Financial Analysis using Cash Flow Statements

This assignment presents a detailed analysis of various financial activities based on a company's cash flow statements. It covers topics such as debt issued and repaid, common stock issuance, other financing activities, net cash flow from financing, the effect of exchange rate changes, and finally, free cash flow calculation. The data provided spans several periods, allowing for trend analysis and a comprehensive understanding of the company's financial health.

Running Head: Accounting
1
Project Report: Finance

Accounting
2
Contents
Introduction of report........................................................................................................3
GENETIC TECHNOLOGIES LTD.................................................................................3
Analysis of Debt Valuation..............................................................................................3
Analysis of Share valuation..............................................................................................4
Analysis of Cost of capital................................................................................................6
Market analysis.................................................................................................................7
Conclusion........................................................................................................................8
References.........................................................................................................................9
Appendix.........................................................................................................................11

Accounting
3
Introduction of report:
Every individual has some savings with his or her. They save some amount form their
income or other sources to keep the amount for urgency or for raising the worth of that
amount. In this report, the share market has been analyzed in which the individual could
invest the amount and get back the amount whenever needed. This report has been prepared
over the comapny, Genetic technologies limited. This company’s financial performance and
the positive have been analyzed to depict the individual that whether they must invest into the
comapny or not. While preparing this report, analyst and various financial website have been
taken into the knowledge to get a better result.
GENETIC TECHNOLOGIES LTD:
GENETIC TECHONOLOGY LIMITED is a diagnostic comapny. This comapny
provides assessment and testing tolls to assist the physicians in managing the women’s health
proactively. This comapny has its operations into Australian as well as various other markets.
The comapny has a market of around $ 600 million annually. The performance and the
market share of the comapny is enhancing gradually (Home, 2017). And according to the
analysis over the comapny, future market of the comapny would be better.
Analysis of Debt Valuation:
Analyzing the debts of a comapny depict the users about the performance of the
capital. Debt valuation study has been conducted. According to this study, the short term debt
and long term debt of the comapny has been raised through bank overdrafts, commercial bills
and creditors support whereas the long term debt is raising thorough the debt and equity of
the comapny. The debt structure of the comapny and its industry are as follows:
Genetic technology LIMITED
2017 2016 2015 2014 2013
Long term debt 0 0 2502384 0 0
Short term debt 0 0 0 0 17748
Industry debt level
2017 2016 2015 2014 2013
Long term debt 11591000 14805000 17740000 20416000 222864000
Short term debt 3214000 3071000 2676000 2448000 2235000

Accounting
4
According to this study, the level of long term debt as well as the level of short term
debt of the comapny is not equivalent. The comapny has neither raised the short term debt
nor long term debt from last 2 years. Comapny is managing the entire funds through the
equity only. According to this report, it has been analyzed that this comapny is required to
manage the debt level as well as to get an optimal capital structure (Gapenski, 2008).
The genetic technologies limited is managing the financial performance is a better
manner as whole but it is not taking any kind of risk and that is why the cost of the comapny
is enhancing. The comapny is requisite to analyze the industry’s debt level and make the
changes according to the debt level into the performance of the comapny. Currently, if the
comapny wants to raise the funds through the debts than the following cost would be
occurred:
Calculation of cost of debt
Outstanding debt 0
interest rate 6%
Tax rate 0.3
Kd 0.0420
According to the table, the cost of debt of the comapny is 4.20% which depict that the
comapny just have to bear 4.2% for each shareholder to raise the capital through the debts.
Analysis of Share valuation:
Analyzing the shares of a comapny depict the users about the performance of the
capital. Share valuation study has been conducted. According to this study, the total cost of
the equity of the comapny is 7.3032%. The table of cost of equity is as follows:
Dividend Discount Model
Dividend
expected
-
0.003262874
Growth rate 7%
Price per share 2.42
cost of equity 7.3032%

