I am in a strange mood this morning and I think I have decided that it is the calm before the storm. I have mixed feelings about my commentary and I feel as though I can hear the click ticking away in the background (actually I can, my clock is way too loud) in regards to the draft deadline for my work (Friday, 26th May 2017 @ 5:00pm). I most likely won’t reach this deadline but I am sure going to try!
To make life a little easier for myself I have broken down all of the questions Martin asks us in the study guide to make sure that I don’t miss anything. I think it easing my mind on where to start with my commentary. Hopefully it can help one of you too 🙂
Have a super fantastic day and I cannot wait to start seeing the facebook page go off with requests for feedback!
Checklist – please note this was just for me to make sense, there could be heaps more to include!
What do the ratios tell me about my firm?
What do the ratios not tell me about my firm?
How do I understand them?
How do my ratio’s compare to other firms ratios? I have printed out 3 other students worksheets and going to compare
What do the ratio’s tell me about my company’s performance?
What new questions do I have in regards to the ratios?
Note that I used 10% but could locate them in the annual report
Check Chapter 4.4 and write what are the key drivers telling me? Write about each of the following points
– Return on Net Operating Assets (RNOA)
– Cost of Capital
– Net Operating Assets (NOA)
– Profit Margin (PM)
– Asset Turnover (ATO)
Which one is driving the Economic profit over the past 4 years?
Is my firm’s economic profit positive or negative?
Is it a large number? What is causing this?
Is it a small number? What is causing this?
Has it changed over the 4 years?
Why was it changing?
Discuss with other students on what is driving my firms economic profit.
Discuss similarities or differences between the economic profit of the different firms. Why is this?
What is causing them to be similar?
What is causing them to be different?
Describe my insights I have gained by breaking it into bits
What insights have I not gained?
Capital Investment Decision
Develop a Capital Investment decision
Provide two options and include discounting cash flows for between 5 to 10 years
Use required cost of capital @ 10%
Calculate paypack period for both options
Calculate net present value (NPV) for both options
Calculate internal rate of return (IRR) for both options
Advise which option it should invest capital in
Use excel tab to calculate NPC and IRR
Discuss thoughts on processes in coming to my recommendation.
Briefly discuss the strengths and weaknesses of analysis