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Principles of Finance Assignment

   

Added on  2021-04-24

15 Pages2715 Words28 Views
Finance
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Running head: PRINCIPLES OF FINANCEPrinciples of FinanceName of the Student:Name of the University:Author’s Note:Course ID:
Principles of Finance Assignment_1

1PRINCIPLES OF FINANCETable of ContentsIntroduction:....................................................................................................................................2Answer to Part i:..............................................................................................................................2Answer to Part ii:.............................................................................................................................5Answer to Part iii:............................................................................................................................8Answer to Part iv:..........................................................................................................................10Conclusion:....................................................................................................................................12References:....................................................................................................................................13
Principles of Finance Assignment_2

2PRINCIPLES OF FINANCEIntroduction:The current report would focus on analysing the capital structure of Retail Food Group(RFG), which is a popular food and beverage organisation in Australia. In addition, it suppliesgreater quality coffee products and it has become emerging leader in dairy processing, wholesalebakery and foodservice sectors of the nation (Retail Food Group 2018). The first section of thereport would focus on analysing the capital structure of the organisation for the past five years.The second segment would evaluate the dividend history over the past five years as well forenabling the shareholders to provide an overview about the earnings of the shareholders. Thethird section would lay stress on evaluating the trend in share price over the past five years.Finally, the report would shed light on evaluating the attractiveness of the shares of RFG forinvestment purpose. Answer to Part i:For analysing and commenting on the capital structure of Retail Food Group, thefollowing capital structure ratios have been taken into consideration, which are illustrated in theform of a table as follows:ParticularsDetails20132014201520162017Total liabilitiesA13188276267464Total equityB240310404434465Total assetsC371398680702930Current liabilitiesD2019975091Debt-to-equity ratioA/B54.58%28.39%68.32%61.52%99.78%Debt ratioA/C35.31%22.11%40.59%38.03%49.89%
Principles of Finance Assignment_3

3PRINCIPLES OF FINANCEEquity ratioB/C64.69%77.89%59.41%61.82%50.00%Capital gearing ratio(A-D)/(C-D)31.62%18.21%30.70%33.28%44.46%Table 1: Capital structure ratios of Retail Food Group for the years 2013-2017(Source: Retail Food Group 2018)201320142015201620170.00%20.00%40.00%60.00%80.00%100.00%120.00%Capital structure ratios of RFGDebt-to-equity ratioDebt ratioEquity ratioCapital gearing ratioFigure 1: Capital structure ratios of Retail Food Group for the years 2013-2017(Source: Retail Food Group 2018)According to the above figure, it could be observed that the debt-to-equity ratio of RFGhas fallen drastically from 54.58% in 2013 to 28.39% in 2014; however, it has increased to68.32% in 2015 and the trend is declining again to 61.52% in 2016. The increase is significant to99.78% in 2017, which denotes that the organisation is highly reliant on debt for raising fundsfor its capital projects and investments in existing operations. As commented by Brooks (2015),
Principles of Finance Assignment_4

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