19 FINANCIAL STATEMENT ANALYSIS OF MYER HOLDINGS
Added on 2020-02-24
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Financial Statement Analysis of Myer Holdings 1FINANCIAL STATEMENT ANALYSIS OF MYER HOLDINGSStudent’s NameCourseLecturerInstitutionDate
Financial Statement Analysis of Myer Holdings 2Financial Statement Analysis of Myer HoldingsIntroduction Myer is an Australia company established in 1900. It is the largest Australian departmental store with over 60 stores operating across Australia. Basically, Myer Holding is the public limited company which is ranked in number 131 out of 2000 top organisations in Australia (Myer Holdings Ltd 2013). Its chief executive officer is Richard Umbers while its chairman is Paul McClintock who is also referred to non-executive chairman. The company usually generates most of its revenue from departmental stores in the Australian industry. Basically, Myer Holdings engages in numerous operations of departmental stores across Australia. In essence, Myer offers a wide range of products ranging from men’s wear, home wares, youth wear, furniture, footwear, children’s wear, electrical goods, general merchandise, women’s wear, toys, handbags, beauty as well as cosmetic products (Myer Holdings Ltd 2016). In addition, Myer offer some retail customer loyalty programs. Myer operates around 67 stores under its brand name Myer Holdings Limited. It has stores across six Australian states and Australian Capital Territory. In essence, it locations comprise a mixture of key suburban shopping centres, city stores, and as well as shopping centres in the regional New South Wales, Tasmania, Victoria and Queensland. The company operates under retail sector and like other retail companies; this company’s shares have been affected greatly during the mass exodus of the investors from retail sector. In the financial year 2016, it generated a total of $2.8 billion in revenue with a total of 12,500 employees across Australia (Myer Holdings Ltd2016). Further, its share price is now down with 36% since the beginning of this year. Its independent auditor is PwC which ensure that the company’s financial statements are audited compliant with the Australian Auditing Standards (Myer Holdings Ltd 2010). According to the auditor Myer’s financial statements are in accordance with Corporations Act
Financial Statement Analysis of Myer Holdings 3of the year 2001 including abiding by the Australian Accounting Standards, providing a true and fair outlook of its financial status in 2016. Industry Situation and Myer Plans Australian retailing industry has increased by around 3% in the current value in 2016 which is in consistence with growth observed during the previous year. Further, the industry experience high competition with subdivision firms struggling to compete against cheap online stores. Despite the comparison with global retail industry, Australian retail industry is a significant and large part of Australian retail economy. Further, in Australian retail industry,foreign retailing firms are strongly represented with retailing firms such as Gap, Apple and Fossil capitalizing on the increasing sale potential. With these considerations, domestic retailing firms such as Myer Holding are required to come up with better plans to overcome the stiff competition being experienced in the industry. Myer Holding Limited future plans is to grow by 0.6% in the next one year (Myer Holdings Ltd 2016). This seems to be possible since the company has outperformed in the retail industry for the last one year. In addition, it ROE for the last one year left a significant mark to be desired. Furthermore, its future plans include a $480,000,000 capital investments as well as over 3% improvement every year in its total sales in the next three to five years. It also plans to reduce its costs through store rationalisation and lifting it sales via refurbishment of its stores and shifting towards bigger brand sold via in-store concessions (Myer Holdings Ltd 2016).III. Financial Statement Analysis From Myer Holding income statement, it is clear that for the last five year, the company experienced a decreasing trend in its gross profit. This is evident by a increase in its gross profit as from as from $1,285.9 million in 2014 to around $1,290.4 million in 2015 and
