Analysis of Treasury Wine Ltd and Australian Vintage’s Performance

Running head: ACCOUNTING FOR MANAGERS
Accounting for managers
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1ACCOUNTING FOR MANAGERS
Table of Contents
Introduction...........................................................................................................................................2
Analysis of Treasury wine Ltd and Australian Vintage’s performance...................................................2
Debt equity ratio...............................................................................................................................2
Dividend payout ratio........................................................................................................................3
Conclusion and recommendation.....................................................................................................4
Reference..............................................................................................................................................5

2ACCOUNTING FOR MANAGERS
Introduction
The purpose of writing this report is analysing the financial performances of ASX listed entity
Treasury Wine Ltd and comparing the same with another ASX listed entity Australian Vintage.
Treasury Wine operates as the wine company and carries on its business in New Zealand, Asia,
Europe, Australia and America. Wine portfolio of the entity includes commercial wine brands,
masstige, luxury wines like Penfolds, Beringer, Wolf Blass, Chateau St Jean and Sterling Vineyards.
On the other hand, Australian Vintage Ltd is the leading wine company in Australia with the
capabilities of boutique, vineyards and bult products in wine (Tweglobal.com 2019).
Analysis of Treasury wine Ltd and Australian Vintage’s performance
Debt equity ratio
Debt equity ratio reveals the proportions of the debt and equity an entity is utilising for
financing its assets. Further it signifies the extent to which the equity invested by the shareholders
can fulfil the creditor obligation in case the business declines. Low debt to equity ratio signifies that
lower amount of capital has been financed through debt against the finance through equity (Evans
and Mathur 2014). It is computed through dividing the total liabilities by total equity amount.
06/14 06/15 06/16 06/17 06/18
Treasury wine
0.35513
2
0.36027
8
0.47924
4
0.46301
8
0.55756
1
Australian
vintage
0.63232
7
0.58743
7
0.54441
6
0.48361
3
0.50490
5
06/14 06/15 06/16 06/17 06/18
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Debt equity ratio
Treasury wine
Australian
vintage
Looking into the above table and graph it can be stated that the debt equity ratio of Treasury
Wine over the years with regard to funding through debt has been increased as the same has been
increased from 0.36 to 0.58 over the period of 2014 to 2018 (Tweglobal.com 2019). On the contrary
the debt equity ratio for Australian Vintage over the same period has been consistent improving
trend and dropped to 0.50 from 0.63. Hence, the leverage position of Australian Vintage over the
years has been improved (Australian Vintage Limited 2019). From the investor’s perspective it is very
crucial to know the leverage position of the entity as the highly leveraged companies are not good