Accounting
5
The revenue, earnings, dividend, growth, EPS etc of the company has been evaluated.
The EPS of the GENETIC TECHNOLOGIES LIMITED is -0.73. The growth rate of the
comapny is 7% (Morningstar,, 2017). The dividend expected from the comapny by the
shareholders is -0.00326. The earnings and the revenues of the comapny from last 5 years are
as follows:
2016-06 2015-06 2014-06 2013-06 2012-06
Revenue 1125134 3039069 5544159 8379537 11330989
Earnings -0.73 -1.23 -2.64 -2.96 -1.73
According to this report, the revenue of the comapny and the earnings of the comapny
are getting down and depict that the company is losing its market due to various factors.
The stock price of the comapny has been evaluated to analyze that whether the market
stock price of the comapny is according to the factors and activities of the comapny or to has
been undervalued or overvalued by the comapny (yahoo finance, 2017). The tables are as
follows:
PE Multiple Model
Industry PE ratio 11.50
EPS (0.73)
Intrinsic Value (8.40)
Share Price 2.42
Overvalued
Dividend Discount Model
Dividend expected (0.0032629)
Growth rate 7%
Discount rate 41.32%
Intrinsic Value (0.009629)
Share Price 2.42
Overvalued
The stock prices of the comapny according to the PE multiple models and the
dividend discount model is -8.40 and -0.009629 whereas the share price of the comapny is $
2.42. According to both the evaluation model, it has been resulted that the share price of the
comapny has been overvalued and the analyst are required to consider this factor. The P/E
model is mainly influenced by the PE ratio and the EPS of the comapny whereas the dividend

Accounting
6
discount model get influenced through the expected dividend, discount rate, growth arte etc.
(Bloomberg, 2017)
According to this study, it has been found that the DDM model is more
approachable as this factor considers the marketing factor more than the internal factor of the
comapny and thus the result of DDM factor could be more reliable. So the intrinsic value of
the shares is -0.009629.
Additionally, various other aspects are also available in the economy which
affects the share price of a comapny directly, according to this study, it has been found that
the analyst must look over the turnover, members, projects industry market etc to analyze the
intrinsic value of the shares as these factors are much more important for the comapny then
the PE ratio and the expected dividend (Glajnaric, 2016).
Analysis of Cost of capital:
Analyzing the cost of capital of a comapny depict the users about the performance of
the capital. WACC valuation study has been conducted. According to this study, the total cost
of the capital of the comapny is 7.3032%. The table of cost of capital is as follows:
Calculation of WACC
Price Cost Weight WACC
Debt 0 0.042 0 0
Equity 6054861 0.07303 1 0.07303
6054861 Kd 0.07303
(Yahoo finance, 2017)
The Australian slab rate and tax rate depict about 30% tax rate for the comapny. 30%
tax rate has been used while calculating the data of the comapny. According to the WACC
table, the cost of debt and the cost of equity of GENETIC TECHONOLOGIES LIMITED is
0.042 and the 0.07303. The cost of both the sources is different due to the different nature.
Cost of equity does not consider the tax factor whereas the cost of debt considers the tax
factor. This is the main reason behind differences.
Current liabilities of the comapny occurs the short term cost of the comapny whereas
the WACC is calculated to analyze the long term cost of the comapny. Thus this must not be
included into the WACC calculations. The pros of not including is the better result and if it is

