Financial Analysis Report of Crown Resorts Limited

This report provides a detailed financial analysis of Crown Resorts Limited including income statement, balance sheet, ratio analysis, profitability, efficiency, leverage, market value, and DuPont analysis.

RUNNING HEAD: ACCOUNTING FINANCIAL ANALYSIS REPORT
financial analysis

Accounting financial analysis report 1
Contents
Financial performance...........................................................................................................................2
Income statement...............................................................................................................................2
Balance sheet.....................................................................................................................................3
Ratio analysis........................................................................................................................................4
Profitability........................................................................................................................................4
Efficiency..........................................................................................................................................6
Leverage............................................................................................................................................6
Market value......................................................................................................................................8
DuPont analysis...................................................................................................................................10
References...........................................................................................................................................11

Accounting financial analysis report 2
Financial performance
Income statement
For analysing the profit and loss statement of Crown Resorts Limited, a horizontal and
vertical analysis is been performed for the year 2016 and 2017. From the items of the
statement, the figures for sales, EBIT, and net income is been analysed first to know about
the financial performance of the company. From the below graph, it can be observed that
both the operating profit and net income of the firm has risen over the two years while its
revenue has been decreased. The reason for this downfall was the 48.9% decline in the
revenue of VIP program play and weakness in the Perth economy. In addition to that, the
flooring game revenue decreases by 1.4% which impact the overall sales of Crown Resorts
(Crown Resorts. 2017).
Despite the increase in the operating expenses the EBIT rises in 2017 as compared to 2016.
This was due to a significant increase of 38% in the operating income of the firm. Along with
this, the net income of the company also rises from $948 million to $1866.1 million showing
an upsurge of 97%. This was basically due to the high profits generated from the proceeds of
the Crown's interest in MRE that resulted in a net gain of $1.7 billion (Crown Resorts. 2017).
2016 2017
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
Aanlysis of sales, net income and EBIT
Sales EBIT Net Income

Accounting financial analysis report 3
Apart from this, talking about the EBITDA of the company reduces from $861.4 million to
$790.3 million, reflecting a downfall of 8%. Reason is the reduction in revenue of VIP
program and the challenging economy of Perth.
Balance sheet
The statement of financial position of the company shows the balance of all the assets and
liabilities of the company along with the amount of equity. When analysed it was observed
that the total assets of Crown Resort reduce by 4% over the past two years. The same goes for
the liabilities of the firm. They have also shown a decrease of 3% in 2017. However, the
equity capital of the company rises, reflecting a 3% increase as a whole. This was due to a
significant upsurge in the retained earnings of the company. Apart from this, the non-current
liabilities and long-term debt of Crown Resorts has also reduced over the year, making the
company less risky (Crown Resorts. 2017).
2016 2017
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
8,000.0
9,000.0
10,000.0
Aanlysis of assets, liabilities and equity
Assets Liabilities Equity
Ratio analysis
Profitability
The ROA indicates the amount of income generated by the companies from their assets. The
below graph shows the returns made by Crown resort and SkyCity over the past five years. It

Accounting financial analysis report 4
can be observed that the ROA of CWN increases initially and then declines rapidly for the
next three years. In 2014, the ratio was 13% which falls to 7% in 2017. On the other hand,
SKC's ROA also reduces but it was more than Crown Resort. In 2013, it was 14% which falls
to 9% in 2017. This is because of the assets and net income of SkyCity increase over the five
years, unlike CWN (Gibson, 2011). Moreover, the proportion of the EBIT and total assets of
SkyCity is lower than the proportion of Crown’s assets and EBIT.
1 2 3 4 5
0%
2%
4%
6%
8%
10%
12%
14%
16%
Return on Assets
CWN SKC
The return on sales of CWN has shown many fluctuations over the past five years whereas
ROS of SKC remains almost stable. The ratio reduces from 17% to 9% in the case of Crown
Limited due to the noteworthy decline in its net profit. In addition, the revenue of the
company has shown a significant fall in the last year, resulting in reduced ratio. On the other
hand, the net income of SKC remains almost the same over the years and its ROS was also
the same from the last two years.

Accounting financial analysis report 5
1 2 3 4 5
0%
5%
10%
15%
20%
25%
Return on sales
CWN SKC
Efficiency
The Asset turnover ratio shows the efficiency of the companies in making revenue from its
total assets. From the below graph it can be interpreted that Crown resorts ATR has shown a
continuous decrease in its ratio from 0.48 to 0.38 times in the past three years. Similarly, the
SkyCity’s ATR has also reduced from 0.52 to 0.41 times, still more than that of Crown
Limited. The reason for such reduction was the change in total sales of CWN is less than the
change in its total assets which reduces the ratio (Higgins, 2012). Furthermore, the sale
reduces last year along with the reduction in the company's total assets.

