INDIVIDUAL WRITTEN REPORT
This assignment is worth 20%
Financial Statement Analysis - To calculate and analyse financial ratios using actual
Given the financial statements and the additional information analyse and discuss the
financial performance and position of David Jones. You should refer to the notes to the
financial statements for further details and clarifications of changes in the financial
Your analysis should be supported by profitability, liquidity, gearing and other appropriate
ratios from Chapter 18 of the prescribed textbook.
Calculate and analyse financial ratios (percentage and ratio analysis)
Use the 2013 and 2012 annual reports to obtain the financial statement figures needed to
calculate the ratios (where there is consolidated accounts, use the consolidated amounts). In
addition, students are strongly advised to:
perform horizontal and vertical analyses of the Balance Sheets and Income
Statements for the company
read all parts of the Annual Reports
Your report should calculate* and analyse the following ratios, in clearly identified separate
Rate of return on net sales
Rate of return on total assets
Rate of return on ordinary shareholders’ equity
Earnings per share (given in the Annual Report)
Current ratio and Acid-test ratio
Inventory turnover and Days in inventory
Gross profit percentage
Accounts receivable turnover
Days’ sales in receivables
Debt to equity ratio
Times interest earned ratio
(* Tabulate and show the formula and detailed calculations in an Appendix.)
Your analysis should include:
Year-to-year (2013 and 2012) comparisons (horizontal analysis). Use the Director’s
Report and the Notes to the Accounts to further justify your answer.
The components of each ratio should be investigated to determine the significant or
determining factors in any change to the ratio.
These significant factors should then be investigated to determine (to the extent
possible) the cause and sustainability of their change (refer to example below).
Example of a current ratio analysis: Company X current ratio increased from 1.2
to 4.3. The company increased its ability to pay its debts in the short-term. The
main reasons for the increase were a 22% increase in cash and a 14% decrease
in accounts payable. The increase in cash and the decrease in accounts payable
were both a result of reductions in purchases of inventory. This is unlikely to
continue as the company was depleting a previous overstock.
Each ratio analysis will be marked on the correctness of the comparisons and the
identification of the determining factors. The depth and correctness of analysis of the factors
will be the primary criteria for grade differentials in this assignment. The determining factors
need not be confined to the annual reports but they must be relevant to your analysis.
Your assignment (in a report form) should be lodged through the Turnitin Assignment
folder of Blackboard by 11.59pm Tuesday 21 October 2014. LATE SUBMISSION
This assignment must be typewritten and double-spaced. A copy should always be
kept by the student. Attach an Assignment Cover Sheet to your submission (refer to
the link on Blackboard - General Policy and Forms).
The Student Manual provides information about the presentation of reports (a link to
the Manual is provided in Blackboard). Wherever possible, tabulate your comparative
data and show them in an appendix but cross-reference them in your report.
The policies on late submission of assignments and plagiarism are provided in the
Course Outline. Extensions with valid reasons will only be considered if the
application is made 48 hours prior to submission.
Length: 2,500 words maximum (excluding appendices).
Financial Ratio analysis
Appendices of calculations/data
Consistent fonts and headings
Pagination and correct cross-referencing