Financial Analysis of Enero Group Limited (2015-2017)

The financial performance of Enero Group Limited is analyzed using various ratios, including Debt to Equity Ratio, Interest Coverage Ratio, Cash Flow Adequacy, and Market Strength Ratios. The results show that the company's trend is generally downward sloping, indicating average performance. The profitability position is satisfactory, but the overall performance is not strong. The Enero Group Limited has a debt-to-equity ratio of 0.44 in 2017, which is considered risky. The interest coverage ratio is also decreasing, indicating that the company may struggle to pay its interest expenses. The cash flow adequacy ratios are declining, suggesting that the company's ability to generate cash from operations is weakening. The market strength ratios, such as Price/Earnings per Share and Dividend Yield, indicate a slight improvement in 2017.

RUNNING HEAD: INTRODUCTION TO ACCOUNTING AND FINANCE
INTRODUCTION TO ACCOUNTING AND FINANCE

INTRODUCTION TO ACCOUNTING AND FINANCE 1
Contents
Enero Group Limited.............................................................................................................................2
Introduction.......................................................................................................................................2
Industry situation and company plans...............................................................................................2
Financial statement Analysis.............................................................................................................3
Ratio Analysis...................................................................................................................................10
Conclusion.......................................................................................................................................19
Bibliography.....................................................................................................................................20

INTRODUCTION TO ACCOUNTING AND FINANCE 2
Enero Group Limited
Introduction
Enero is a company providing joined services of marketing and communication. The
services include advertisement, media planning, research, public relations, direct marketing
and design and event management (Bloomberg, 2017)1. It mainly operates from Sydney,
London and New York, and many other locations (Enero, 2017)2. Enero group limited is
based in Pyrmont, New South Wales, Australia. The CEO of the company is Matthew
Melhuish. The most recent share price is A$ 1.04 (date 30.06.2017) and the dividend per
share is 5 cents (date 26.06.2017). Independent auditor of the company is KPMG. Their
opinion on the company’s financial statements is that Enero group limited has prepared its
financial statements for the year ended 30 June 2017 in accordance with Australian
Accounting standards and the Corporations Regulations 2001.
Industry situation and company plans
 Enero Group limited has strong clients across the industry and sector group validates
expansion of revenue. It has been observed that largest client represents only 13% of
the total net revenue. Further the company has more than 700 client relationships.
 This company has awarded with an 84 industry awards across the group.
 The future plans of the company are as follows:
 Fetch additional new resources.
 Discover new sectors to sell the services
 Expand the business in new geographies for the purpose to enhance the
networked clients.
1 Bloomberg. 2017. Company Overview of Enero Group Limited. Retrieved on 13 September 2017 from
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=11190588.
2 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.

INTRODUCTION TO ACCOUNTING AND FINANCE 3
 Looking forward to connect the bigger client teams for the motive of
acquisition.
 Last but not the least integrate the services for the better public relations.
Financial statement Analysis
 Statement of financial performance

Particulars 2017
(AUD’000)
2016
(AUD’000)
2015
(AUD’000)
Gross Profit/ Net
revenue
100,172 113,488 110,347
Net income 1930 8115 -1615

INTRODUCTION TO ACCOUNTING AND FINANCE 4
Income from
operations
3436 10073 576
(Source: Annual Report, 2017;2016;2015)345.
Comment:
 Gross Profit: It has been observed from the above table that in 2017 gross
profit is least among previous two years (2016 and 2015).
Gross Profit/ Net revenue
90,000
95,000
100,000
105,000
110,000
115,000
100,172
113,488
110,347
AUD $' 000
2017
2016
2015
 Net Income: It has been observed from the above table that in 2017 the net
income is very less from 2016 but more than 2015. The net income is highest
in 2016 which shows that the profitability position is sound in 2016 in
comparison to 2017.
3 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
4Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
5 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 5
Net income
-4000
-2000
0
2000
4000
6000
8000
10000
1930
8115
-1615
AUD $' 000
2017
2016
2015
 Income from operations: It has been observed from the above table that in 2017
the income from operations is very less from 2016 whereas more than 2015.
Thus, income from operations is highest in 2016 among three years.
Income from operations
0
2000
4000
6000
8000
10000
12000
3436
10073
576
AUD $' 000
2017
2016
2015
 Common Size analysis
Particulars
Amount (AUD $' 000)
2017 % 2016 % 2015 %
Gross Revenue 180666 180.36% 213632 188.24% 212332 192.42%

