Financial Accounting: Analysis of Transurban's Financial Performance and Sustainable Development Goals

This assignment analyzes the financial performance of Transurban Company for the two financial years that is 2018 and 2017. It also evaluates the initiatives taken by the company to meet its UN sustainable development goals.

Running head: ACCOUNTS AND FINANCE
Accounts and finance
Name of the student
Name of the university
Student ID
Author note

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Table of Contents
Answer to question 1:.................................................................................................................2
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................3
Conclusion:................................................................................................................................5
Answer to question 2:.................................................................................................................5
UN sustainable development goals of Transurban:...................................................................5
Evaluating the initiatives of achieving sustainable development goals:....................................6
References list:.........................................................................................................................10
Appendix:.................................................................................................................................12

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Answer to question 1:
Introduction:
This section of the assignment demonstrates the comparison of the financial
performance of Transurban Company for the two financial years that is 2018 and 2017.
Transurban is a road operator company that is engaged in the development and management
of networks of urban toll road in North America and Australia (Transurban.com, 2019).
Analysis and evaluation of the financial performance is done by the application of tool of
ratio analysis using which the liquidity, efficiency, profitability and solvency position of the
company is evaluated. In addition to this, it can be viewed from the annual report of the
company that the current financial year of analysis that is 2018 witnessed an increase in
revenue, net profit, EBITDA (Earnings before interest tax depreciation and amortization) and

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profits generated from ordinary activities. As evident from the narratives of the financial
statement, it can be inferred that the financial year 2018 was a successful year due to increase
in overall revenue and profits.
Discussion:
The profitability position of Transurban is evaluated by computing ratios such as
gross profit margin, operating profit margin, return on capital employed and return on equity.
It is seen that the gross profit margin has reduced from 66.07% in year 2017 to 60.02% in
year 2018. This fall in gross profit is attributable to the fact that the magnitude of increase in
gross profit is less than that of revenue. A fall in ratio is not considered desirable as it
indicates that company is not generating higher percentage of profits (Robinson, 2015).
Operating profit margin on other hand increased from 7.65% to 14.23 in year 2018 due to
significant increase in the amount of net profit. In addition to this, return on equity increased
to 6.92% in year 2018 as against 3.60% in year 2017 which implies that the company is
efficiently utilizing its investor’s money to generate income. However, return on capital
employed declined by fewer amount from 4.24% in 2017 to 4.04% in 2018. This indicates
that the profits generated by employing each dollar of capital have not increased much.
The efficiency position of Transurban is analyzed by computing debtor turnover, total
assets and fixed assets turnover. There is considerable decline in the figure of debtor turnover
to 7.41 in year 2018 as against 21.02 in year 2017. Such significant fall is indicative of the
fact that receivables are not being frequently collected. Total fixed assets have remained same
over the years with the fixed assets turnover increasing from 0.14 in 2017 to 0.15 in 2018.
This increase in ratio has implication that assets are utilized efficiently to generate sales or
income (Ehrhardt & Brigham, 2016).

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Solvency position of Transurban is evaluated by computing ratios such as debt to
equity, debt and equity ratio. A fall in debt to equity ratio from 3.02 to 2.91 in the current
year of analysis implies that investors are positive views on making investment in the
company as the creditworthiness of the company has improved. Equity ratio on other hand
has increased from 0.25 in 2017 to 0.26 in year 2018 which indicates that the investment
made by shareholders have increased and company is less risky and more sustainable
(Loughran & McDonald, 2016). Now, looking at the figures of debt ratio which has reduced
from 0.75 to 0.74 in 2018 indicates that the financial leverage of Transurban has reduced and
thereby there has been an improvement in the financial stability. Therefore, the overall
solvency position of company is favorable.
The liquidity position of Transurban is evaluated by computing ratios such as current
ratio as time interest earned ratio (Edwards et al., 2015). It can be observed from the figure
that current ratio in the current year of analysis has increased significantly compared to
previous year with the value being at 0.82. It is desirable for the organization to witness an
increment in the value of current ratio as it implies that their capability to meet the short term
obligations using current assets have improved and current assets are sufficient to meet the
liabilities. In addition to this, the time interest earned ratio has increased from 3.7 in year
2017 to 3.9 in year 2018 which is indicative of the fact that the number of times the company
makes payment for its interest has increased (DeFusco et al., 2015). In addition to this,
creditors of company favor the company with higher interest earned ratio. Therefore, it is
inferred from the analysis of figures that liquidity position of Transurban has improved in the
current year of analysis.
The network portfolio of the group delivered strong growth in EBITDA and the
increase in figures was attributable to toll prices across the disciplined and network cost
control and increased traffic. Furthermore, return generated for the total shareholder

