Financial Statement Analysis

Ratio Analysis

Profitability

Margins % of Sales

Gross Margin

Operating Margin

Net Int Inc. & Other

EBT Margin

Net Margin %

The profitability ratio for the financial year 2014 depicts a gross profit margin of 47.19 which implies that the company’s manufacturing and distribution efficiency is improved. The EBIT Margin is 22.29 which imply that the company’s operation profitability is viable. In this regards, the overall profitability trend for tassal group is viable which implies that the company is a going concern[ CITATION Col05 l 1033 ].

Liquidity ratio

Liquidity/Financial Health

Current Ratio

Quick Ratio

Financial Leverage

Debt/Equity

The current ratio for tassal group is 3.38 which more than one implying that the ability of the company to meet its short term obligation as and when they fall due is achievable. The quick ratio depicts a value of 0.2 which implies that assets that may be quickly converted into cash are adequate to cover current liabilities. The debt equity ratio is 0.11 which imply that the extent to which the shareholders of the company can meet the debt is 0.11. The overall trend of liquidity for the company is not risky[ CITATION Raj10 l 1033 ].

Efficiency ratio

Efficiency ratio

Receivables Turnover

Inventory Turnover

Fixed Assets Turnover

Asset Turnover

The receivable ratio for the financial period 2014 depicts a value of 24.16 with inventory turnover of 0.71. This implies that the company is able to make more sales with more receivables being paid. The asset turnover depicts a value of 0.53 which implies that the ability of the company to replace its old asset with now one is faster. This implies therefore that the company is efficient in tis operations[ CITATION Pam04 l 1033 ].

Trend Analysis

The trend analysis will be based on the financial periods for 2014 as the base year and 2013 financial year as the benchmark year in order to provide a foundation for making an analysis and coming up with the decision about the company business situation[ CITATION Rog10 l 1033 ].

TASSAL GROUP LTD (TGR) 2014 INCOME STATEMENT

2013 AUD in millions

2014 AUD in millions

Trend (AUD in millions)

Cost of revenue

Gross profit

Operating expenses

0

Sales, General and administrative

Other operating expenses

Total operating expenses

Operating income

Interest Expense

Other income (expense)

Income before taxes

Provision for income taxes

Net income from continuing operations

Net income

Net income available to common shareholders

From the above trend analysis for tassal group, it can be observed that the change is negative depicting a decrease. The revenue depicts a decline trend with an increase in the net profit. The total operating expense is declining the company with an increase in net income for shareholder. The over trend analysis for the company as far as the income statement is concerned is that tassal group is making an improve profitability in terms of business operation due to decline in operating expense with increase in reported net profit[ CITATION Rog10 l 1033 ].

Statement of financial position for Tassal Group

Balance sheet

Trend (AUD in millions)

Current assets

Cash and cash equivalents

Short-term investments

Total cash

Receivables

Inventories

Prepaid expenses

Total current assets

Non-current assets

Property, plant and equipment

Gross property, plant and equipment

Accumulated Depreciation

Net property, plant and equipment

Equity and other investments

0

Goodwill

0

Intangible assets

0

Other long-term assets

0

Total non-current assets

Total assets

Liabilities and stockholders’ equity

Liabilities

Current liabilities

Short-term debt

Capital leases

Accounts payable

Deferred income taxes

Other current liabilities

Total current liabilities

Non-current liabilities

Long-term debt

Capital leases

Deferred taxes liabilities

Other long-term liabilities

0

Total non-current liabilities

Total liabilities

Stockholders’ equity

Common stock

0

Retained earnings

Accumulated other comprehensive income

Total stockholders’ equity

Total liabilities and stockholders’ equity

It can be observed from the above income statement for tassal group that there is an increase in current asset 8% with an increase in total noncurrent asset by 4%. This is an indication that the asset and inventory turnover for the company is faster which would lead to increase in sales level and net profit to shareholders of the company. The non-current liabilities is increasing by 2% implying that the company investment in debt financing is growing which is ideal since debt capital is considered the cheapest cost of financing. The shareholders equity is increasing with 6%. This is due to growth in retained by 27%. The current liabilities for the company are declining which is an indication that the company ability to meet its short term obligation as and when they fall due for repayment is effective[ CITATION Cra14 l 1033 ].

Reference list

Deegan, C. (2014). Financial Accounting Theory. New York.

Drury, C. (2015). Management Accounting for Business — Page 39. New York: John Wiley & Son’s.

Hussey, R. (2015). Fundamentals of International Financial Accounting. London: Cingage learning.

Pamela P. Peterson, ‎. J. (2004). Capital Budgeting: Theory and Practice. London: Cingage Learning .

Sprinkle, R. B. (2010). Managerial Accounting — Page 72. London: Cingage Learning.