Financial Statement Analysis- Assignment

Running head: FINANCIAL STATEMENT ANALYSIS
Financial Statement Analysis
Name of the Student:
Name of the University:
Authors Note:

FINANCIAL STATEMENT ANALYSIS
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Table of Contents
Part 1 of Assignment 2:..............................................................................................................3
1.a) Stating any change in strategy analysis based on half-yearly results:................................3
1.b) Stating any change in competitive strategy analysis based on half-yearly results:............3
1.c.i) Calculating yield based on half-yearly report, where shares are purchased on 28 March:
....................................................................................................................................................3
1.c.i) Comparing current half-yearly yield with full year yield:................................................4
Part 2 of Assignment 2:..............................................................................................................5
2.a Assessing and reporting operating Management Decomposition:.......................................5
2.b Evaluating and reporting Investment management decomposition:....................................6
2.c Evaluating and reporting Financial management decomposition:.......................................7
2.d Assessing and reporting sustainable growth rate:................................................................9
2.e Analysing the cash flow statement:....................................................................................10
3.a Providing separate forecast for the company:....................................................................11
3.b Analysing and discussing the appropriate forecast strategy:.............................................12
3.c Providing and discussing cash flow forecast:.....................................................................12
4.a Evaluating the change in share price within 7 days of half-year report release:................14
4.b Evaluating the change in share price within 31- December and half-year report release:.15
4.c Evaluating the change in share price between the half-year report release and 30 April:. 16
Part 3 of Assignment 2: Reflective Thinking...........................................................................17
5.a Providing discussion on each of the three analyses and how the knowledge changed:. 17
5.b Stating how my knowledge improved after receiving feedback from requirement 1:.......17
5.c Stating how the perception altered regarding the purpose of ratios:..................................18
5.d Stating how the perception of interrelationship among financial ratios and company’s
financial position changed:......................................................................................................18

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Reference and Bibliography:....................................................................................................20

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Part 1 of Assignment 2:
1.a) Stating any change in strategy analysis based on half-yearly results:
From the overall evaluation of the half yearly results the change in strategy analysis is
not needed, as the organizations profitability relatively increased during the half yearly
period. The half yearly result needs to be evaluated on the basis of previous half yearly
records that is provided by the organization. This would eventually help the investors to
identify the adequate Rate of returns which could be provided from investment. Therefore, it
could be stated that the current strategy analysis used for the evaluation needs to be
maintained by the investor (Alin-Eliodor 2014).
1.b) Stating any change in competitive strategy analysis based on half-yearly results:
The changes in competitive strategy should not be conducted by the investors, as
competitive analysis used for deriving the financial viability of Amcor Ltd is needed to
identify the investment viability. The rising profits that is obtained by the organisation during
the half yearly result indicates that no changes in the competitive strategy is needed as of
now.
1.c.i) Calculating yield based on half-yearly report, where shares are purchased on 28
March:
Particulars Value
Share price on 28 March 2018 14.10
Number of shares 1,736.00
Investment Amount 24,477.60
Dividends half yearly (31-12-17) 0.21

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Dividend received 364.56
Yield 1.49%
The above table relatively represents the yield provided by investments during the
half yearly report. the company adequately provided a half yearly dividend of 0.21 per share
to its investors, which are depicted or overall rid of 1.49% (Au.finance.yahoo.com 2018). The
identification of yield relatively allows the investors to detect return generation capacity of
the Investments, which could help them improve their capital gains.
1.c.i) Comparing current half-yearly yield with full year yield:
Particulars Value
Share price on 28 March 2018 14.10
Number of shares 1,736.00
Investment Amount 24,477.60
Dividends yearly (31-06-17) 0.24
Dividend received 407.96
Yield 1.67%
After evaluating the yield during half yearly report and during early report it could be
identified that the return on investments obtained by the organisation during the annual report
is much more profitable. Therefore, with the comparison of two different yield it could be
identified that with the higher dividend payments the yield of the investors relatively rises.

