Financial Statement Analysis for Accent Group Limited

Running Head: Financial Statement Analysis
Financial Analysis
Accent Group Limited

Financial Statement Analysis 1
Executive summary:
This report has been prepared to identify and highlight the financial strengths and weaknesses
of Accent Group Limited. The company is operating as the leading dealer of wide range of
sports footwear, apparel and other accessories in Australia. To analyse the financial
performance of the company various approaches have been used such as horizontal analysis,
vertical analysis and ratio analysis. The annual reports of Accent Group for the financial
years 2018, 2017 and 2016 have been thoroughly examined. The results of financial ratios
have revealed that the company has achieved profitability over the last three years. But it has
distributed maximum profits to its shareholders in 2018 among all the 3 years. However, at
the same time the liquidity position of the company in 2018 is not as strong as that was in the
previous two years. The capital structure of the company in all the three financial years is
adequate. However, in 2017, the portion of debt financing was relatively higher than that of
2016 and 2018.

Financial Statement Analysis 2
Table of Contents
Executive summary:..............................................................................................................................1
Introduction:..........................................................................................................................................3
Profitability position:.............................................................................................................................3
Return on net sales ratio...................................................................................................................4
Ratio of return on total assets...........................................................................................................4
Asset turnover ratio...........................................................................................................................5
Return on equity ratio.......................................................................................................................5
Liquidity Position:..................................................................................................................................6
Current Ratio.....................................................................................................................................6
Quick Ratio........................................................................................................................................6
Inventory turnover ratio and day’s inventory ratio...........................................................................7
Gross Profit Ratio...............................................................................................................................7
Receivables turnover ratio.................................................................................................................7
Day’s sales in receivables...................................................................................................................7
Gearing Ratios:......................................................................................................................................8
Debt to asset ratio.............................................................................................................................8
Debt to equity ratio...........................................................................................................................8
Interest Coverage Ratio.....................................................................................................................8
Conclusion:............................................................................................................................................8
References:..........................................................................................................................................10
Appendix:............................................................................................................................................11

Financial Statement Analysis 3
Introduction:
Accent Group Limited is an Australian company listed on Australia’s Securities Exchange. It
had started its business operations in year 1981 and is headquartered at Waterloo, Australia.
The company is engaged in the retail, distribution as well as franchisee business of footwear,
Apparel and the various types of accessories across Australia as well as New Zealand. Accent
Group was initially known with the name of RCG Corporation Limited. The company is
operating as the regional leading distribution of lifestyle footwear and it currently owning
over 420 stores and 10 distribution brands across both the countries of its operations. The
brand portfolio of the company includes Athlete’s Foot, Hype DC, Platypus Shoes, Podium
Sports, Sketchers, Merrell, CAT, Vans, Dr. Martens, Saucony, Timberland, Sperry Top-
Sider, Palladium, and Stance (Bloomberg, 2018).
The present report is prepared to carry out the financial analysis of the Accent Group using
different techniques such as horizontal analysis (also known as trend analysis), vertical
analysis and ratio analysis. Under this report the financial performance of the company over
last three financial years i.e. 2016, 2017 and 2018 has been analysed using different financial
ratios. Financial performance of business is based on various aspects such as its profitability
position, liquidity position, solvency position and its efficiency in managing and using
different assets of the business (Higgins, 2003). These aspects have been taken into
consideration in order to assess the overall financial position of Accent Group.
For ratios calculation: Refer Appendix Table 3
Profitability position:
Profitability is the state when the firm has sufficient amount of earnings left after meeting all
the costs and expenses of the business. There are various rations which determine the
profitability position of the business. (Tracy, 2012). The use of the key profitability ratios