Accounting
7
included than it becomes easy for the management to analyze the total long term and short
term cost of the comapny (Google finance, 2017).
According to the calculations, the total cost of the comapny is 0.07303 which totally
occurred through the equity of the comapny as comapny did not enhance the level of the debt
for the funds. This calculation helps the comapny to maintain a better level of capital
structure.
Currently, this comapny has researched over a new medicine for the health of the
comapny and adopt various new technologies to get a better result. For both of these projects,
comapny required to enhance the level of the sources. And for both the projects, comapny
enhanced the level of equity rather than the debt for not taking any kind of risk related to the
market and other factors (Dixon and Monk, 2009).
The current capital structure of the comapny depict that comapny do not have a single
penny of debts to manage the level of capital of the comapny. According to this study, it has
been found that the entire funds of the comapny are through the equity funds only whereas
the industry’s data depict that the debt and equity both must be raised up for the company’s
funds. Following are the level of the capital structure of the comapny and the industry:
Capital structure of Industry
Debt 11591000
Equity 14400000
Capital structure of comapny
Debt 0
Equity 6054861
(AFR, 2017)
According to this evaluation, the capital structure of the comapny is not at all
equivalent with the comapny and the company is required to make the changes into it.
The optimal capital structure is a level of the debt and the equity of an organization
where the comapny become more profitable in context of the risk as well as the cost. The
optimal capital structure must be set by the comapny according to the market and economical
condition (Hillier, Grinblatt and Titman, 2011). The capital structure of the comapny is not
good and the comapny is required to raise the level of the debt.

Accounting
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Market analysis:
Market analysis study has been performed over the GENTIC TECHONOLOGIES
LIMITED to analyze that whether the performance of the comapny is according to the market
condition or not (Jiashu, 2009). The financial performance of the comapny is decreasing by a
great level and the comapny is required to maintain and enhance it.
Various financial analyst studies have been read over the comapny and it has been
analyzed that the performance of the comapny is not at all good. Comapny is required to
make various changes into its performance to manage the level of the revenue as well as the
capital structure (Voelkl and Fritz, 2017). The capital structure of the comapny is not optimal
and the managers are suggested to enhance the level of the debt so that the risk could be
average and the cost of capital could be reduced (Morningstar, 2017). Comapny is required to
make the changes into its financial policies to maintain the market (Yahoo finnce, 2017). The
health factors are increasing and comapny must use this opportunity to enhance and grab the
market share (Google finance, 2017).
Conclusion:
To conclude, the comapny has failed to manage the activities and opportunities in a
better manner. Company is required to reduce the level of the equity and enhance the level of
debt to make an optimal structure of the capital and comapny must grab the opportunity and
enhance the level of the market share.

Accounting
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References:
AFR. 2017. GENETIC TECHONOLOGY LTD. Retrieved from
http://www.afr.com/research-tools/GNEE/company-profile/operational-history available on
14th Oct 2017.
Bloomberg. 2017. GENETIC TECHONOLOGY LTD. Retrieved from
https://www.bloomberg.com/quote/GENE:AU available on 14th Oct 2017.
Dixon, A.D. and Monk, A.H., 2009. The power of finance: accounting harmonization's effect
on pension provision. Journal of Economic Geography, 9(5), pp.619-639.
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial
management. Health Administration Press.
Glajnaric, M., 2016. The importance of dividend paying stocks. Equity, 30(2), p.6.
Google finance. 2017. GENETIC TECHONOLOGY LTD. Retrieved from
http://finance.google.com/finance?q=ASX:GENE available on 14th Oct 2017.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy.
McGraw Hill.
Home. 2017. GENETIC TECHONOLOGY LTD. Retrieved from http://gtgcorporate.com/
available on 14th Oct 2017.
Jiashu, G., 2009. Study on Fair Value Accounting——on the essential characteristics of
financial accounting [J]. Accounting Research, 5, p.003.
Morningstar. 2017. GENETIC TECHONOLOGY LTD. Reterived from
http://financials.morningstar.com/company-profile/c.action?
t=GENE&region=usa&culture=en-US available on 14th Oct 2017.

Accounting
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Voelkl, B. and Fritz, J., 2017. Relation between travel strategy and social organization of
migrating birds with special consideration of formation flight in the northern bald ibis. Phil.
Trans. R. Soc. B, 372(1727), p.20160235.
Yahoo finance. 2017. GENETIC TECHNOLOGY LIMITED. Retrieved from
https://finance.yahoo.com/quote/gene.ax?ltr=1 available on 3rd Oct 2017.