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performance has increased from 4% 2017 to 6% in year 2018 which implies favorable
situation for the shareholders (Transurban.com, 2019). Moreover, positive cash flow has been
generated by the group for the operating activities after allowing for the payments. Total
amount of dividend paid by the group has increased from 48 cents in year 2017 compared to
54.5 in year 2018 (Transurban.com, 2019).
Conclusion:
The company is favorable in terms of liquidity and solvency position as the financial
leverage of company has improved along with the capability of organization to use its current
assets to meet the short term liabilities. Moreover, the profitability position is also favorable
as witnessed from increasing return generated by assets and equity and operating profit
margin. Now, taking into account the efficiency ratios, it is inferred from the analysis of
figures than the efficient of Transurban as a whole has increased. However, their efficiency in
collecting the receivables have reduced that might be attributable to lenient credit policy of
management (Chen et al., 2018). From the analysis of all the financial figures, the fact that is
deduced is that the financial performance of Transurban has increased in the financial year
2018. Thus, investors would be positive when seeking investments in the shares of
Transurban Company.
Answer to question 2:
UN sustainable development goals of Transurban:
In this section, the sustainability performance of Transurban Company has been
evaluated by addressing the initiatives taken by company. The objective of the paper is to

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evaluate whether the company is meeting its UN sustainable development goals. The
sustainability report of the company provides detailed information about the environmental
performance and workforce. The sustainable development goals that are relevant to the
operations of the company include gender equality, well being and good health, clean and
affordable energy, industry, innovation and infrastructure, economic growth and decent work,
communities and sustainable cities, climate action and partnership for the goals
(Transurban.com, 2019).
Evaluating the initiatives of achieving sustainable development goals:
For meeting the sustainable development goal of well being and good health, the
company developed a well being program incorporating significant measures that helps in
addressing the mental health. In addition to this, the organization makes diligent efforts
towards eliminating injuries and fatalities using roads. The measurement of such injuries is
done by the development of road injury cash index along with implementation and
establishment of safety action plans (Lu et al., 2015).
Gender equality in organization is promoted by providing women with equal
opportunities sand participation and avoiding any kind of discrimination. The initiatives taken
by the company involves flexible working practices, recruitment approaches and supporting
female engineers and accessibility to parental leave. The equity has been targeted by
improving the gender balance within the organization (O’Neill et al., 2016).
The goal of economic growth and decent work is attained with the help of
development of suitable indicators such as material footprint per GDP in terms of resource
efficiency. The use of sustainable materials has increased by using supplementary
cementitious materials and reducing emission of carbon by partnering with Boral and Beyond
zero emission. The quantity of materials used in the development of new road assets is

