Financial Analysis of APN Group

This assignment requires a comprehensive financial analysis of APN Group, focusing on their reported financial condition and performance. Students need to evaluate financial ratios to assess the company's liquidity, profitability, and solvency. The analysis should also consider management's stated objectives, particularly reducing the cost of capital through debt financing strategies. The report concludes by summarizing the overall financial health and sustainability of APN Group based on the analyzed data.

Running head: ACCOUNTING & FINANCE
Accounting & Finance
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Part A:..............................................................................................................................................2
1a. Capital budgeting for Base-Case Scenario:...............................................................................2
1b. Capital budgeting for Worst-Case Scenario:.............................................................................3
1c. Capital budgeting for Best-Case Scenario:................................................................................4
PART B:..........................................................................................................................................5
Introduction:....................................................................................................................................5
Depicting the APN’s capital structure:............................................................................................5
Calculating the Depiction of After-Tax WACC:.............................................................................6
Evaluation of the financial ratios:....................................................................................................6
Identifying the performance of competitor’s:..................................................................................7
Depicting the Capital structure of APN:..........................................................................................7
Conclusion:......................................................................................................................................8
References and Bibliography:........................................................................................................10

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Part A:
1. Conducting investment appraisal techniques:
1a. Capital budgeting for Base-Case Scenario:

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1b. Capital budgeting for Worst-Case Scenario:

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1c. Capital budgeting for Best-Case Scenario:

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2. Mentioning the capital budgeting approaches could be taken into consideration:
The capital budgeting techniques such as NPV, Payback period, and ARR is mainly used
in calculating the overall viability of the project. Moreover, the overall net cash flow is firstly
derived after, which all the relevant investment appraisal techniques is been used to identify
viability of the project.
3. Stating the above proposal should be accepted:
The derivation of calculation conducted in the above figures mainly indicates viability of
the project under base-case scenario. The project is able to provide development profitability
index of 114.36% and a payback period of 7.13, which is fairly reasonable for an investment
project. Hence, investment in the project would eventually allow the organisation generate a
relevant income in future and increase its firm value. Moreover, the project also has a positive
NPV that indicates the viability of the project for providing higher returns in future.
PART B:
Introduction:
The report directly indicates that relevant financial condition of APN Outdoor Group by
evaluating the financial ratios and WACC of the organisation. Furthermore, the report aims in
providing in-depth financial condition of the organisation and its overall capital structure.
Depicting the APN’s capital structure:
The evaluation of the overall financial report of APN mainly indicates that the company
is more focused on acquiring equity capital and then debt. This could eventually be identified

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from the capital structure of the company, which indicates its WACC. The current WACC of the
organisation is mainly at 6.67%, as the company has intention to decrease the overall cost of
capital for adding more and more projects at less cost (Investors.apnoutdoorcorporate.com,
2017). This reduction in cost of equity could help in achieving optimal capital structure, which
could directly improve financial stability of the organisation. Moreover, it could be identified in
reduction in cost of capital could only be obtained if the organisation increases cheap debt
accumulation to support its capital needs. However, it is seen that the organisation has many
reduced the interest bearing capital with more equity, which has directly increased the overall
WACC of the organisation.
Calculating the Depiction of After-Tax WACC:
Evaluation of the financial ratios:
The overall financial ratios of the organisation are mainly identified by detecting liquidity
ratios such as current ratio and quick ratio. The organisation’s overall current ratio has remained
same at 1.90 from 2015 to 2016 indicating a no sudden change in its current structure.
Furthermore, the quick ratio the organisation has a lead to increase from 2015 to 2016 and is
currently situated at 1.78 from 1.6. This only indicates that the company has been focusing its
financial expenditure wisely with adequate currency is been accommodated and increment in the

