Financial Information for Decision Making

This assignment analyzes the financial information of Premier Investments Ltd., including its profile, history, industry background, and financial performance. The analysis includes profitability ratio analysis, efficiency ratio analysis, gearing ratio analysis, and liquidity ratio analysis. The conclusion highlights the stagnant profitability, increased efficiency of fixed assets, and the company's reliance on debt financing.

Running Head: FINANCIAL INFORMATION FOR DECISION MAKING
FINANCIAL INFORMATION FOR DECISION MAKING
Name of the Student
Name of the University
Author Note

1FINANCIAL INFORMATION FOR DECISION MAKING
Table of Contents
Introduction................................................................................................................................2
Company and industry Background.......................................................................................2
Analysis and Interpretation of Financial Performance...........................................................3
Profitability Ratio Analysis....................................................................................................3
Conclusion..................................................................................................................................4
References..................................................................................................................................5
Appendix....................................................................................................................................6

2FINANCIAL INFORMATION FOR DECISION MAKING
Introduction
The aim of this assignment is to do the analysis on the financial information of
Premier Investments Ltd. It is the company based in Melbourne Australia in the business of
retail of fashion chains in different spatiality. This assignment will include a brief profile of
the company, its history and the industry in which it operates. Moreover, this assignment will
also include analysis and interpretation of the financial position, performance as well as the
market standing of the company (Premier Investments. 2019).
Company and industry Background
Premier Investment Ltd. is Australian based company listed on ASX, which operates
in various specialty of the retain fashion chains in the Australia, Singapore, Ireland, Hong
Kong, Malaysia and the United Kingdom. The company operates through the segment of
retail and investments. It offers casual, women’s wear and non-apparel products. This
company has large portfolio of the retail brands that concludes Jay Jays, Jacqui E, Dotti, Just
Jeans, Smiggle and Peter Alexander. It has more than 1200 store and also provides products
through online platform. The company currently own wholly the retail conglomerate Just
group as well as holds stake of 25.7% in the consumer electrical products manufacturer
Breville Group Limited (Premier Investments. 2019).
The company has been listed on ASX since December 15, 1987. It was established as
an vehicle of investment for maximizing the growth of the returns of capital for the
shareholders by acquisition of the strategic or controlling shareholdings in the premier
companies of Australia with the focus particularly in retailing, distributing and importing. In
the year 2016, the company becomes substantial holder of the Airlie funds management pty
ltd (Premier Investments. 2019).

3FINANCIAL INFORMATION FOR DECISION MAKING
Premier Investments Ltd. operates in the industry of retaining. The retail industry is
going through major opportunities for expanding in the market. It is shaped by the spending
patterns of consumers prevailing in the country. The major competitors of the company
include HGL Ltd., PAS group Ltd., RCG Corp Ltd. and Gazal Corporation Limited (Premier
Investments. 2019).
Analysis and Interpretation of Financial Performance
Profitability Ratio Analysis
For the detailed calculations relating to the following analysis, refer to the appendix 1.
The ROC for the year 2016-2018 has been same; there has been no increase or decrease in
ROC percentage. However, in the year 2017-2018, there has been decrease of 2%. Therefore,
it can be analyzed that the business is not able to generate more earnings on its revenue, cost
of operations, assets and shareholders equity over the years (Chiaramonte and Casu 2017).
Efficiency Ratio Analysis
For the detailed calculations relating to the following analysis, refer to the appendix 2.
The fixed asset turnover from the year 2016-2017 have decreased by 3% but in the year
2017-2018, it has increased by 74%. Therefore, it shows that the company is utilizing its
assets in most efficient manner. Hence, increase in fixed asset turnover will increase the value
of the company and overall earnings (Asiri and Hameed 2014).
Gearing Ratio Analysis
For the detailed calculations relating to the following analysis, refer to the appendix 3.
The gearing ratio is calculated for the measurement of financial leverage of entity which
shows the degree to which the activities of the firm are funded by the shareholders equity
than by debt. The gearing ratio of the company is increased by 3.66% for the year 2017 and
increased by 0.2% in the year 2018. It shows the increasing trend of uses of debt as compare