Accounting
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Appendix:
Date Adj Close Return Date Adj Close Return
31-05-2013 11.95 30-06-2013 28.9837
30-06-2013 12.45 0.041841 31-07-2013 30.7262 0.060119998
31-07-2013 11.95 -0.0401606 31-08-2013 34.4575 0.12143708
31-08-2013 12.45 0.041841 30-09-2013 35.8850 0.041427788
30-09-2013 11.5 -0.0763052 31-10-2013 35.6291 -0.00713103
31-10-2013 9.5 -0.173913 30-11-2013 37.0271 0.03923756
30-11-2013 9.1 -0.0421053 31-12-2013 36.8203 -0.00558507
31-12-2013 7.15 -0.2142857 31-01-2014 33.0700 -0.10185416
31-01-2014 7.45 0.04195804 28-02-2014 34.7000 0.049289416
28-02-2014 8.2 0.10067114 31-03-2014 35.4500 0.021613832
31-03-2014 7 -0.1463415 30-04-2014 34.5300 -0.0259521
30-04-2014 6.8 -0.0285714 31-05-2014 36.6900 0.062554302
31-05-2014 5.4 -0.2058824 30-06-2014 37.1000 0.01117468
30-06-2014 5.3 -0.0185185 31-07-2014 36.7600 -0.00916442
31-07-2014 4.15 -0.2169811 31-08-2014 35.6200 -0.03101194
31-08-2014 3.3 -0.2048193 30-09-2014 37.5600 0.054463842
30-09-2014 2.85 -0.1363636 31-10-2014 36.0700 -0.03966989
31-10-2014 2.55 -0.1052632 30-11-2014 35.5400 -0.01469362
30-11-2014 1.95 -0.2352941 31-12-2014 35.9800 0.012380388
31-12-2014 1.95 0 31-01-2015 35.6400 -0.00944972
31-01-2015 2.79 0.43076923 28-02-2015 36.1900 0.015432099
28-02-2015 5.83 1.08960573 31-03-2015 37.4900 0.035921609
31-03-2015 5.27 -0.0960549 30-04-2015 35.8600 -0.04347829
30-04-2015 4.42 -0.1612903 31-05-2015 35.9900 0.003625237
31-05-2015 4.06 -0.081448 30-06-2015 36.0000 0.000277799
30-06-2015 3.04 -0.2512315 31-07-2015 36.7400 0.020555611
31-07-2015 3.16 0.03947368 31-08-2015 38.1400 0.038105523
31-08-2015 2.34 -0.2594937 30-09-2015 44.1400 0.157315159
30-09-2015 2.36 0.00854701 31-10-2015 41.4100 -0.06184864
31-10-2015 1.85 -0.2161017 30-11-2015 42.1500 0.017870128
30-11-2015 3.44 0.85945946 31-12-2015 39.9000 -0.05338078
31-12-2015 2.68 -0.2209302 31-01-2016 44.4500 0.114035057
31-01-2016 2.15 -0.1977612 29-02-2016 39.4400 -0.11271095
29-02-2016 2.06 -0.0418605 31-03-2016 37.8800 -0.0395537
31-03-2016 2.31 0.12135922 30-04-2016 41.2200 0.088173176
30-04-2016 2.42 0.04761905 31-05-2016 41.3900 0.004124163
30-04-2016 2.44 0.00826446 30-06-2016 42.4600 0.025851656
31-07-2016 3.04 0.24590164 31-07-2016 42.3500 -0.0025907
31-08-2016 3.16 0.03947368 31-08-2016 42.0300 -0.00755606

