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Assessment Information – Semester 2 2018

Financial Statement Analysis

Unit Code: ACCT100

Unit Name: Introduction to Accounting

Marks / Weighting: 50/ 25 %

Learning Objectives: 1 & 4

Due Date: Week 10, Thursday 11th October 2018, 23:00 hrs. (EST)

(via Turnitin)

You will be able to commence the assignment after week 8.

Word limit: 2000 words (excluding appendices and references)

Assignment Description

This assignment covers chapter 18, financial statement analysis based on material covered

in week 7. There are 3 questions with varying allocated marks. All questions must be

answered.

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Introduction

This assignment requires you to conduct a financial analysis of a publicly listed company.

You are required to pick one listed Australian company. You can find a list of all ASX sectors

and constituent companies at the following website:

https://www.asx.com.au/asx/research/listedCompanies.do

After you select your company, you are required to download the 2017 financial statements

published by that company. You can find the financial statements in the company’s annual

report which can be downloaded from that company’s website.

You must also attach the 2017 Annual Report of your chosen company with your assignment.

There is a separate tab available in turnitin submission to load your annual report/s.

If it is not attached, your assignment will not be graded.

Required:

Question 1

  1. i) Calculate the following ratios for 2017 and 2016. (10 Marks)
  2. a) Liquidity Ratios: b) Profitability Ratios:

 Current Ratio  Net Profit margin

 Quick Ratio  Asset turnover

 Return on total assets

  1. c) Solvency Ratios:  Return on ordinary shareholders’ equity

 Debt ratio  Earnings per ordinary share (EPS)

 Debt to equity ratio

 Times interest earned ratio

(ii) Compare and interpret each of the ratios for 2017 and 2016 calculated in (i) above.

(10 Marks)

(iii) Write a concluding comment on:

  1. a) overall liquidity of the company
  2. b) overall profitability of the company
  3. c) overall solvency of company. (12 Marks)

*Please refer to text book (Horngren’s financial accounting) pp.805-806 for financial

ratio formulas. Refer to pp.791-800 to get an idea of how to interpret ratios.

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Question 2 (6 marks)

Discuss THREE limitations of ratio analysis as a fundamental analysis tool.

Question 3 (8 marks)

Corporate reporting is evolving and is more than reporting on profits. Reporting on the entity’s

performance related to people and the planet is increasingly important and included within

the annual report or as a stand-alone report. List FOUR examples of such reporting by your

chosen company.

Referencing and format (4 marks)

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APPENDIX 2 – Rubrics, Assessment Task 2- Financial Statement Analysis

ILOs Criteria

Standards

Below

Expectations

Meets Expectations Exceeds Expectations

Level 1 (e.g. F) Level 2 (e.g. P) Level 3 (e.g. C) Level 4 (e.g. D) Level 5 (e.g. HD)

LO 1 Ethics &

sustainabilit

y

Shows little to no

understanding of

ethical principles.

Shows a basic

understanding of

ethical principles.

Shows a satisfactory

understanding of

ethical principles.

Shows a good

understanding of ethical

principles.

Shows a well-developed

understanding of ethical

principles.

LO4 Performanc

e Analysis

Ratio and or trend

analysis is not

completed. Little or

no description of

ratio and trend

analysis in terms of

liquidity, profitability

and solvency.

Ratio analysis is nearly

completed at a basic

level, including

simplistic description of

ratio and trend analysis

in terms of liquidity,

profitability and

solvency.

Ratio analysis is

completed, including

moderate descriptions

and reasoning behind

the use of particular

ratios in terms of

liquidity, profitability

and solvency.

Ratio analysis is

completed properly,

including some

descriptions and

reasoning behind the use

of particular ratios.

Correct responses are

outlined in analysis in

terms of liquidity,

profitability and solvency.

Ratio analysis is completed

extremely well, including

descriptions and reasoning

behind the use of particular

ratios. Correct responses are

outlined in analysis in terms of

liquidity, profitability and

solvency.

LO 4 Interpretatio

n and

Discussion

Specific position

(perspective or

argument) fails to

take into account

the complexities of

the issue(s) or

scope of the

assignment.

Makes assertions

that are not justified.

Takes a specific

position on the

organisation’s

performance that take

into account the main

issue(s) or scope of the

assignment.

Mostly justifies any

conclusions reached

with arguments, not

merely assertions, but

does not take different

perspectives into

account sufficiently

Some arguments by be

weak or over simplified.

The arguments are

generally logical but the

line of reasoning is not

always clear

Mostly supports

arguments with

evidence from the

analysis and

interpretation of the

financial statements, as

well as other sources

from personal research

referenced in the

Harvard style. The links

to the evidence may

not be strong and some

evidence may not be

relevant.

Takes a specific

position on the

organisation’s

performance that

takes into account the

main issue(s) or

scope of the

assignment.

Justifies any

conclusions reached

with arguments, not

merely assertions, but

does not take different

perspectives into

account sufficiently.

Arguments are

generally logical but

the line of reasoning

is not always clear

Supports arguments

with evidence from

the analysis and

interpretation of the

financial statements,

as well as other

sources from personal

research referenced

in the Harvard style.

The links to the

evidence may not be

strong.

Takes a specific position

on the organisation’s

performance that

accurately takes into

account the complexities

of the issue(s) or scope

of the assignment.

Justifies any conclusions

reached with welldeveloped

arguments,

not merely assertions

that sufficiently take into

account different

perspectives Arguments

are logical and the line of

reasoning is clear.

Supports arguments with

evidence from the

analysis and

interpretation of the

financial statements, as

well as a range of other

sources from personal

research referenced in

the Harvard style. The

links to the evidence are

clear and explicit.

Takes a specific position on

the organisation’s

performance that imaginatively

and accurately takes into

account the complexities of

the issue(s) or scope of the

assignment.

Justifies any conclusions

reached with sophisticated

arguments, not merely

assertion, that sufficiently take

into account different

perspectives and the limits of

the conclusion reached.

Arguments are logical and

persuasive and the line of

reasoning is clear.

Strongly supports arguments

with evidence from the

analysis and interpretation of

the financial statements, as

well as an extensive range of

other sources from personal

research referenced in the

Harvard style. The links to the

evidence are clear and explicit

and well integrated.