INTRODUCTION TO ACCOUNTING AND FINANCE 6
Directly attributable cost
of sales -80494 -80.36% -100144 -88.24% -101985 -92.42%
Net revenue 100172 100.00% 113488 100.00% 110347 100.00%
Other income 207 0.21% 206 0.18% 206 0.19%
Employee expenses -71382 -71.26% -79085 -69.69% -81070 -73.47%
Occupancy costs -8036 -8.02% -8082 -7.12% -8345 -7.56%
Travel expenses -1244 -1.24% -1515 -1.33% -2034 -1.84%
Communication expenses -2038 -2.03% -2252 -1.98% -2184 -1.98%
Compliance expenses -1434 -1.43% -2114 -1.86% -2114 -1.92%
Depreciation and
amortisation expenses -3758 -3.75% -3060 -2.70% -4225 -3.83%
Administration expenses -6518 -6.51% -7426 -6.54% -7271 -6.59%
Incidental acquisition
costs -156 -0.16% 0 0.00% 0 0.00%
Contingent consideration
fair value loss -2303 -2.30% 0 0.00% 0 0.00%
Loss on disposal of
subsidiaries 0 0.00% 0 0.00% -2644 -2.40%
Net finance (costs)/
income -149 -0.15% 170 0.15% 65 0.06%
Profit before income tax 3361 3.36% 10330 9.10% 731 0.66%
Income tax expense -1431 -1.43% -2215 -1.95% -2346 -2.13%
Profit/(loss) for the year 1930 1.93% 8115 7.15% -1615 -1.46%
(Source: Annual Report, 2017;2016;2015)678.

1. Enero group recognises revenue when it is reliably measured and future
economic benefits will flow to the group.
2. Revenue from services recognised according to the stage of completion
method.
3. Interest income is recognised according to the effective interest method.
6 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
7 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
8 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 7
 Statement of financial Position

As at 30 June 2017
Particulars
AUD $'000
2017 2016 2015
Assets
Cash and cash equivalents 32512 37620 25812
Trade and other receivables 19994 24305 27852
Other assets 4251 4630 4335
Income tax receivable 70 0 273
Total current assets 56827 66555 58272
Receivables 0 0 21
Deferred tax assets 1735 1715 1887
Plant and equipment 6899 4942 7034
Other assets 156 338 427
Intangible assets 83134 75502 84545
Total non-current assets 91924 82497 93914
Total assets (A) 148751 149052 152186
Liabilities
Trade and other payables 26568 32237 31561
Contingent consideration payable 4512 0 0
Interest-bearing loans and borrowings 1352 9 27
Employee benefits 2772 2166 2356
Income tax payable 512 994 748
Provisions 18 163 220
Total current liabilities 35734 35569 34912
Contingent consideration payable 5631 0 0
Interest-bearing loans and borrowings 1915 11 0
Employee benefits 661 599 480
Provisions 1853 1614 1276
Total non-current liabilities 10060 2224 1756
Total liabilities 45794 37793 36668
Equity
Issued capital 96389 491576 491509
Other reserves -13609 -7106 4800
Profit appropriation reserve 12443 0 0
Retained profits/(accumulated losses) 7030 -375243 -383615