Accounting
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30-09-2016 2.34 -0.2594937 30-09-2016 41.4300 -0.01427549
31-10-2016 2.36 0.00854701 31-10-2016 43.7300 0.055515327
30-11-2016 1.85 -0.2161017 30-11-2016 44.5100 0.01783668
31-12-2016 3.44 0.85945946 31-12-2016 45.7600 0.028083578
31-01-2017 2.68 -0.2209302 31-01-2017 49.7000 0.086101468
28-02-2017 2.15 -0.1977612 28-02-2017 51.1500 0.02917507
31-03-2017 2.06 -0.0418605 31-03-2017 48.1600 -0.05845556
30-04-2017 2.31 0.12135922 30-04-2017 51.1500 0.062084759
31-05-2017 2.42 0.04761905 31-05-2017 48.1600 -0.05845556
-0.326% 1.228%

Accounting
13
GENETIC TECHNOLOGIES LTD ADR (GENE) CashFlowFlag INCOME
STATEMENT
Fiscal year ends in June.
2016-
06
2015-
06 2014-06
2013-
06
2012-
06
Revenue
112513
4
303906
9 5544159
837953
7
113309
89
Cost of revenue 743060 891243 1837729
194546
7
194862
5
Gross profit 382074
214782
6 3706430
643407
0
938236
4
Operating expenses
Research and development
258475
2
285166
5 3298127
346246
6
402936
9
Sales, General and administrative
671943
5
916270
5
1050390
3
120804
24
112600
60
Other operating expenses
-
139679
8
-
1716386
Total operating expenses
930418
7
106175
72
1208564
4
155428
90
152894
29
Operating income
-
892211
3
-
846974
6
-
8379214
-
910882
0
-
590706
5
Interest Expense 28889 264694 744199 38968 45217
Other income (expense) 492037 -75730
-
1011056
-
201695 655454
Income before taxes
-
845896
5
-
881017
0
-
1013446
9
-
934948
3
-
529682
8
Net income from continuing
operations
-
845896
5
-
881017
0
-
1013446
9
-
934948
3
-
529682
8
Other 9272 51116 9305
Net income
-
845896
5
-
881017
0
-
1012519
7
-
929836
7
-
528752
3
Net income available to common
shareholders
-
845896
5
-
881017
0
-
1012519
7
-
929836
7
-
528752
3
Earnings per share
Basic -0.73 -1.23 -2.64 -2.96 -1.73
Diluted -0.73 -1.23 -2.64 -2.96 -1.73
Weighted average shares outstanding
Basic
114347
61
715202
2 3830385
314723
3
306935
2
Diluted
114347
61
715202
2 3830385
314723
3
306935
2

Accounting
14
EBITDA
-
804000
2
-
831327
3
-
9051825
-
891220
6
-
468966
7
GENETIC TECHNOLOGIES LTD ADR (GENE) CashFlowFlag BALANCE SHEET
Fiscal year ends in June. 2016-06 2015-06 2014-06 2013-06 2012-06
Assets
Current assets
Cash
Cash and cash equivalents
1117968
7
1834135
7 2834034 1930589 8900235
Short-term investments 17460
Total cash
1117968
7
1834135
7 2834034 1930589 8917695
Receivables 392521 524580 895470 299348 386060
Inventories 317497
Prepaid expenses 320610 188701 414910 398185 536125
Other current assets 238252 193961 216095 29294 109915
Total current assets
1213107
0
1956609
6 4360509 2657416 9949795
Non-current assets
Property, plant and equipment
Gross property, plant and
equipment 3049462 2654409 5799559 6194829 6222730
Accumulated Depreciation -2499323
-
2236814
-
5405395
-
5771661
-
5579812
Net property, plant and equipment 550139 417595 394164 423168 642918
Equity and other investments 795533 3932384 4414914
Goodwill 315388 315388 315388
Intangible assets 608477 736041 863605 991171 1118736
Total non-current assets 1158616 1153636 2368690 5662111 6491956
Total assets
1328968
6
2071973
2 6729199 8319527
1644175
1
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 17748
Accounts payable 392322 517079 900275 622216 905772
Accrued liabilities 175157 430680 237166 375491
Deferred revenues 77282 153226 320781 266646
Other current liabilities 764710 710122 1027349 1146528 740402
Total current liabilities 1332189 1735163 2318016 2465016 1930568
Non-current liabilities

