Assignment On Financial And Economic Interpretation

FINANCIAL AND
ECONOMIC
INTERPRETATION
STUDENT ID:
[Pick the date]

The company selected for this task is Carsales.com which is the leading company in
Australia. dealing in online selling and buying of cars, trucks and other vehicles (including
boats and caravans). The company is also rapidly expanding its footprint across Asia and
Latin America. The latest annual report of the company filed with the exchange corresponds
to the period starting from July 1, 2018 and ending on June 30, 2019.
Executive Summary
The given report presents an overview of the performance of Carsales.com performance in
FY2019 in comparison to FY2018. During the year, the revenue has seen reasonable growth
driven by Asia business as revenue from Australia showed marginal growth only. There has
some reduction in the operating and net profit on account of higher contribution from foreign
business. Also, there is increased debt on the balance sheet so as to fund the expansion of the
company. The non-financial indicators of the company have also been robust during the year.
Going forward, two potential concerns are falling margins and increasing debt.
Analysis
In order to proceed with the discussion of the financial performance comparison, it is
imperative to compare key income statement items such as revenue, EBITDA along with Net
profit. The revenue from the online advertising services has witnessed a 1% growth y-o-y.
The significant increase in revenue has been achieved from Asia where there is jump from $
29.7 million to $ 65.1 million. This has led to a 12% jump in the total revenue of the
company on a y-o-y basis. The increase in EBITDA is about 7% in FY2019 when compared
with FY2018. The EBITDA margin for the company has declined from 52.0% (FY2018) to
50.3% (FY2019). The net profit after tax from continuous business activities has shown a
change of only 2% in FY2019 over the previous year. There are certain pivotal changes in
the balance sheet which are noteworthy. These include changes in borrowing where there has
been a repayment of the short term borrowings which have declined from $246 million to
practically zero in FY2019. However, the long term borrowings have increased from $208.7
million in FY2018 to $474.3 million in FY2019. The equity capital for the company has
increased from $ 119.5 million in FY2018 to $ 135.3 in FY2019. A pivotal non –financial
indicator relevant for the company is listings volume growth on a y-o-y basis which is 25%.
Other key non-financial indicators include the number of session, users, page views on the
website along with the total minutes spent on the website. The number of sessions, users,