD D C P F
21.25< 18.75< 16.25< 12.5< 12.5>





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