Accounting
15
Long-term debt 2502384
Minority interest 120587 154630
Other long-term liabilities 74308 25321 81280 96224 108541
Total non-current liabilities 74308 25321 2583664 216811 263171
Total liabilities 1406497 1760484 4901680 2681827 2193739
Stockholders' equity
Common stock
1152725
76
1152471
28
9008049
2
8373584
5
8328014
2
Retained earnings
-
1094442
48
-
1.01E+0
8
-
9217511
3
-
8204991
6
-
7275154
9
Accumulated other comprehensive
income 6054861 4697403 3922140 3951771 3719419
Total stockholders' equity
1188318
9
1895924
8 1827519 5637700
1424801
2
Total liabilities and stockholders'
equity
1328968
6
2071973
2 6729199 8319527
1644175
1
GENETIC TECHNOLOGIES LTD ADR (GENE) Statement of CASH FLOW
Fiscal year ends in June. AUD. TTM
2016-
06
2015-
06
2014-
06
2013-
06
2012-
06
Cash Flows From Operating
Activities
Net income
-
84589
65
-
88101
70
-
101344
69
-
93494
83
-
5E+0
6
Depreciation & amortization
39007
4
23220
3 338445
39830
9
5619
44
Investment/asset impairment
charges
1043
38
Investments losses (gains)
-
34924
6
-
337502
Stock based compensation 50239
30352
2 119531
22300
5
2028
323
Accounts receivable
1783
94
Prepaid expenses
18917
8
-
31207
3 -16725
13794
0
-
6246
6
Accounts payable
-
2092
56
Other working capital -
24480
61651
6
-
153405
51537
6
1753
25

Accounting
16
9 3
Other non-cash items
-
70258
70
34744
5
-
13722
80 577685
55807
4
-
5E+0
6
Net cash provided by operating
activities
-
70258
70
-
77268
38
-
96915
28
-
109870
88
-
75167
79
-
8E+0
6
Cash Flows From Investing
Activities
Investments in property, plant, and
equipment
-
59180
-
30346
2
-
19259
2 -47917
-
53611
-
7631
4
Property, plant, and equipment
reductions 56781 7131 57119 1201
3145
5
Acquisitions, net
21008
95
-
12624
2 10
Purchases of investments
-
114159
Sales/Maturities of investments 577497
Other investing activities
-
183046
5370
26
Net cash used for investing
activities -2399
-
29633
1
19654
22 232375
-
17865
2
4921
77
Cash Flows From Financing
Activities
Debt issued
21500
00
558146
2
1000
000
Debt repayment
-
17748
-
1E+0
6
Common stock issued
23289
927
700000
0
48150
0
1.1E+
07
Other financing activities
70965
21 -1654
-
25726
64
-
658498
-
25797
Net cash provided by (used for)
financing activities
70965
21 -1654
22867
263
119229
64
43795
5
1.1E+
07
Effect of exchange rate changes
41394
8
86315
3
36911
5 -58459 78534
1264
95
Net change in cash
48220
0
-
71616
70
15510
272
110979
2
-
71789
42
3795
568
Cash at beginning of period
14519
541
18341
357
28310
85
172129
3
89002
35
5104
667
Cash at end of period
15001
741
11179
687
18341
357
283108
5
17212
93
8900
235

Accounting
17
Free Cash Flow
Operating cash flow
-
70258
70
-
77268
38
-
96915
28
-
109870
88
-
75167
79
-
8E+0
6
Capital expenditure
-
59180
-
30346
2
-
19259
2 -47917
-
53611
-
7631
4
Free cash flow
-
70850
50
-
80303
00
-
98841
20
-
110350
05
-
75703
90
-
8E+0
6