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ACCT Company Project
Financial analysis word count: 581
According to Hallenstein Glasson Holdings Limited (HGH) ,the Current Ratio of the company was 1.92:1 in 2009, which was above the acceptable level (1:1). Since 2010, the Current Ratio of HGH increased with slightly fluctuation, the ratio at 2.34, 2.17, 2.23 and 2.4 all were above the ideal ratio (2:1). Compared with Postie Plus Group Ltd (PPG), the ratio at 1.79 in 2009 was above the acceptable level. Between 2010 and 2012, the Current Ratio increased, all of them during that three years were above the ideal ratio. However, there was a dramatically downward trend from 2012 to 2013 down to 0.91:1 which was near the unacceptable level (0.9:1). To sum up, the ratios among HGH represented better.
Quick Asset Ratio
From the Quick Asset Ratio chart, it appears the ratios of HGH to be at the acceptable levels and got peak at 1.66 in 2012. The ratios for this five years are favorable, however, the ratios were far away from the ideal ratio. The highest quick ratio was at 0.34 and the lowest ratio was at 0.08 of PPG which means the Quick Asset Ratio of this company were below the acceptable levels between 2009 and 2013. That means less quick assets to meet Current Liabilities, it was bad. To be concluded, HGH had more ability to control their inventory and prepayments.
The Equity Ratio
According to the measurement of the Equity Ratio analysis, it measured a higher Equity Ratio which above 50% was less risk associated with an organization. The Equity Ratio for HGH grew from 71.45% to 78.31% during this five years. It means that HGH worked in a less risk level and the increase of the Equity Ratio over the period was due to to an growth in shareholder’s equity. In opposite, the Equity Ratio of PPG was below 50%. There was a significant decline from 46.79% to 14.06% during 2013. This indicates that there was a higher risk in PPG and it is unfavorable.
The Times Interest Earned Ratio
There was no Times Interest Earned Ratio of HGH from 2009 to 2013. Over the period of 2009 to 2011, the TIE ratio increased slightly from 1.72 times to 2.26 times. However, since 2012, the TIE ratio decreased and in 2013, there was a slump from 1.57 times to -12.71 times. The business has become risker. This very unfavorable TIE ratio implies.
Inventory turnover ratios combined the number of times that the business could buy and sell inventory. The IT ratio of HGH has taken a substantially decline, from 14.26 times to 10.88 times by 2013. This ratio should be through investigated. PPG also had a decrease of IT ratio but much slightly over the five years period from 5.17 times to 4.31 times. This showed the company could control their sales in a stable level. However, it stayed in a low level of Inventory Turnover.
Fixed Asset Turnover
The Fixed Asset Turnover Ratio of both of HGH and PPG had a slight fluctuating trend from 2009 to 2013. To be specific, PPG had a increasing overall of FAT from 14.48 times to 16.26 times; when turns to HGH, the company had a decreasing overall of FAT from 6.16 times to 5.47 times. FAT ratio of PPG increased that can be linked to the net sales which had more growth than the average fixed asset from 2009 to 2011. The decline FAT ratios of HGH while not representing dramatically unfavourable trends, should be monitored so that overall efficiency in the usage of these assets does not drop more significantly.
Non-financial analysis word count: 241
Postie Plus Group Ltd
PPGL is a company which follows the tripple bottom line, they are concerned about financial, social and environmental components an integral part of businesses. In these recent years, PPGL is aware of its responsibility to the environment and the issue of sustainability. The environmental component includes, or example, impacts of processes, products, and services on air, water, land and human health (Elkington, 1997). Followed this rule, PPGL dispatch products to use reusable bags in lieu of cartons. Whilst, they provide plastic bags which are with the “smart idea”‘Recycle this bag…. save money and the planet’ to customers. The company also are continuous attention to the new technology that would provide more environmentally friendly bags to the customers.
After the Canterbury earthquake, the environment and businesses were suffered greatly of Canterbury area. PPGL concentrated living conditions, workplace environment and psychological status for many staff after the violent Canterbury earthquakes. PPGL senior management were in immediate contact with Christchurch staff and created as normal a workplace environment as possible and they also provided consumables such as fresh water to staff. Temporary office premises were obtained (PPGL Annual Report, 2011). In addition to these measures, staff got professional suggestion from a qualified workplace psychologist. These measures would helped staff live better during the earthquake which followed the social component of tripple bottom line including, for example, workplace health and safety, ... ..., human right, etc (Elkington, 1997).
Annual Report. (2011). Postie Plus Group Ltd. Company Research. Retrieved from NZX deep archive database.
Annual Report Financials. (2013). Postie Plus Group Ltd. Company Research. Retrieved from NZX deep archive database.
Annual Report Financials. (2013). Hallenstein Glasson Holdings Limited . Company Research. Retrieved from NZX deep archive database.
Lawrence, S., Davey, H.,& Low, M. (2012). Accounting at Work in Business, Government and Society (5th ed.). Auckland, New Zealand.
Current Ratio - The current ratio measures the liquidity of an organisation in terms of whether the organisation is able to meet its short-term obligations.
Quick Assets Ratio - The quick ratio measures the ability of an organisation meet its short-term debts. Inventory and Prepayments are excluded from this measure, as they cannot be readily converted to cash.
Financial Structure Ratios
Equity Ratio/Percentage - The equity ratio measures how much funding of an organisation is provided by the owners or shareholders.
Times Interest Earned (TIE) - The times interest earned ratio indicates the proportion of earnings before interest and tax there is to cover the interest expense.
Asset Management Ratios
Inventory Turnover -The inventory turnover ratio measures the number of times that an organisation has been able to by and sell its inventory.
Fixed Assets Turnover -The fixed assets turnover ratio measures the efficiency of fixed assets in the generation of sales revenue.
Total Assets Turnover -The total assets turnover ratio measures how effectively and efficiently the assets of the organisation are being used to generate sales revenue.
Net Profit Percentage - The net profit percentage measures the net profit generated from sales revenue.
Return on Equity Percentage (ROE) -The return on equity percentage measures an organisation’s profitability in terms of the return being generated for owners/shareholders.
Return on Assets Percentage (ROA)- The return on assets percentage measures how effectively an organisation is using its assets to generate profits.
Turnover % - The turnover percentage measures the presentable change of net sales from one period to the next.
Net Income % - The net income percentage measures the percentage change in net income from one period to the next.
Earning Per Share (EPS) - The earnings per share ratio shows the amount of earnings of a company for each issued ordinary share.
Dividends Per Share (DPS) - The dividend per share ratio shows the proportion of earnings of a company that will be paid out as dividends.
Market Test Ratios
Market Share Price - The market share price is the current market value of one share unit of a company. Note (the market share prices in this report are as per the balance date of the financial statements).
Price Earnings - The price earnings ratio shows how much shareholders are currently willing to pay for shares and how much they are earning per share.
Dividend Yield - The dividend yield ratio shows the rate of return to a shareholder if shares were to be purchased at the current market share price.
(Lawrence, Davey, & Low, 2012)