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Business Analysis and Interpretation
You are required to calculate key financial ratios for an ASX listed company and its competitor and interpret this information in the context of your allocated competitor company over time.
You will be allocated two ASX listed companies to study for this assessment. You must do your allocated companies in the order they are allocated to you. You can look up your allocated companies under 'You/Competitor' in MyGrades in week 1.
Imagine you work for the FIRST of these companies. The second is one of your company's competitor.
Your boss has asked you to calculate and assess the company's key (your boss's opinion) ratios relative to that of its competitor and provide recommendations for improvement.
The key ratios you need to calculate for your company and your competitor are net profit margin, asset turnover, current ratio, quick ratio and debt ratio. Your boss also wants you to calculate the cash cycles. All workings for ratios and the cash cycles are required.
You focus your analysis on the companies' 2014, 2015 and 2016 ratios mentioned above firstly in terms of trend changes and also in comparison to your competitors ratios.
In making your assessment consider potential differences between your company and its competitor that could explain divergent results. Where relevant, these should be noted. (For example, although the companies may compete in some of the same markets, they may also have different areas of business).
Chapter 8 of your textbook will give you a background explanation on these ratios and you should in your own words explain the relevance of ratios, benchmarking and also the relevance of your particular identified ratios as part of your discussion.
To undertake this task you will need to get some background information on the companies and collect some data to create ratios. Information required is available from DatAnalysis found by following the links from the SCU homepage to the 'Library' and 'Databases'. For the calculation of ratios aspect of this assessment use the 'Financial Data icon and then across the top, Profit and Loss and also Balance Sheet as necessary.
Since your boss is a busy person and has little time to read lengthy reports, your submission for this task preferably should not exceed 1,000 words. Structure your submission as a very short report that excludes title and contents pages. Ensure you fully reference any non-text book or non DatAnalysis sources of data and information you use in this assessment.
Speciality Fashion Group Ltd. (SFH) is a public company that was incorporated in 1993 in New South Wales as Miller’s Fashion Club. Its name was changed to SFH in 2006. It is a multi-branded company that deals in women apparel. Its brands consist of Millers, Crossroads, Rivers, and Autograph etc. It has 1095 retail outlets and 7 online businesses through which retail operations extends to customers in Australia, New Zealand, USA, South Africa.
The present report has been prepared for the purpose of financial and business analysis of SFH. The trend of ratios for three financial years, i.e. 2014, 2015 and 2016 has been calculated. The report also focuses on the comparison of the performance of SFH with it competitor company, i.e. Noni B Ltd for three financial years.
Noni B Limited (NBL) is a competitor company of SFH, which was incorporated in 1977 in New South Wales. This company specializes in apparel and accessories for Australian women who are forty plus. It has 212 retail outlets though the nation and one online business. Its two fashion brands consist of Noni B and Liz Jordan. The apparels designed by this company are contemporary and meant for all occasions.
Ratio analysis is a technique of financial analysis that expresses a proportional relationship between two financial variables so that a meaningful interpretation can be drawn for business decision making (ACCA, 2017).