INTRODUCTION TO ACCOUNTING AND FINANCE 8
Total equity attributable to equity holders of the
parent 102253 109227 112694
Non-controlling interests 704 2032 2824
Total equity 102957 111259 115518
Total Liabilities + Total Equity (B) 148751 149052 152186
check point OK OK OK
(Source: Annual Report, 2017;2016;2015)91011.
 Common Size analysis
Enero Group limited
As at 30 June 2017
Particulars
AUD $'000
2017 % 2016 % 2015 %
Assets
Cash and cash equivalents 32512 21.86% 37620 25.24% 25812 16.96%
Trade and other
receivables 19994 13.44% 24305 16.31% 27852 18.30%
Other assets 4251 2.86% 4630 3.11% 4335 2.85%
Income tax receivable 70 0.05% 0 0.00% 273 0.18%
Total current assets 56827 38.20% 66555 44.65% 58272 38.29%
Receivables 0 0.00% 0 0.00% 21 0.01%
Deferred tax assets 1735 1.17% 1715 1.15% 1887 1.24%
Plant and equipment 6899 4.64% 4942 3.32% 7034 4.62%
Other assets 156 0.10% 338 0.23% 427 0.28%
Intangible assets 83134 55.89% 75502 50.65% 84545 55.55%
Total non-current assets 91924 61.80% 82497 55.35% 93914 61.71%
Total assets (A) 148751
100.00
% 149052
100.00
% 152186 100.00%
Liabilities
Trade and other payables 26568 17.86% 32237 21.63% 31561 20.74%
Contingent consideration
payable 4512 3.03% 0 0.00% 0 0.00%
9 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF
10Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
11 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 9
Interest-bearing loans and
borrowings 1352 0.91% 9 0.01% 27 0.02%
Employee benefits 2772 1.86% 2166 1.45% 2356 1.55%
Income tax payable 512 0.34% 994 0.67% 748 0.49%
Provisions 18 0.01% 163 0.11% 220 0.14%
Total current liabilities 35734 24.02% 35569 23.86% 34912 22.94%
Contingent consideration
payable 5631 3.79% 0 0.00% 0 0.00%
Interest-bearing loans and
borrowings 1915 1.29% 11 0.01% 0 0.00%
Employee benefits 661 0.44% 599 0.40% 480 0.32%
Provisions 1853 1.25% 1614 1.08% 1276 0.84%
Total non-current
liabilities 10060 6.76% 2224 1.49% 1756 1.15%
Total liabilities 45794 30.79% 37793 25.36% 36668 24.09%
Equity
Issued capital 96389 64.80% 491576
329.80
% 491509 322.97%
Other reserves -13609 -9.15% -7106 -4.77% 4800 3.15%
Profit appropriation
reserve 12443 8.36% 0 0.00% 0 0.00%
Retained
profits/(accumulated
losses) 7030 4.73% -375243
-
251.75
% -383615 -252.07%
Total equity attributable
to equity holders of the
parent 102253 68.74% 109227 73.28% 112694 74.05%
Non-controlling interests 704 0.47% 2032 1.36% 2824 1.86%
Total equity 102957 69.21% 111259 74.64% 115518 75.91%
Total Liabilities + Total
Equity (B) 148751
100.00
% 149052
100.00
% 152186 100.00%
check point OK OK OK
(Source: Annual Report, 2017;2016;2015)121314.
12 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
13 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
14 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 10

1. Plant and equipment are computed at cost less accumulated depreciation less
impairment losses.
2. Depreciation is charged as per straight line basis.
3. Goodwill amount is measured at cost less impairment losses. Goodwill
carrying amount has increased from 2016 due to acquisition of East wick
Communications.
4. Other intangible assets other than goodwill amortised as per SLM basis over
its useful lives.
 Statement of cash flows

Particulars 2017
(AUD $’000)
2016
(AUD $’000)
2015
(AUD $’000)
Net income 1930 8115 -1615
Operating cash
flows
9840 17000 6993
(Source: Annual Report, 2017;2016;2015)151617.
15 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
16 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
17 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 11
Comment: It has been observed from the above table that net income is very low as
compared to operating cash flows. In other words, overall cash generated from
operations is very high although profit after tax is very less because of incidental
expenses occurred during the year.

Particulars 2017
(AUD $’000)
2016
(AUD $’000)
2015
(AUD $’000)
Net cash used in
investing activities
-7532 -1071 -2625
(Source: Annual Report, 2017;2016;2015).
Comment: In year 2017, it has been observed that Enero group has acquired a
business of AUD $ 6328000 and thus the amount of acquisition is highest among the
three years.
 The most important source of financing is “interest bearing loans and borrowings”.
The reason being that the amount has increased tremendously in 2017 from 2016.
Further the group has paid dividend to equity shareholders due to which net cash used
in financing activities has increased considerably.
 Overall cash and cash equivalents has decreased in 2017 in comparison to 2016 but
had increased from 2015.
Ratio Analysis
 Ratios
 Liquidity Ratios
1. Working capital/ current ratio:
Particulars 2017 2016 2015