Financial Statement Analysis of Myer Holdings 4decreased to around $1,274.3 million in 2016 (Myer Holdings Ltd 2016). Its net income in the past five years experienced a decreasing and increasing trend. This is evident by a decrease as from $98.5 million in 2014 to around $30 million in 2015 and an increase to around $61 million in 2016. Its income from operations also experienced a decreasing and increasing trend for the past five years decreasing as from $160.3 million in 2014 to around $71.80 million in 2015 and then increasing to around $95.20 million in 2016 (Myer Holdings Ltd 2016).Table 1: Trend analysis of the income statement20122013201420152016Change2013Change2014Change2015Change2016Revenue100.00%100.00%100.00%100.00%100.00%0.32%-0.33%1.58%-0.54%Cost of revenue56.06%55.34%55.70%56.34%57.86%-0.96%0.30%2.69%2.11%Gross profit49.31%50.04%49.22%48.61%48.27%1.77%-2.00%-0.35%1.26%Other income1.03%0.94%4.07%2.69%Operating expensesSales, General and administrative40.51%41.84%43.33%43.59%43.95%3.50%3.10%2.17%0.28%Other operating expenses0.71%0.00%0.00%23.36%0.00%00-100.00%0strategic review,restructuring0.88%0.00%2.32%0.69%Total operating expenses42.10%41.84%43.33%-69.27%-44.64%-0.30%3.10%-161.56%56.02%Operating income(EBIT)8.98%8.19%6.14%2.70%3.61%-9.22%-34.00%-123.26%24.58%Interest Expense0.06%0.05%0.04%0.03%0.03%-7.14%-35.92%-37.33%17.58%Other income (expense)1.20%1.14%0.88%0.89%0.58%-5.03%-29.96%2.43%-52.60%
Financial Statement Analysis of Myer Holdings 5Income before income taxes7.83%7.12%5.30%1.85%3.06%-9.76%-34.75%-182.28%39.24%Provision for income taxes2.44%2.16%1.53%0.72%0.77%-12.72%-41.85%-107.81%4.95%Net income from continuing operations5.40%4.96%3.77%1.13%2.31%-8.62%-31.88%-228.33%50.82%Net income5.40%4.96%3.77%1.13%2.31%-8.62%-31.88%-228.33%50.82%Net income available to common shareholders5.40%4.96%3.77%1.13%2.31%-8.62%-31.88%-228.33%50.82%Earnings per shareBasicDilutedBased on Table 2 below, it is evident that Myer Holding total current assets for the year 2014 was 24.83% of the total assets, while in 2015 and 2016 it was 25.49% and 25.70% respectively. On the other hand, the total non-current assets for the year 2014 was 75.12% of the total assets while in 2015 and 2016 it was 74.51% and 74.30% respectively. This means that total non-current assets as compared to total assets for the last five years experienced an increasing and decreasing trend. Further, the total current liabilities for the year 2014 was 27.47% of the total assets while in 2015 and 2016 it was 25.49% and 27.89% respectively. Itstotal non-current liabilities for the year 2014 were 26.28% of the total assets while in 2015 and 2016 it was 28.72% and 12.85% (Myer Holdings Ltd 2016). On overall, the total liabilities for the company in 2014 was 53.75% of the total assets while in 2015 and 2016 they were 54.27% and 40.69%. On the other hand, its total equity for the year 2014 was 46.25% of the total assets while in 2015 and 2016, it was 45.73% and 59.31% respectively. This proves the fact that total assets of Myer for the past five years were equal to total liabilities plus total equities.
Financial Statement Analysis of Myer Holdings 6Table 2: Trend analysis of balance sheet20122013201420152016Current assetsCash and cash equivalents1.99%4.20%3.83%2.81%2.41%Short-term investments0.00%0.00%0.00%0.79%0.00%Total cash1.99%4.20%3.83%3.66%2.46%Receivables0.92%1.26%1.56%1.61%2.03%Inventories20.11%18.76%19.49%20.24%21.22%Prepaid expenses0.00%0.00%1.40%1.80%0.96%Other current assets0.00%0.48%-20.18%-21.14%-21.68%Total current assets23.02%24.70%24.83%25.49%25.70%Non-current assetsProperty, plant and equipmentOther properties0.00%0.00%89.39%94.54%99.20%Property and equipment, at cost26.87%26.24%89.39%94.54%99.20%Accumulated Depreciation0.00%0.00%-37.35%-44.83%-51.50%Property, plant and equipment, net26.87%26.24%52.04%49.71%47.70%Equity and other investments0.00%0.00%0.00%0.00%0.48%Goodwill0.00%0.00%38.95%39.90%40.31%Intangible assets48.80%48.00%57.53%57.18%56.48%Deferred income taxes1.10%0.87%1.40%1.91%2.89%Other long-term assets0.21%0.19%-74.81%-74.24%-73.55%Total non-current assets76.98%75.30%75.12%74.51%74.30%Total assets100.00%100.00%100.00%100.00%100.00%Liabilities and stockholders' equityLiabilitiesCurrent liabilitiesAccounts payable20.70%19.99%21.06%20.30%20.18%Deferred income taxes0.79%0.98%0.78%0.05%0.75%Deferred revenues0.13%0.00%0.62%0.74%1.18%Other current liabilities4.59%5.98%5.02%4.40%5.78%Total current liabilities26.22%26.95%27.47%25.49%27.89%Non-current liabilitiesLong-term debt26.50%26.29%43.66%46.74%15.79%Other long-term liabilities1.53%0.07%-17.38%-18.02%-2.94%Total non-current liabilities28.03%26.36%26.28%28.72%12.85%Total liabilities54.24%53.31%53.75%54.27%40.69%Stockholders' equityCommon stock27.10%26.82%27.16%27.82%39.56%Retained earnings18.94%19.58%19.61%17.75%20.29%Accumulated other comprehensive income-0.77%0.21%-0.52%0.16%-0.59%Total stockholders' equity45.76%46.69%46.20%45.73%59.31%Total liabilities and stockholders' equity100.00%100.00%100.00%100.00%100.00%
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