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efficiency of the inventory can be identified (Lueg, Punda & Burkert, 2014). Moreover the
profitability ratio of the organisation indicates an increment from 13.67% to 14.66% in 2016
(Investors.apnoutdoorcorporate.com, 2017). This financial ratios directly they keep overall
financial stability of the organisation and its current financial position.
The overall total long term debt to Assets of the organisation is mainly at 0.23 while
interest coverage ratio stands at 25.96. This mainly indicates that the overall financial stability of
the organisation is adequate where more debt could be accommodated as APN could pay
adequate interest on loans.
Identifying the performance of competitor’s:
Current competitors APN are mainly Ooh Media, who has adequate capital structure,
which is directly supporting moral operation and capability. The companies on capital structure
are balance between both debt and equity, which is directly organisation to decrease the chance
of insolvency. However, APN is more focused in acquiring more equity and reducing the debt
exposure (Troy, 2013). Comparison of the overall capital structure mainly indicates that Ooh
Media has adequate Capital structure where it has a mixture of both debt and equity.
Furthermore, evaluation of the annual report of APN mainly indicated that the organisation
referring equity financing over debt finance, which is why from 2015 to 2016 the company has
reduced overall loan requirements and has not acquired any new loans or financial obligation.
Depicting the Capital structure of APN:
The evaluation of the annual report of APN Group mainly indicated that the company's
current capital structure is distributed between debt and equities, which has helped in supporting

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its operational capability and financing needs. Furthermore, viability of the capital structure of
the organisation can only be identified with the help of WACC, which is relatively higher as the
management indicated to review its cost of capital (Investors.apnoutdoorcorporate.com, 2017).
Moreover, any kind of decisions that is taken by appropriate authorities is directly reflected on
the overall capital structure organisation. Hence, APN Group management mainly wants the
overall cost of capital of your organisation to reduce, as it might help in starting new projects to
generate higher returns from investment.
The overall aim of APN Group is to reduce the cost of capital, which is directly achieved
by reducing your on equity funding and acquiring low cost debt funding. This accumulation of
low debt funding could eventually allow APN Group to reduce the overall cost of capital and
achieve all the relevant measures that was taken by the management. The acquiring of low cost
debt is one of the methods that is used by organisation. The other method is mainly to reduce the
equity capital, which could directly help in reducing cost of capital. The use of bonds, bank
loans, overdraft, and other financial obligations are directly used by organisation to increase debt
exposure (Ferrer & Tang, 2016).
Conclusion:
The evaluation of the overall report indicates that the current financial condition of the
organisation is relatively adequate. In addition, the financial ratios portray a positive financial
condition of the organisation which directly states that future progress and sustainability that
could be obtained by the organisation. The overall return that is provided by the organisation is
also adequate and supports management decisions.

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References and Bibliography:
Abdul-Baki, Z., Uthman, A. B., & Sannia, M. (2014). Financial ratios as performance measure:
A comparison of IFRS and Nigerian GAAP. Accounting and Management Information
Systems, 13(1), 82.
Ferrer, R. C., & Tang, A. (2016). An Empirical Investigation of the Impact of Financial Ratios
and Business Combination on Stock Price among the Service Firms in the Philippines. Academy
of Accounting and Financial Studies Journal, 20(2), 104.
Investors.apnoutdoorcorporate.com. (2017). APN Outdoor | Investor Centre. [online] Available
at: http://investors.apnoutdoorcorporate.com/Investor-Centre/?page=Annual-Reports [Accessed
19 Sep. 2017].
Le, M. H. N., Nguyen, T. M., Nguyen, T. T. T., Ho, S. Q. D., & Tran, N. Q. H. (2015). Impact of
financial market ratios to individual investors decision in Vietnam (Doctoral dissertation, FUG
HCM).
Lueg, R., Punda, P., & Burkert, M. (2014). Does transition to IFRS substantially affect key
financial ratios in shareholder-oriented common law regimes? Evidence from the UK. Advances
in Accounting, 30(1), 241-250.
Pech, C. O. T., Noguera, M., & White, S. (2015). Financial ratios used by equity analysts in
Mexico and stock returns. Contaduría y Administración, 60(3), 578-592.

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Thim, C. K., Choong, Y. V., Fie, Y. G., & Har, L. W. (2014). Assessing Financial Performance
of Malaysian Islamic and Conventional Commercial Banks Using Financial Ratios. Journal of
Modern Accounting and Auditing, 10(4).
Troy, L. (2013). 2014 Almanac of Business and Industrial Financial Ratios. Prentice-Hall.