INTRODUCTION TO ACCOUNTING AND FINANCE 12
(AUD
$’000)
(AUD $’000) (AUD $’000)
Current Assets 56827 66555 58272
Current Liabilities 35734 35569 34912
Working capital
ratio/current ratio
1.59 1.87 1.67
(Source: Annual Report, 2017;2016;2015)181920.
Comment: It is seen from the above calculation that current ratio or working
capital ratio of year 2017 is lowest than 2016 but more than 2015. In other
words, group can easily pay off its current debts from short-term assets.
Hence, liquidity performance of Enero group limited is sound. The trend is
downward sloping in 2017.
2. Receivable turnover ratio:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Net credit revenue 100172 113488 110347
18 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
19 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
20 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 13
Average accounts
receivable*
22054 26013 27074
Receivables
turnover
4.54 4.36 4.08
* Average accounts receivable = (opening accounts receivable balance
+ closing accounts receivable balance)/2
(Source: Annual Report, 2017;2016;2015)212223.
Comment: It is seen from the above calculation that the trend is upward
sloping. Higher ratio is favourable. Higher ratio determines the efficiency of
the company to collect its receivables more frequently.
3. Average days’ sales uncollected:
Formula = 365/ Receivables turnover
Particulars 2017 2016 2015
Average days’ sales
uncollected
80.40 days 83.72 days 89.46 days
(Source: Annual Report, 2017;2016;2015)242526.
21 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
22 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
23 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
24 Enero Group Limited. 2017. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY17.PDF.
25 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
26 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 14
Comment: It is seen from the above calculation that the trend is downward
sloping which is good. Further it shows that in 2017 amount was collected
from the customers much early than in 2016 and 2015. Therefore, it indicates
a positive sign.
4. Inventory turnover:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Cost of sales 80494 100144 101985
Average Inventory - - -
Inventory turnover - - -
(Source: Annual Report, 2017;2016;2015).
Comment: It is seen from the above table that Enero group has no inventories.
 Profitability Ratios
1. Profit margin:

INTRODUCTION TO ACCOUNTING AND FINANCE 15
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Net profit 1930 8115 -1615
Gross Revenue 180666 213632 212332
Profit Margin 1.07% 3.80% -0.76%
(Source: Annual Report, 2017;2016;2015)272829.
Comment: It is seen from the above calculation that profit margin is less from
2016 but more than 2015. Trend is downward sloping. Further, the
profitability position is not adverse but it is satisfactory.
2. Asset Turnover:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Gross revenue 180666 213632 212332
27 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
28 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
29 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 16
Average total assets 148901.5 150619 146846
Asset Turnover 1.21 1.42 1.45
(Source: Annual Report, 2017;2016;2015)303132.
Comment: It is seen from the above calculation that the trend is downward
sloping which is adverse. This means that the Enero group is not using its
assets efficiently.
3. ROA:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Net profit 1930 8115 -1615
Average total assets 148901.5 150619 146846
ROA 1.30% 5.39% -1.10%
(Source: Annual Report, 2017;2016;2015).
Comment: It is seen from the above calculation that the trend is downward
sloping which is adverse. Thus, company is not earning effectively on its
assets.
30 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
31 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
32 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 17
4. ROE:
Formula as per Du Pont Equation
= Net profit margin * Asset turnover ratio * financial leverage ratio
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Average total assets 148901.5 150619 146846
Average total Equity 107108 113388.5 109511.5
Financial leverage
ratio
1.39 1.33 1.34
(Source: Annual Report, 2017;2016;2015)333435.
Particulars 2017 2016 2015
Profit Margin 1.07% 3.80% -0.76%
Asset Turnover 1.21 1.42 1.45
Financial leverage 1.39 1.33 1.34
33 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
34 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
35 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 18
ratio
ROE 1.80% 7.17% -1.48%
(Source: Annual Report, 2017;2016;2015)363738.
Comment: It is seen from the above calculation that the trend is downward
sloping which is adverse. Thus the company is not effectively meet its
financial obligations. Thus, capital structure of the group should be taken into
consideration.
 Long-term solvency ratios
1. Debt to Equity Ratio:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Debt 45794 37793 36668
Equity 102957 111259 115518
Debt to Equity Ratio 0.44 0.34 0.32
(Source: Annual Report, 2017;2016;2015).
36 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
37 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
38 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 19
Comment: It is seen from the above calculation that the trend is upward
sloping which is adverse because it is considered as risky position. Thus,
investors do not fund its capital due to bad performance of the company.
2. Interest Coverage ratio:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
EBIT 3436 10073 576
Interest Expense 74 87 90
Interest Coverage
ratio
46.43 115.78 6.4
(Source: Annual Report, 2017;2016;2015)394041.
Comment: It is seen from the above calculation that the trend is downward
sloping which is adverse. This means that group is making interest payments
in 2017 but not better than 2016. The situation is average.
 Cash Flow Adequacy
1. Cash Flow Yield:
Particulars 2017
(AUD
2016
(AUD $’000)
2015
(AUD $’000)
39 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
40 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
41 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 20
$’000)
Cash flows from
operations
9840 17000 6993
Share Price 1.04 1.25 0.78
Cash Flow Yield 9461.54 13600 8965.38
(Source: Annual Report, 2017;2016;2015)424344.
Comment: It is seen from the above calculation that the trend is downward
sloping but it is considered as average. This means that group is average in
generating cash from operations.
2. Cash Flows to Sales:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Cash flows from
operations
9840 17000 6993
Gross Revenue 180666 213632 212332
Cash Flows to Sales 0.054 0.080 0.033
(Source: Annual Report, 2017;2016;2015).
42 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
43 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF.
44 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.

