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

Running head: ACCOUNTS AND FINANCE
Accounts and finance
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FINANCIAL ACCOUNTING
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

FINANCIAL ACCOUNTING
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

FINANCIAL ACCOUNTING
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).