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Therefore, significant changes in Yield could be identified from the levels of 1.67% in annual
report to 1.49 per cent in half yearly yield.
Part 2 of Assignment 2:
2.a Assessing and reporting operating Management Decomposition:
Particulars Half-yearly Dec 2017 Half-yearly Dec 2016
Revenue 100.00% 100.00%
Gross profit 19.88% 20.81%
EBITDA 11.41% 10.48%
Net Income 7.42% 6.58%
Interest 2.26% 2.10%
Tax expense 1.74% 1.80%
Operating Management Decomposition Half-yearly Dec 2017 Half-yearly Dec 2016
Gross Profit Margin 19.88% 20.81%
EBITDA Margin 11.41% 10.48%
NOPAT Margin 9.51% 8.52%
The book table relatively evaluate the overall operating management decomposition
of Amcor Limited from 2016 half yearly report to 2017 half yearly report. this relevant
evaluation directly indicates that the overall gross profit margin of the organization has
declined from 20.81% to 19.88%. this relatively indicates the high expenses on raw materials
which is conducted by the organization during the fiscal year of 2017. on the contrary, the
ABT margin of the organization has a relatively improved from the levels of 10.48% to

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11.41%, which directly indicates the overall reduction in administrative cost incurred by the
company. Furthermore, the NOPAT margin of the organization has also improved from
8.52% in 2016 to 9.51% in 2017 half yearly report, which directly indicates the low finance
and administrative cost incurred during the financial year. This overall reduction in gross
profit margin was due to the excessive again expenses incurred by the company for
purchasing raw materials. On the other hand, the other expenses such as tax expense and
administrative expense of the organization relatively improved during 2017. The
improvement of EBIDTA was relatively higher which adequately accommodated the rising
interest payments conducted by the company during the Fiscal year (Asx.com.au 2011).
2.b Evaluating and reporting Investment management decomposition:
Particulars Half-yearly Dec 2017 Half-yearly Dec 2016
Accounts Receivable turnover 3.27 3.18
Inventory turnover 2.61 2.71
Accounts payable turnover 1.52 1.37
Working capital turnover (0.40) (0.16)
Long term assets 0.21 0.20
PP&E 0.62 0.62
Investment Management Decomp Half-yearly Dec 2017 Half-yearly Dec 2016
Days Account receivable 111 115
Days Account inventory 140 135
Days Account payable 241 266

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The above calculation relatively decomposers the investment management activities
that is conducted by Amcor Limited from 2016 to 2017. From the valuation it could be
identified that accounts receivable of the company relatively increased during 2017, which
indicated a positive attribute for the company. This increment in accounts receivable turnover
directly influenced the number of days, which was used for obtaining payments. Furthermore,
the inventory level and accounts payable level relatively deteriorated during the fiscal year,
which can be identified from the Rising value of accounts payable turnover and declining
value of inventory turnover. The number of days that was taken by inventory to clear out
relatively increased from 135 days to 140 days, while the accounts payable these relatively
reduced from 266 days 241 days in 2017. This directly affected the overall financial
capability of the company and its working capital turnover ratio which deteriorated from the
levels of -0.16 in 2016 to -0.40 in 2017. The long-term assets accumulation of the
organization relatively improved while stability in property plant and equipment was seen
from 2016 to 2017. This relatively indicated that the overall financial position of the
company slightly deteriorated due to the decline in inventory and accounts payable condition.
However, the conditions of the organization are a relatively adequate, where it could generate
higher rate of returns from investment (Asx.com.au 2011).
2.c Evaluating and reporting Financial management decomposition:
Particulars Half-yearly Dec 2017 Half-yearly Dec 2016
Liquidity ratio
Current Ratio 0.64 0.82
Quick ratio 0.37 0.49
Cash ratio 0.08 0.14
operating cash flow ratio 0.15 0.14