INTRODUCTION TO ACCOUNTING AND FINANCE 21
Comment: It is seen from the above calculation that the trend is downward
sloping which is categorized as unsatisfactory. This ratio determines the
effectiveness of the company to transform company’s revenue into cash.
3. Free cash flows to assets:
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Cash flows from
operations
9840 17000 6993
Total assets 148751 149052 152186
Free cash flows to
assets
0.066 0.114 0.046
(Source: Annual Report, 2017;2016;2015)454647.
Comment: It is seen from the above calculation that the trend is downward
sloping which is categorized as unsatisfactory. This ratio determines the
effectiveness of the company to transform company’s assets into cash.
4. Free cash Flow:
45 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
46 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF
47 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf

INTRODUCTION TO ACCOUNTING AND FINANCE 22
Particulars 2017
(AUD
$’000)
2016
(AUD $’000)
2015
(AUD $’000)
Cash flows from
operations
9840 17000 6993
(Source: Annual Report, 2017;2016;2015).
Comment: It is seen from the above calculation that the trend is downward
sloping which is categorized as unsatisfactory. This means that the group is
not efficiently generating cash from its operations.
 Market Strength ratios
1. Price/earnings per share:
Particulars 2017 2016 2015
Price Per share 1.04 1.25 0.78
Earnings Per
share
2.2 8.0 -3.4
Price/earnings
per share
0.47 0.16 0.23
(Source: Annual Report, 2017;2016;2015)484950.
48 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
49 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF
50 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf

INTRODUCTION TO ACCOUNTING AND FINANCE 23
Comment: It is seen from the above calculation that the ratio is improving
which is a positive sign. This ratio determines earnings covered from per share
price.
2. Dividends Yield:
Particulars 2017 2016 2015
Dividend per
share
5 cents - -
Price Per share 1.04 1.25 0.78
Dividends Yield 4.81 - -
(Source: Annual Report, 2017;2016;2015)515253.
Comment: It is seen from the above calculation that dividend is declared only
in 2017 which is a positive sign.
Conclusion
According to the analysis, the performance of the company is average in 2017 as
compared to 2016. The profitability position is satisfactory. Therefore, the Enero
group limited is not a strong performer.
51 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf.
52 Enero Group Limited. 2016. Annual Report. Retrieved on 13 September 2017 from
http://enero.com/images/enero/annual-reports/Enero_Annual_Report_FY16.PDF
53 Enero Group Limited. 2015. Annual Report. Retrieved on 13 September 2017 from http://www.enero.com/images/enero/annual-
reports/Enero_Annual_Report_FY15.pdf