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reducing and the contractors driving efficiencies are challenged by making them use
sustainability rating tools. Moreover, there are developed indicators such as estimates of job
creation and travel time savings that are used measure the development of the intended goal.
The target of using clean and affordable energy is addressed by measuring the energy
efficiency and renewable energy with the share of renewable energy in the total consumption
and energy intensity being the indicator of the same. Transurban has taken multiple initiatives
for energy efficiency and installation of renewable energy across a number of facilities and
assets.
The goal of innovation, industry and infrastructure is addressed by setting the target
such as enhancing sustainability of infrastructure, development of sustainable infrastructures,
enhancing technology and innovation. Each of the targets is addressed by developing
indicators such as emission of carbon dioxide and annual level of mean of fine particulate
matter (Waage et al., 2015). Transurban has completed three innovation grant projects and
have continuously committed towards achievement of sustainable ratings.
The sustainable developed targets for achieving the goals of sustainable cities and
communities are safe and affordable transport, adverse environmental impact, and increased
urbanization. Some of the indicators include implementation of toll demand notice and the
organization becoming a member of Thriving communities’ partnership (Le Blanc, 2015).
For the major projects, company has enhanced community and planning process of
engagement. Concerning road tunnels, monitoring and reporting of air quality are undertaken
by the company.
The goal of responsible production and consumption is achieved by the development
of targets such as use of natural resource, generation of waste, sustainable procurement and
sustainable reporting. There are developed indicators for each of the set targets such as

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number of companies publishing sustainability reports, material footprint and number of
countries implementing policies of sustainable public procurement (Costanza et al., 2016).
Transurban group has taken initiatives to address this goal by revising the procurement
policy, commencing a trail junction with Downer and identifying solution to reduce the
emission of carbon.
The goal of climatic action is addressed by organization by developing sustainable
targets such as climactic change strategy and climatic change resilience. There are developed
indicators such as proportion of government adopting the strategies if reducing the disaster
risk and total number of countries that have communicated about the strategies and policies
they have adopted to deal with the climatic change conditions (Spaiser et al., 2017).
Therefore, from the analysis of all the sustainable development goals and the
initiatives taken by Transurban to achieve the sustainable development targets in relation to
the goals, it can be concluded that the company has been efficient in addressing the
sustainability issues. The indicator developed by the organization has been sufficient to
measure the efforts taken by company to deal with various sustainability issues. In addition to
this, Transurban has also developed additional targets and indicators for evaluating their
sustainable performance over the years.
Answer to question 3:

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Particulars Amount
Current Assets:
Cash at bank $8,950
Accounts receivable $6,915
Prepaid insurance $735
Marine supplies $600
Total Current Assets $17,200
Non-Current Assets:
Jet Skis $1,21,500
Accumulated depreciation – jet skis ($61,000)
Office equipment $3,150
Accumulated depreciation – office equipment ($1,935)
Total Non-Current Assets $61,715
TOTAL ASSETS $78,915
Current Liabilities:
Accounts Payable $8,895
Salaries Payable $1,720
Interest Payable $3,560
Accrued Expenses $1,125
Unearned rental revenue $1,007
Total Current Liabilities $16,307
Non-Current Liabilities:
Bank Loan $37,500
Total Non-Current Liabilities $37,500
TOTAL LIABILITIES $53,807
NET ASSETS $25,108
Equity:
D Swan, Opening Capital $47,535
Less: Net Loss ($9,977)
$37,558
Less: D Swan, Drawings ($12,450)
D Swan, Closing Capital $25,108
TOTAL EQUITY $25,108
as on 30 June,2019

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Le Blanc, D. (2015). Towards integration at last? The sustainable development goals as a
network of targets. Sustainable Development, 23(3), 176-187.

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Loughran, T., & McDonald, B. (2016). Textual analysis in accounting and finance: A
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Transurban.com. (2019). Retrieved 23 May 2019, from
https://www.transurban.com/content/dam/transurban-pdfs/01/sustainability-reports/
FY18-Sustainability-Report-SDG.pdf
Transurban.com. (2019). Retrieved 23 May 2019, from
https://www.transurban.com/content/dam/investor-centre/04/2018-Annual-Report.pdf
Waage, J., Yap, C., Bell, S., Levy, C., Mace, G., Pegram, T., ... & Mayhew, S. (2015).
Governing the UN Sustainable Development Goals: interactions, infrastructures, and
institutions. The Lancet Global Health, 3(5), e251-e252.

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Appendix:

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