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Debt and Coverage Ratio
Liabilities to equity 8.46 9.19
Debt to equity 4.98 5.17
Net debt to equity 4.54 4.54
Debt to capital 0.83 0.84
Net Debt to capital 0.82 0.82
Interest coverage (earnings based) 5.05 4.99
Interest coverage (cash flow based) 5.90 7.85
The above calculation a relatively represents the overall financial management
decomposition of Amcor Limited, which comprises of liquidity, debt, and coverage ratio.
From the valuation it could be identified that current ratio quick ratio and cash ratio of the
organisation relatively deteriorated from 2016 to 2017. This irrelevant decline an overall
financial capability of the company was due to the accumulation of high and current
liabilities by the organisation. The company Accumulated high current liabilities during
2017, which directly impacted its capability to support their short term financial obligations
(Wahlen, Baginski and Bradshaw 2014).
The overall debt and coverage ratio can be evaluated from the above table, where
liabilities to equity, debt to equity, debt to capital and interest coverage cash flow based has a
relatively declined from the levels of 2016 in 2017. This relevant decline of essential
financial ratios from 2016 to 2017 directly state the law financial capability of Amcor
Limited to continue its operations. However, the interest coverage earning these ratios
relatively improved, while net debt to equity ratio, and debt to Capital ratio remains stagnant
for the two fiscal years. Hence from the decomposition of financial management it would be

FINANCIAL STATEMENT ANALYSIS
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identified that the performance of the company has deteriorated from 2016 to 2017, while
adequate measures needs to be implemented by the organization to improve its financial
position (Asx.com.au 2011).
2.d Assessing and reporting sustainable growth rate:
Particulars Half-yearly Dec 2017 Half-yearly Dec 2016
Return on Equity 34.86% 32.97%
Dividend pay-out ratio 81.61% 86.73%
Sustainable growth rate 6.41% 4.37%
The above table directly evaluates the substantial growth rate that is obtained by
Amcor Limited from 2016 to 2017. the growth rate is relatively derived from identifying the
return on equity and dividend payout ratio of the organization. the dividend payout ratio was
relatively calculated by dividing the dividend payments with the Net income available for
shareholders of the organization. Furthermore, the return on equity of the organization was
calculated by dividing the overall net income with the current value of the total equity shares
of the organization. this relatively helped in deriving the overall substantial growth rate
obtained by the company. the substantial growth rate relatively indicates the overall
increment in value of dividend that will be provided by the company during the fiscal years.
the growth rate has a relatively increased from 4.37% to 6.41%, which indicates a substantial
increment in the dividend payment ratio. the organization has relatively improved in paying
the shareholders their adequate share by providing adequate dividend (Pappa 2015).
Therefore, from the evaluation of substantial growth the investment opportunity in Amcor
Limited is relatively high, as the companies providing higher rate of dividends today

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investors. This increment in substantial growth rate was relatively obtained by the rising level
of returns on equity, Obtained by the organization during 2017.
2.e Analysing the cash flow statement:

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The evaluation of above cash flow statement relatively indicates that the overall
position of Amcor Limited as a relatively declined from 2016 to 2017 half yearly report. The
other operations of the organization relatively declined due to the low cash and cash
equivalents at the end of the financial period for the company. The net cash flow from
operating activities of the company relatively reduced from 214.9 million in 2016 to 178.1
million in 2017. The reduction was conducted in trade and other peoples of the organization,
which were relatively reduced the overall net operating activities of the organization. The
cash flow from investing activities are relatively improved where the reduction in
investments of the organization helped in reducing the cash outflow. inside the company
started to dispose property plant and equipment in 2017. However, relevant reduction in net
cash flow from financing activities was seen in 2017, where the company adequately repaid
the borrowings. This irrelevant increment in cash outflows of Financing activities directly
increased the net decrease in cash held by the organization in 2017 (Entwistle 2015). This
relatively post the cash and cash equivalents at the end of the financial period to the level of
361.7 in 2017 as compared to 378.2 in 2016.

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3.a Providing separate forecast for the company:
Particulars 2017 2016 Growth
sales 9101 9421.3 -3.40%
Earnings 51.6 21 145.71%
Shareholders’ equity 891.5 845.5 5.44%
Net Income 614.00 273.60 124.42%
Shareholders’ equity 891.5 845.5 5.44%
ROE 68.9% 32.4% 112.84%
The book table relatively represents the overall growth and forecast for the company
which is obtained by evaluating 2017 and 2016 financial year Annual reports. From the
valuation it could be Identified that the sales growth rate of Amcor Limited as a relatively
falling from 2016 to 2017 by -3.4%. this relatively indicates that the organizations revenues a
relative are declining due to low demand from customers. However, the earnings report of the
organization has a relatively improved by 1 45.7% in 2017, which is due to the high net
income obtained during 2017. The overall increment in shareholders equity is seen at the
levels of 5 44%, where the retained income of the company has increased its overall share
value.Net income of the company has improved by the levels of 124.40%, which has
improved operational capability of the company (Grimm and Blazovich 2016).
3.b Analysing and discussing the appropriate forecast strategy:
For the most seeing the overall improvement in the operational capability of Amcor
Ltd, Relevant forecast needs to be conducted with the help of strategic analysis, Competitive
analysis, accounting analysis and financial analysis. This relevant evaluation would
eventually help in identifying the level of returns that could be generated by the organization

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to with investors. The evaluation directly indicates that changes in competitive strategy
analysis needs to be conducted, where different company can be evaluated with Amcor to
identify the financial viability of the organization. Moreover, the financial analysis strategy
would also help in understanding the current financial position of Amcor with other
competitive companies, which could be used for investing.
3.c Providing and discussing cash flow forecast:
Particulars 2017 2016 Growth
Cash flows from operating activities
Cash before changes in working capital and provisions 1285.4 1315 -2.25%
Total changes in working capital and provisions 72 88.5 -18.64%
Net cash flows from operating activities 1027.4 1099.4 -6.55%
Cash flows from investing activities
Net cash flows from investing activities -632.6 -997 36.55%
Cash flows from financing activities
Net cash flows from financing activities -337 -126.9 165.56%
Net increase/(decrease) in cash held 57.8 -24.5 335.92%
Cash and cash equivalents at the beginning 513.4 697.5 -26.39%
Effects of exchange rate -13.5 -159.5 -91.54%
Cash and cash equivalents at the end 557.7 513.5 8.61%
The above table adequately indicates the overall cash flow statement of the
organisation which has the relatively improved over the period of 1 fiscal year. The growth

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phase in net cash flow from operating as a relatively declined from the levels of 1099.4 in
2016 to 1027.4 in 2017 with the net declining rate of -6.5 5%. This relatively indicates that
the overall net cash flow from operating activities reduced due to the non-accumulation of
adequate cash from operations. In addition, the net cash flow from investing activities has
relatively improved from the levels of - 997 to -632.6, which directly indicates that A positive
attribute for the organisation. this relevant improvement was at the levels of 36.55%.
Furthermore, the overall net cash flow from financing activities relatively increased by the
levels of 165.56 % indicating a higher debt accumulated by the organisation. Moreover, the
cash held by the organisation at the end of 2017 was at the levels of 57.8, where relevant
increment of 335.92% in net cash increase was seen. the secretary indicated a positive
attribute for the organisation, which increased cash and cash equivalents at the end of the
period by 8.61% (Asx.com.au 2011).
4.a Evaluating the change in share price within 7 days of half-year report release:
2/12/2018
2/13/2018
2/14/2018
2/15/2018
2/16/2018
2/17/2018
2/18/2018
2/19/2018
2/20/2018
2/21/2018
13.4
13.6
13.8
14
14.2
14.4
14.6
14.8
Half yearly report to 7 days
The above figure relatively indicates the overall impact of half yearly report on the
share price of Amcor Limited within the 7 days of trading. In addition, the values of Amcor
limited has a relatively decline after the half yearly report which indicates that the investors

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were not happy with the current financial position of the company which was portrayed in the
annual report. This relevant decline in the annual report was due to the low cash availability
of the company to continue its operations in 2017. The declining Liquidity position of the
company was also a major factor for the reduction in share price of the company during the 7
days of trading. The company's overall financial performance during 2017 half yearly report
was a relatively low which negatively affected the sentiments of investors and masses selling
was conducted in the share market (Au.finance.yahoo.com 2018).
4.b Evaluating the change in share price within 31- December and half-year report
release:
12/28/2017
12/30/2017
1/1/2018
1/3/2018
1/5/2018
1/7/2018
1/9/2018
1/11/2018
1/13/2018
1/15/2018
1/17/2018
1/19/2018
1/21/2018
1/23/2018
1/25/2018
1/27/2018
1/29/2018
1/31/2018
2/2/2018
2/4/2018
2/6/2018
2/8/2018
2/10/2018
2/12/2018
13.6
13.8
14
14.2
14.4
14.6
14.8
15
15.2
15.4
15.6
31 December to Half yearly report
From December 2017 the overall Change in substantial holdings and directors interest
notice was published by Amcor Limited, which negatively affected the share price of the
organisation. this can be seen in the above figure out where the continuous decline of
Amcor’s Shares from December to the date of announcement for annual report can be seen.
from the evaluation it could also be indicated that after the announcement of annual report for
sudden spike in the share price of the organisation was seen which was again nullified by the
continuous downtrend of the organisation. the relevant announcements such as Change in

FINANCIAL STATEMENT ANALYSIS
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substantial Holdings was the major impact where after which the share price of the
organisation started to decline exponentially. This relatively indicated that investors were
trying to sell the shares of Amcor Limited during the fiscal year (Au.finance.yahoo.com
2018).
4.c Evaluating the change in share price between the half-year report release and 30
April:
2/12/2018
2/16/2018
2/20/2018
2/24/2018
2/28/2018
3/4/2018
3/8/2018
3/12/2018
3/16/2018
3/20/2018
3/24/2018
3/28/2018
4/1/2018
4/5/2018
4/9/2018
4/13/2018
4/17/2018
4/21/2018
4/25/2018
4/29/2018
13.2
13.4
13.6
13.8
14
14.2
14.4
14.6
14.8
Half yearly report to 30 April
The fluctuations in price of Amcor Limited can be seen from the above figure, where
different kinds of news have affected the overall share price of the organisation. The other
news such as a different updates and dividend distribution that he will be conducted by the
organisation was at effectively helpful in improving its share price. However, the ineffective
results of AMVIG Holdings Limited relatively declined the share price of the organisation
again from March 23rd. This announcement relatively reduced the share price of the
organisation while hampering its ability to improve its return generation capacity. They were
different announcements conducted by the directors regarding the interest notice for
improving the relevant operations of the company to generate higher rate of returns from

FINANCIAL STATEMENT ANALYSIS
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investment. Nevertheless, this news was not adequate to support the overall declining share
price of Amcor (Au.finance.yahoo.com 2018).
Part 3 of Assignment 2: Reflective Thinking
5.a Providing discussion on each of the three analyses and how the knowledge changed:
After reviewing the overall report of strategy analysis competitive analysis and
accounting analysis my knowledge regarding the operation has a relatively changed.
Previously, I would not utilize the strategic analysis competitive analysis and accounting
analysis to identify the financial growth and prospects of an organisation for investing
purposes. On the other hand, I would not utilize the measure to improve and identify any kind
of investment opportunities that is presented from the evaluation. after receiving the feedback
and updating the strategies under the required assignment I was able to identify the major
factors that needs to be evaluated to identify the impact of annual report on share price of the
organisation. The fundamental concept of detecting the investment opportunity can be
identified with the help of strategic analysis, compute, and accounting analysis.
5.b Stating how my knowledge improved after receiving feedback from requirement 1:
After conducting the first assignment relevant responses was provided where after
receiving the feedback and updating the strategy I was able to improve the investment scope,
which was conducted to detect the financial performance of the organisation. the tree analysis
that was conducted by me in the assessment was a relatively helpful, as it evaluated all the
relevant aspects of an organisation and the progress it could generate in the long run. the
evaluation of the financial analysis relatively helps in identifying the financial position of an
organisation over the period of time. Moreover, with the competitive analysis the overall
condition of the organisation as compared to its competitors can be evaluated this helped in

