Company Performance Analysis

Running head: COMPANY PERFORMANCE ANALYSIS
Company Performance Analysis
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1COMPANY PERFORMANCE ANALYSIS
Abstract:
The report is prepared with the objective for performing the financial evaluation of an
entity listed in ASX in order to undertake decisions. Therefore, Dominos Pizza
Enterprises Limited is selected as the entity. Different sections are prepared for
effective presentation of the report. Dominos Pizza Enterprises Limited has sound
profitability position because of the significant rise in both gross margin and net
margin. However, the entity is needed to formulate strategies for enhancing its
ROCE in future, since it is deemed to be a vital indicator of business profitability. In
addition, Dominos Pizza Enterprises Limited is able to maintain its operating
efficiency as well as profitability that would maximise the wealth of the shareholders
as well as the investors. It could be observed that the dividend payout ratio of the
entity has increased massively in 2017 and it has fallen slightly in 2018. This implies
that Dominos Pizza Enterprises Limited is involved in following constant dividend
policy, as it distributes dividends based on the profit generated by the organisation.
Hence, the investor is recommended to invest in the shares of Dominos Pizza
Enterprises Limited.

2COMPANY PERFORMANCE ANALYSIS
Table of Contents
I. Introduction:...............................................................................................................3
II. Financial analysis of Dominos Pizza Enterprises Limited:.......................................3
2.1 Company description:.........................................................................................3
2.2 Computation and assessment of performance ratios:........................................3
2.3 Detection of marketable securities:.....................................................................7
2.4 Sensitivity analysis:.............................................................................................7
2.5 Systemic and un-systemic risks:.........................................................................9
2.6 Dividend payout ratio and payout policy:..........................................................10
III. Letter of recommendation:.....................................................................................10
IV. Conclusion:............................................................................................................11
References:................................................................................................................12

3COMPANY PERFORMANCE ANALYSIS
I. Introduction:
By assessing the financial health of the entities, it becomes possible to gauge
the ongoing financial performance along with gathering an idea of their future
performance (Amit and Villalonga 2014). Due to this reason, the investment
professionals conduct financial performance analysis of those entities so that
appropriate investment decision could be undertaken. For performing the evaluation,
there are different tools used such as sensitivity analysis, ratio analysis and others.
The qualitative aspects to be taken into account include risk analysis of the firms,
marketable securities as well as others (Atanasov and Black 2016). The report is
prepared with the objective for performing the financial evaluation of an entity listed
in ASX in order to undertake decisions. Therefore, Dominos Pizza Enterprises
Limited is selected as the entity. Different sections are prepared for effective
presentation of the report. Initially, a brief overview of the business operations of the
above-mentioned entity would be provided in the paper. The next section elaborates
on the financial health of the entity by performing ratio analysis related to profitability
and operating efficiency. The next section focuses on performing cash management
evaluation that is made with the help of identifying marketable securities. After this,
there has been conduction of sensitivity analysis so that the viability of the proposed
project could be analysed accordingly. The aim of the next section is to include a
discussion of systemic and un-systemic risks. In addition, dividend payout ratio is
computed for the chosen entity and accordingly, evaluation would be made of its
payout policy. Finally, the report would shed light on recommending the feasibility of
investing in the chosen entity.
II. Financial analysis of Dominos Pizza Enterprises Limited:
2.1 Company description:
Dominos Pizza Enterprises Limited is the biggest pizza chain in Australia in
terms of network sales and network store numbers and it is the biggest global
franchise for Dominos Pizza brand. In other words, it is involved in operating retail
food outlets. The organisation is involved in operating a network of nearly 2,400
stores. The first store of Dominos that opened in Australia has been in the year 1983
in Springwood, Queensland. It then offered home delivery after the concept was
used by the Pizza Oven Family Restaurant in the year 1981 in Holland Park
Brisbane. Silvio’s Dial-a-Pizza has bought the Master Franchise of Australia and
New Zealand in 1993 and in 1995, the two brands merged and they are rebranded in
the name of Domino’s Pizza. In the year 2018, Dominos Pizza Enterprises Limited
has been inducted into the “Queensland Business Leaders Hall of Fame”
(Dominos.com.au 2019).
2.2 Computation and assessment of performance ratios:
The assessment of operating efficiency and profitability could be taken into
account in the form of two significant aspects in order to determine the current
financial performance and standing of Dominos Pizza Enterprises Limited. The
below-stated discussion reveals the assessment of different ratios under operating
efficacy and profitability of the selected organisation:
Analysis of profitability: