Linear Regression Analysis Example

This assignment presents the output of a linear regression analysis. Key metrics like Adjusted R-squared (0.037), Standard Error (0.024), and F-statistic from the ANOVA table are provided. The coefficients for the intercept and X Variable 1, along with their standard errors, t-statistics, p-values, and confidence intervals, are also included. The analysis requires interpretation of these results to understand the model's fit, significance, and the relationship between the independent and dependent variables.

RUNNING HEAD: Financial analysis of Tassal Group Limited (TGR.AX) 1
Name of the student
Topic- Tassal Group Limited (TGR.AX)
University name

Financial analysis of Myer Holdings Limited 2
Introduction
This report is prepared to evaluate the financial performance of Tassal Group
Limited (TGR.AX). There are several financial tools have been used such as ratio
analysis, share price movement analysis and capital budgeting tools.
1. Present description of the company
Tassal Group Limited (TGR.AX) is an Australian Salmon farming Company founded in 1986
and operating its business on international level. This company is listed on the Australian
security exchange and accustomed to act by the instructions given by its CEO Mark A. Ryan.
2. Ownership and governance structure
The CEO of company is CEO Mark A. Ryan
3. Performance ratio analysis of Tassal Group Limited (TGR.AX)
This performance ratio analysis is used to establish relation between two financial factors of
Tassal Group Limited (TGR.AX) (Tassal Group Limited (TGR.AX), 2015).
Calculation of ROA and ROE
Tassal Group Limited (TGR.AX)
Particulars (Amount in Million 2014 2015 2016 2017
AUD$ AUD$
AU
D$
EBIT 42 44 48 55
Interest 5 5 7 8
Net profit 41 50 48 58
Total Assets 537 613 749
863.0
0
Total Liabilities 195 240 345 325
Shareholders' Equity 537 613 749
863.0
0

Financial analysis of Myer Holdings Limited 3
Computation of Return on assets
1. Rate of Return on Assets
2014 2015 2016 2017
A. Net income 41 50 48 58
B. Total assets 537 613 749 863
(A/B) 7.64% 8% 6% 7%
Interpretation
It is evaluated that the rate of return of company has decreased since last four years.
In 2015, company was having 7.64% returns on its assets which went down to 7% in 2017.
Computation of Return on equity
2. Rate of Return on Equity
2014 2015 2016 2017
A. Net income available to equity
shareholders. 41 50 48 58
B. Shareholder’s Equity 537 17,981 749 863.00
(A/B) 7.64% 0.28% 6.41% 6.72%
Interpretation
It is analysed that return on equity of company has went down since last four years. In 2015,
company was having 7.04% returns on its equity which went down to 6.72% in 2017.
Computation of Debt to equity
3. Debt Ratio
2014 2015 2016 2017
A. Total Liabilities 195 240 345 325
B. Total assets 537 613 749 863.00
(A/B) 36% 39% 46% 38%
Interpretation

Financial analysis of Myer Holdings Limited 4
It has increased its debt to equity ratio from 36% to 38%. However, company has increased
its financial leverage. At the same time, company has increased its overall profit throughout
the time.
Proving the equation
This equation is implemented to satisfy the both sides.
EBIT
TA X NPAT
EBIT X TA
OE = NPAT
OE
Providing equation 2014 2015 2016 2017
Net profit After tax/OE 0.07635 0.081566069 0.06409 0.06721
EBIT/TA*NPAT/EBIT*TA/OE 0.07635 0.081566069 0.06409 0.06721
(Please see the excel sheet for the proper calculation)
This equation is proofed above
4. Movements in the share prices
4.1 Graph of share price movement of Tassal Group Limited
(TGR.AX)
12/1/2015
3/1/2016
6/1/2016
9/1/2016
12/1/2016
3/1/2017
6/1/2017
9/1/2017
12/1/2017
-0.25
-0.20
-0.15
-0.10
-0.05
0.00
0.05
0.10
0.15
Average return-Tassal Group Limited
(TGR.AX)
Average return-Tassal
Group Limited (TGR.AX)

Financial analysis of Myer Holdings Limited 5
4.2 Comparison of share price movement of -Tassal Group
Limited (TGR.AX) with the all ordinary share index) .
2/1/2016
3/1/2016
4/1/2016
5/1/2016
6/1/2016
7/1/2016
8/1/2016
9/1/2016
10/1/2016
11/1/2016
12/1/2016
1/1/2017
2/1/2017
3/1/2017
4/1/2017
5/1/2017
6/1/2017
7/1/2017
8/1/2017
9/1/2017
10/1/2017
11/1/2017
12/1/2017
-20.00
-15.00
-10.00
-5.00
0.00
5.00
Average Return
Average return-Tassal Group Limited (TGR.AX) 0.00 0.00
Average Return
Comparison of share price movement of Tassal Group Limited (TGR.AX) with the all ordinary index
It is evaluated that return of Tassal Group Limited (TGR.AX) on the shares computed is stable. It is
considered that company has positive increase in its share price. In addition to this, share price
movement of all ordinary indexes is having very high fluctuation. It is reflecting that market has high
premium risk (Yahoo finance, 2017). All ordinary index share price has been showing high
amount of share fluctuation (Tassal Group Limited, 2017).
5. Announcements
 In 2017, company has increased its overall profit throughout the time.
 Company has no fluctuation in its share price and increased its business efficiency in market
(Tassal Group Limited, 2017).
6. Research via internet
Beta calculation or stock information

Financial analysis of Myer Holdings Limited 6
6.1 The value of beta is calculated from the data fetch from
Yahoo finance i.e. .15
Regression
Statistics
Multiple R
0.28444158
1
R Square
0.08090701
3
Adjusted R Square 0.03714068
Standard Error 0.02359694
Observations 23
ANOVA
df SS MS F Significance F
Regression 1 0.001029337 0.001029337 1.848613026 0.188365758
Residual
2
1 0.011693127 0.000556816
Total
2
2 0.012722464
Coefficie
nts
Standard
Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Interce
pt
0.00887
5528
0.004951
814
1.79237
9259
0.08749
2233
-
0.00142
2332
0.01917
3388
-
0.00142
2332
0.01917
3388
X
Variabl
e 1
-
0.09463
3128
0.069601
755
-
1.35963
7093
0.18836
5758
-
0.23937
7903
0.05011
1646
-
0.23937
7903
0.05011
1646
The beta value is -0.9 which is very good indicator for the effective business functioning of
organization. The beta of company is negative as share price of company is being changed in
opposite direction (Yahoo finance, 2018).
6.2 Computation of required rate of return by using CAPM
method
E(R) = Rf +( β∗R p)
E(R) = Expected rate of return

Financial analysis of Myer Holdings Limited 7
Rf = Risk free rate of return
β = Beta
Rp= Market Risk Premium (Zhu, 2014).
Calculation of Required rate of return
Risk free rate (A) 4%
Beta (B) -0.094633128
Market Risk premium (C) 6%
Required rate of return [A+(B*C)] 3.43%
(Please see the excel sheet attached)
The required rate of return of company is -45. It is negative as the beta of company is highly
negative (Tassal Group Limited (TGR.AX), 2017).
6.3 Determination of conservative investment
It is evaluated that conservative investment indicates that company has good amount of
earning capacity. It is evaluated that company is following conservative investment policy. It
is considered that company has been earning good amount from its business. It is having
retained earnings in its business which reflects that company could plug back profit in its
business again (Zhu, 2014).
7. Weighted Average Cost of Capital (WACC)
7.1 Cost of equity (calculated above using CAPM
Cost of equity = -45.16%
Cost of Debt = 0%
WACC = Cost of debt (interest rate after tax) + cost of equity
WACC
Capital Amount (AUD$
million )
Cost of
capital
% of
portion
WAC
C

Financial analysis of Myer Holdings Limited 8
Equity 863 3.43% 0.8164617 2.80%
Debt 194 2.89% 0.1835383 0.53%
Total
capital 1057 WACC 3.33%
The cost of debt of company has been decreased by reducing the interest rate payment (Tassal
Group Limited (TGR.AX), 2016).
7.2 Implications that a higher WACC on investment decision
It is observed that if company would have higher WACC then it will restrict
management to make investment in projects. Company could only accept those projects
which give higher return on capital employed.
8. Consideration of debt ratio for the company
8.1 Appear to stable
It is evaluated that Company has increased its debt ratio throughout the time.
Computation of Debt to equity
3. Debt Ratio
2014 2015 2016 2017
A. Total Liabilities 195 240 345 325
B. Total assets 537 613 749 863.00
(A/B) 36% 39% 46% 38%
Interpretation
It has increased its debt to equity ratio from 36% to 38%. However, company has increased
its financial leverage. At the same time, company has increased its overall profit throughout
the time.

Financial analysis of Myer Holdings Limited 9
8.2 Gearing ratio discussion
It reflects company’s efficiency to cover all of its interest payment from the EBIT. It
is observed that Tassal Group Limited (TGR.AX) is having strong gearing which is good
indicator for the sustainability of the organization (Tassal Group Limited (TGR.AX), 2014)
Gearing Ratio
2014 2015 2016 2017
Gearing Ratio 12% 11% 15% 15%
9. Divided policies of company
Tassal Group Limited is having strong profit based dividend policy. It is evaluated
that management of Tassal Group Limited has increased its profit throughout the time. In
addition to this, dividend payment of company has also increased with the similar rate.
10. Letter of recommendation
It is observed that Tassal Group Limited (TGR.AX) is having strong brand image in
market. In addition to this, profit earned by company has also increased throughout the time.
It is analysed that investors may opt this Tassal Group Limited (TGR.AX), 2014 in their
portfolio to increase their overall return. They could invest their money in Tassal Group
Limited (TGR.AX) for long run to create value on their investment (Tassal Group Limited
(TGR.AX), 2017).

Financial analysis of Myer Holdings Limited 10
11. Conclusion
There are several financial tools have been used to evaluate the financial performance of
company. In addition to this, Tassal Group Limited (TGR.AX), 2014 has strong financial
performance. Therefore, investors could invest their money in Tassal Group Limited
(TGR.AX) for long run.

Financial analysis of Myer Holdings Limited 11
12. References
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice.
Cengage Learning.
Tassal Group Limited (TGR.AX), 2014, 2015, annual report, Retrieved on 19h January,
2017 from https://www.asx.com.au/asxpdf/20140926/pdf/42sh4t3fhld77c.pdf
Tassal Group Limited (TGR.AX), 2014, 2016, annual report, Retrieved on 19h January,
2017 from https://www.asx.com.au/asxpdf/20140926/pdf/42sh4t3fhld77c.pdf
Tassal Group Limited (TGR.AX), 2014, 2017, annual report, Retrieved on 19h January,
2017 from https://www.asx.com.au/asxpdf/20140926/pdf/42sh4t3fhld77c.pdf
Tassal Group Limited (TGR.AX), 2014, annual report, Retrieved on 19h January, 2017
from https://www.asx.com.au/asxpdf/20140926/pdf/42sh4t3fhld77c.pdf
Yahoo finance, 2018, Tassal Group Limited (TGR.AX), retrieved on 19h January from
https://in.finance.yahoo.com/
Zhu, J., 2014. Quantitative models for performance evaluation and benchmarking: data
envelopment analysis with spreadsheets (Vol. 213). Springer

Financial analysis of Myer Holdings Limited 12
13. Appendix
Performance ratio
Tassal Group Limited (TGR.AX)
Particulars (Amount in
Million 2014 2015 2016 2017
AUD$ AUD$ AUD$
EBIT 42 44 48 55
Interest 5 5 7 8
Net profit 41 50 48 58
Total Assets 537 613 749 863.00
Total Liabilities 195 240 345 325
Shareholders' Equity 537
61
3 749 863.00
1. Rate of Return on Assets
2014 2015 2016 2017
A. Net income 41 50 48 58
B. Total assets 537 613 749 863
(A/B) 7.64% 8% 6% 7%
2. Rate of Return on Equity
2014 2015 2016 2017
A. Net income available to equity
shareholders. 41 50 48 58
B. Shareholder’s Equity 537 17,981 749 863.00
(A/B) 7.64% 0.28% 6.41% 6.72%
3. Debt Ratio
2014 2015 2016 2017
A. Total Liabilities 195 240 345 325
B. Total assets 537 613 749 863.00
(A/B) 36% 39% 46% 38%
Gearning Ratio
2014 2015 2016 2017
Gearning Ratio 12% 11% 15% 15%

Financial analysis of Myer Holdings Limited 13
Share price movement
Date
Ad
Close
Average return-Tassal Group
Limited (TGR.AX)
Adj Close (All
ordinary share index)
Average
Return
31-12-
2015 null - null
31-01-
2016 4.81 - 4947.899902
29-02-
2016 3.84
-
0.20 5151.799805 0.04
31-03-
2016 3.82
-
0.01 5316 0.03
30-04-
2016 3.9 0.02 5447.799805 0.02
31-05-
2016 4.19 0.07 5310.399902
-
0.03
30-06-
2016 3.98
-
0.05 5644 0.06
31-07-
2016 4.12 0.04 5529.399902
-
0.02
31-08-
2016 4.09
-
0.01 5525.200195
-
0.00
30-09-
2016 4.03
-
0.01 5402.399902
-
0.02
31-10-
2016 3.85
-
0.04 5502.399902 0.02
30-11-
2016 3.82
-
0.01 5719.100098 0.04
31-12-
2016 4.15 0.09 5675
-
0.01
31-01-
2017 4.62 0.11 5761 0.02
28-02-
2017 4.78 0.03 5903.799805 0.02
31-03-
2017 4.53
-
0.05 5947.600098 0.01
30-04-
2017 4.46
-
0.02 5761.299805
-
0.03
31-05-
2017 4.5 0.01 5764 0.00
30-06-
2017 3.81
-
0.15 5773.899902 0.00
31-07-
2017 3.79
-
0.01 5776.299805 0.00
31-08-
2017 3.89 0.03 5744.899902
-
0.01
30-09-
2017 3.85
-
0.01 5976.399902 0.04
31-10- 4.21 6057.200195

Financial analysis of Myer Holdings Limited 14
2017 0.09 0.01
30-11-
2017 3.99
-
0.05 6167.299805 0.02
31-12-
2017 3.76
-
0.06 6130.399902
-
0.01
Beta calculation
SUMMARY
OUTPUT
Regression
Statistics
Multiple R
0.28444
1581
R Square
0.08090
7013
Adjusted R
Square
0.03714
068
Standard
Error
0.02359
694
Observation
s 23
ANOVA
df SS MS F
Significa
nce F
Regression 1
0.00102
9337
0.00102
9337
1.84861
3026
0.18836
5758
Residual 21
0.01169
3127
0.00055
6816
Total 22
0.01272
2464
Coefficie
nts
Standar
d Error t Stat P-value
Lower
95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
0.00887
5528
0.00495
1814
1.79237
9259
0.08749
2233
-
0.00142
2332
0.01917
3388
-
0.00142
2332
0.01917
3388
X Variable 1
-
0.09463
3128
0.06960
1755
-
1.35963
7093
0.18836
5758
-
0.23937
7903
0.05011
1646
-
0.23937
7903
0.05011
1646