FINANCIAL STATEMENT ANALYSIS
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identifying the investment opportunity that are presented in the stock market. The analysis
conducted on strategy was also helpful in identifying the measures taken by the management
to improve company’s profitability. this revaluation literally indicated the measures that was
taken by the company to improve its growth and obtain higher rate of return from investment.
5.c Stating how the perception altered regarding the purpose of ratios:
After completing the assessment, the purpose of the rituals has a relatively altered in
my mind, as the overall ratios was conducted to identify the financial health of the
organisation and was not used as a decomposition method. the overall different
decomposition method that was used in the assessment to identify the financial health of
Amcor Limited relatively helped me to understand the significance of ratios and how it good
detect the financial capability of an organisation. assessment a relatively help me to
understand the financial ratios and the evaluation of financial statement which needs to be
conducted by investors to understand the current financial position of an organisation. Good
knowledge regarding the use of decomposition has a relatively improved where different
combination of the ratios was conducted to identify the financial progress of an organisation.
the substantial growth phase relatively helps me to understand the overall increment in
growth of the organisation which was obtained in 2017. the use of dividend payout ratio and
return on equity would eventually help in detecting the sustainable growth rate of an
organisation which is derived in the assessment and could allow the investor to understand
the financial progress that is obtained by the company.
5.d Stating how the perception of interrelationship among financial ratios and
company’s financial position changed:
Previously I was relatively focused on ratios as a measure of calculating only the
financial performance of the organisation and did not understand the interrelationship

FINANCIAL STATEMENT ANALYSIS
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between the two ratios that could be used by the investors to detect financial stability and
viability of the company. Now after the completion of the assessment I was able to identify
the different levels of interrelationships that could be used by the investors to detect the
financial performance and abbreviations found in the financial statement of an organisation.
the operating management decomposition method relatively combined different level of
ratios which help in identifying the current operation management condition of Amcor. this
relatively help in making adequate decisions regarding the investments conducted in the
company. the knowledge was relatively altered regarding the ratios and its implications that
could be used in different ways to improve the level of forecast from the evaluation of the
financial statement of an organisation.

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Reference and Bibliography:
Aggarwal, N. and Gupta, M., 2016. Returns from Financial Statement Analysis Among Low
Book-to-Market Stocks: Evidence from India. IUP Journal of Applied Finance, 22(2), p.47.
Alin-Eliodor, T., 2014. Financial Statements Analysis. Journal of Knowledge
Management, 4(5), pp.62-73.
Asx.com.au. (2011). Announcements Search Results. [online] Available at:
https://www.asx.com.au/asx/statistics/announcements.do?
by=asxCode&asxCode=AMC&timeframe=D&period=M6 [Accessed 9 May 2018].
Au.finance.yahoo.com. (2018). AMC.AX Historical prices | AMCOR FPO Stock - Yahoo
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period1=1518373800&period2=1525026600&interval=1d&filter=history&frequency=1d
[Accessed 9 May 2018].
Entwistle, G., 2015. Reflections on teaching financial statement analysis. Accounting
Education, 24(6), pp.555-558.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley &
Sons.
Grimm, S.D. and Blazovich, J.L., 2016. Developing student competencies: An integrated
approach to a financial statement analysis project. Journal of Accounting Education, 35,
pp.69-101.
Maaloul, A. and Zéghal, D., 2015. Financial statement informativeness and intellectual
capital disclosure: An empirical analysis. Journal of Financial Reporting and
Accounting, 13(1), pp.66-90.