Analysis of Suncorp Group Limited

Running head: ANALYSIS OF SUNCORP GROUP LIMITED FINANCIAL
PERFORMANCE
Analysis of Suncorp Group Limited Financial Performance
Name of the Student
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Author Note

ANALYSIS OF SUNCORP GROUP LIMITED FINANCIAL PERFORMANCE1
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Financial Performance Analysis of Suncorp Group Limited.................................................2
a. Description of the Company...........................................................................................3
b. Analysis of the Company’s Net Working Capital Position............................................4
c. Cost of Equity of the firm...............................................................................................5
d. Analysis of Company’s Liquidity and Capital structure.................................................7
Liquidity Ratios..................................................................................................................7
Capital structure Ratios....................................................................................................10
Conclusion and recommendation.............................................................................................10
Appendix..................................................................................................................................11
References................................................................................................................................17

ANALYSIS OF SUNCORP GROUP LIMITED FINANCIAL PERFORMANCE2
Introduction
In the competitive era of business, the organization requires a proper analysis of their
financial condition so that they can analyze and assess their current situation. Financial
analysis is an aspect of the entire business finance function that gives information to the users
and managers to make an effective and critical decision (Revelli and Viviani 2015). The
report aims to examine the main issues and includes the underlying theories essential for
measuring the position of business and its financial performance. The discussion underlines
different ratios, such as liquidity ratios and capital structure ratios to measure the company's
financial performance from the data provided in their annual reports. The company chosen
here is “Suncorp Group Limited” for the analysis of its financial performance. Suncorp
Group Limited is well-recognized provider of financial services that allows above nine
million people to well protect as well as improve their wellbeing (Smith, Henderson and
Ginger 2015). The analysis of Suncorp Group Limited financial performance within this
report is on the basis of analysis of its net working capital position, liquidity, its capital
structure, and cost of equity of the firm using constant dividend growth model. From the
overall analysis, it has found that Suncorp Group Limited is a well-regarded dividend payer
with a good history of reaching its benchmark in performance. The company has grown in its
earning exceeding its annual average over the past five years. The investors will have better
insight for this company because its growth also exceeded the expansion of Insurance
industry, which generated a better earnings growth.
Discussion
Financial Performance Analysis of Suncorp Group Limited
The company does not reveal overall data associated to the financial actions or
procedures, but, they reflect several beneficial information that highlights two essential

ANALYSIS OF SUNCORP GROUP LIMITED FINANCIAL PERFORMANCE3
factors which are the company's profitability and financial soundness. Financial Performance
Analysis comprises analysis and interpretation of data provided within the financial report in
such a way that it commences an overall analysis of the profitability as well as the financial
soundness of the company.
a. Description of the Company
Suncorp Group Limited is an insurance, banking and, finance organization, which is
situated in Brisbane, Queensland in Australia. The group is founded in the year 1996 whose
headquarter is in Brisbane, Australia. The company employs and works with approximately
14,000 people under it. The group is considered as one of the mid-size banks of Australia.
The group has formed its largest insurance group after the merger of Suncorp, Metway Bank
and the Queensland Industry Development on 1 December 1996. Suncorp Group is a public
listed company on ASX within the code SUN (Suncorp Group 2020). The group comes under
the industry of Banking, General Insurance, Life Insurance, Superannuation and Wealth
management. The Suncorp Group Limited is a locally owned public listed organization that
operates within two areas Australia and New Zealand.
The product of Suncorp Group Limited in Australia under the Insurance consists of
Car, CTP, Life and Income, Health and Travel, Home and Contents, and Motorcycle. The
group's determination is to construct a better present for its stakeholders. They help through
providing products and services to lead the life the people want at present and have a secure
plan for life the people want and require themselves for the future. The strategy of the
company is to strengthen its core business through staying focused towards their customers,
brands, and products. The strategy of the company is to form a sustainable competitive
advantage through its four strategic capabilities:

ANALYSIS OF SUNCORP GROUP LIMITED FINANCIAL PERFORMANCE4
 Product Innovation: The Company is likely to improve existing products as well as
create new innovative solutions along with enhancing the capability of their product.
This is included in their pricing and risk management.
 Digital: The consistency in the upgrading of technology inspired people to choose
digital channels. The group tends to help customer to self-serve where requires and
take the initiative to digitize. The group automates procedures to drive their
efficiency and makes thing easier for their people.
 Engaged and Enabled People: The group is willing to create a wide-ranging,
diverse, highly committed and proficient workforce that like to work as a single team
so that to deliver value to their customers.
 Excellent Customer Experience: They endeavour to deliver excellent customer
experiences through structuring itself as a well-recognized brand by building trusted
relationships and improving the channels to meet the experiences of the customers.
b. Analysis of the Company’s Net Working Capital Position
Net Working Capital is a liquidity calculation that measures the capability of the
business to payoffs its current debts with current assets. The measurement is essential to the
management, vendors, and creditors because it reflects the short-term liquidity of the business
as well as the ability of the company for its efficient management for using their assets. If the
company cannot meet their current obligations (to be paid within a year) with current assets,
then they have to use their non-current assets to pay off the current liabilities (Agha 2014).
This can result in decreased operations, sales and other serious business and financial
problems.
Net WorkingCapital=Current Assets−Current Liabilities

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(Refer to Appendix 1)
The Current assets and Current Liabilities of Suncorp Group Limited in the year 2018
were $669 million and $ 82 million. In the year 2019, the group has increased its percentage
of Current assets with 75%, and Current Liabilities declared an increase of approximately 8
times than the year 2018. As a result, the Net working capital of the Suncorp in the year 2018
and 2019 were $512 million and $587 million. The company has a positive figure in both the
years of its Net working capital that is a positive sign of the company's position. Keeping
aside the cash and equivalent to cash, the company has enough financial assets in the year
2018 and 2019 of $552 million and $1075 million. The net working capital position of
Suncorp Group Limited is in a positive and better position which means that the group have
enough current assets to pay off their current debts. The huge amount reflects that the
business has a good amount of capital to expand with the existing one and without taking any
additional debt or investors. The Suncorp Group is able to fund its own expansion through its
current growing operations.
c. Cost of Equity of the firm
The cost of equity refers to the return of a company that an investor expects from its
investment to receive by the business. The cost of equity measures the amount that the
business has to produce for the investors or the shareholders who have invested in the
company. This allows them to raise additional capital whenever it is required by the company
to keep consistency in the flow of its operation (Berger, Chen and Li 2018). In other words,