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to equity, it is because it has low cost benefit as compare to equity. Although the increase
percentage is low in the year 2017-2018, but the company has still it is more financed by debt
(Delen, Kuzey and Uyar 2013).
Liquidity Ratio Analysis
For the detailed calculations relating to the following analysis, refer to the appendix 4.
The liquidity ratio is calculated is current ratio. Current ratio is calculated for measuring the
ability of the company for meeting its obligations of the short-term (Robinson et al. 2015). It
has been observed that the liquidity ratio of company has declined to 0.7% in the year 2017
and the percentage has been increased to 0.44% in the year 2018. Therefore, it shows that the
company has sufficient current assets for meeting its short term liabilities efficiently
(Annualreports.com. 2019).
Conclusion
Hence, it can be concluded from the analysis that the company’s profitability over the
years is stagnant. The efficiency of the company in terms of fixed assets turnover has
increased which means increased efficiency of fixed assets. In addition, the company is more
prone to use debt over shareholders fund, which is having less cost. Lastly the liquidity
position of the company states that company position to meet its short term obligations is up
to the mark.

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References
Annualreports.com. (2019). [online] Available at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_PMV_2017.pdf
[Accessed 9 May 2019].
Asiri, B.K. and Hameed, S.A., 2014. Financial ratios and firm's value in the Bahrain
Bourse. Research journal of finance and accounting, 5(7), pp.1-9.
Chiaramonte, L. and Casu, B., 2017. Capital and liquidity ratios and financial distress.
Evidence from the European banking industry. The British Accounting Review, 49(2),
pp.138-161.
Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios:
A decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.
Premier Investments. (2019). Home - Premier Investments. [online] Available at:
https://www.premierinvestments.com.au/ [Accessed 9 May 2019].
Robinson, T.R., Henry, E., Pirie, W.L. and Broihahn, M.A., 2015. International financial
statement analysis. John Wiley & Sons.

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Appendix
Ratios Years
1 Profitability Ratio
Return on Assets 2016 2017 2018
Net Profit 103,874.00 105,136.00 83,638.00
Total Assets
1,338,555.0
0
1,335,673.0
0
1,344,934.0
0
Result 8% 8% 6%
2 Efficiency Ratio
Fixed Assets Turnover 2016 2017 2018
Sales
1,057,454.0
0
1,101,132.0
0
1,187,847.0
0
Average Fixed Assets
1,214,637.5
0
1,308,086.5
0 752,247.00
Result 87% 84% 158%
3 Gearing Ratio
Gearing Ratio 2016 2017 2018
Total Debt 324,328.00 401,018.00 406,480.00
Shareholders’ Funds
1,344,934.0
0
1,335,673.0
0
1,338,555.0
0
Result 19.43 23.09 23.29
4 Liquidity Ratio
Current Ratio 2016 2017 2018
Current Assets 436,580.00 346,821.00 386,790.00
Current Liabilities 140,053.00 143,390.00 135,368.00
Result 3.12 2.42 2.86
Figure: Financial Ratios
Return on Assets 2016 2017 2018
Net Profit 103,874.00 105,136.00 83,638.00
Total Assets

7FINANCIAL INFORMATION FOR DECISION MAKING
1,338,555.0
0
1,335,673.0
0
1,344,934.0
0
Result 8% 8% 6%
Figure 1: Return on Assets
Fixed Assets Turnover 2016 2017 2018
Sales
1,057,454.0
0
1,101,132.0
0
1,187,847.0
0
Average Fixed Assets
1,214,637.5
0
1,308,086.5
0 752,247.00
Result 87% 84% 158%
Figure 2: Fixed Assets Turnover
Gearing Ratio
Gearing Ratio 2016 2017 2018
Total Debt 324,328.00 401,018.00 406,480.00
Shareholders’ Funds 1,344,934.00 1,335,673.00 1,338,555.00
Result 19.43 23.09 23.29
Figure 3: Gearing Ratio
Liquidity Ratio
Current Ratio 2016 2017 2018
Current Assets 436,580.00 346,821.00 386,790.00
Current Liabilities 140,053.00 143,390.00 135,368.00
Result 3.12 2.42 2.86
Figure 4: Liquidity Ratio