Accounting financial analysis report 6
1 2 3 4 5
-
0.10
0.20
0.30
0.40
0.50
0.60
Asset turnover ratio
CWN SKC
Leverage
The current ratio of CWN has shown a sudden increase in 2017 as compared to the previous
years. On the other side, the CR of SkyCity reduces continuously from 1.12 to 0.36. This was
due to the upsurge in the current liabilities of SKC. Whereas the assets of CWN rises which
were enough to meet its current liabilities (Godwin & Alderman, 2012). It is also noticed that
the change in the current assets of Crown last year is significantly more than the change in its
liabilities. As a result, the ratio gets boosted.
1 2 3 4 5
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
Current Ratio
CWN SKC

Accounting financial analysis report 7
Debt to equity ratio measures the portion of debt taken by the firm against its portion of
equity. The D/E ratio of Crown resorts was less than SkyCity reflecting that the company's
most of the assets are financed through equity rather than debt. Moreover, the ratio reduces
due to the low debt component of CWN as compare to its equity (Jenter & Lewellen, 2015).
In 2017, the ratio was 0.65 which was less than the ratio of 0.72 in 2016. This was because of
the downfall in liabilities of CWN against its equity. On the other hand, the debt component
of SkyCity is more than its equity which increases its ratio from 1.03 to 1.13, making the
company riskier.
1 2 3 4 5
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Debt to Equity
CWN SKC
The similar trend is been noticed in Asset to Equity of Crown when compared to SKC. The
company has low ratio indicating less debt financing. The amount of Crown’s total assets is
very much higher than its total equity which reduces its ratio (Kimmel, Weygandt & Kieso,
2010). Furthermore, the ratio reduces from 1.72 to 1.65 last year due to a minor increase in
the equity of the firm.

Accounting financial analysis report 8
1 2 3 4 5
-
0.50
1.00
1.50
2.00
2.50
Asset to Equity
CWN SKC
Market value
The P/E ratio of Crown Limited has been continuously increased after facing a downfall in
2014. The ratio rises from 13.2% to 27.5% in 2017. This upsurge was due to an increase in
the share price of the company over the years. On the other hand, SkyCity's share price was
very much lower than that of Crown resorts which makes its P/E lower (Lee, Lee & Lee,
2009).
1 2 3 4 5
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
P/E Ratio
CWN SKC
However, the reverse trend has been noticed in the P/B ratio where SKC's ratio was higher
than Crown Resort's ratio. Though both companies' ratio has been reduced over the past five

Accounting financial analysis report 9
years but the proportion of SkyCity's share price and net asset per share is less than Crown
Resort, which makes the ratio to increase. For SKC, the ratio was 2.08 in 2017 whereas
Crown Resorts reported the same at 1.64 during the same year.
1 2 3 4 5
-
0.50
1.00
1.50
2.00
2.50
3.00
P/B Ratio
CWN SKC
Talking about the dividend yield, CWN has declared stable dividends in the initial three
years, which then rises to 72.50 cents and 143 cents in 2016 and 2017 respectively. Due to
this increase, the dividend yield of the Crown Resort also rises in the last year. However,
SKC has declared low dividends during the past five years and its share price was also less
than its competitor. This causes a reduction in the company's dividend yield.
1 2 3 4 5
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Dividend Yield
CWN SKC

Accounting financial analysis report 10
DuPont analysis
It is an extended calculation of ROE which includes the determination of asset turnover, net
profit ratio, and financial leverage. Comparatively, the ROE of CWN reduces drastically
from 13% to 6% in the past five years. On the other hand, SKC tries to maintain its ROE and
has also improved it in 2015 as compared to other years. The reduction was due to the decline
in net profits of Crown Resorts (Nikolai, Bazley & Jones, 2009).
1 2 3 4 5
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
DuPont - ROE
CWN SKC

Accounting financial analysis report 11
References
Gibson, C. H. (2011). Financial reporting and analysis. USA: South-Western Cengage
Learning.
Godwin, N., & Alderman, C. (2012). Financial ACCT2. USA: Cengage Learning.
Higgins, R. C. (2012). Analysis for financial management. New York: McGraw-Hill/Irwin.
Jenter, D. & Lewellen, K. (2015). CEO preferences and acquisitions. The Journal of
Finance, 70(6), pp.2813-2852.
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2010). Financial accounting: tools for
business decision making. New Jersy: John Wiley & Sons.
Lee, A. C., Lee, J. C., & Lee, C. F. (2009). Financial analysis, planning and forecasting:
Theory and application. Singapore: World Scientific Publishing Co Inc.
Nikolai, L. A., Bazley, J. D., & Jones, J. P. (2009). Intermediate Accounting. USA: Cengage
Learning.