BAFN600 - Finance and Quantitative Methods
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Austarlian Catholic University
Finance and Quantitative Methods (BAFN600)
Added on 2020-04-29
BAFN600 - Finance and Quantitative Methods
Austarlian Catholic University
Finance and Quantitative Methods (BAFN600)
Added on 2020-04-29
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RUNNING HEAD: Financial analysis1Name of the studentTopic- Financial analysisUniversity name-
Financial analysis of MYOB Group Limited2ContentsIntroduction.........................................................................................................................2Purpose of this report......................................................................................................2Present description of company......................................................................................2A.Industry and market outlook.....................................................................................3B.Risk analysis of MYOB Group Limited........................................................................5C.Cost of capital and capital structure of MYOB group private limited.......................8D.Dividend policies......................................................................................................11E.Share price analysis.................................................................................................13Recommendation..............................................................................................................15Conclusion..........................................................................................................................16References.........................................................................................................................17Appendix............................................................................................................................19
Financial analysis of MYOB Group Limited3Introduction With the ramified economic changes and complex business functioning, each and everyorganization has been maintained its capital structure in effective manner with a view to reducethe cost of capital and financial leverage at large. This report has reflected the risk analysis,capital structure identification and dividend policies adopted by company in its businessfunctioning. In this report, MYOB Group Limited Company has been taken into consideration. Itis an international company which has been running its business on international level. Purpose of this reportThis report has shown the key understanding on the financial performance of MYOBGroup Limited. The capital structure evaluation and dividend policies implemented have alsobeen evaluated in this report. This report will show whether CEO of the company should acquireMYOB Group Limited with a view to expand its business (MYOB 2016).Present description of companyMYOB Group Limited is Software Company having headquarter in Australia andfounded in 1991. This company has more than 20 units around the globe and indulged inproviding software services (MYOB 2016).
Financial analysis of MYOB Group Limited4A.Industry and market outlook Economic and industry environment for the industry With the ramified changes and increasing complexity of the business, it is observed that there are several factors of economic and industry which has been affecting MYOB Group Limited. In Australia, GDP of the company has been increasing by average 5% as compared to last year data. In addition to this, with the changes in technologies there are several rivals companies of MYOB Group Limited which has shown high amount of growth in their total turnover such as Sasu, Reckon Intuitquickbooks XOXO and Xero. However, technologies or software industry has been showing sluggish market conditions and resulted to negative businessfunctioning. In addition to this, MYOB Group Limited has also faced problem due to the non-availability of the talented employees in Australia. It has been observed that software market industry has been declined by high percentage and clients are more inclined towards adopting cyber computing enterprises resources planning. It has been observed that if MYOB Group Limited wants to keep up with the challenges of market and industry offers then it should make effective efforts to adopt new technologies and cyber computing enterprises resources planning in its business functioning. MYOB group limited is the company of information technology that deals in the data tech software. Its share price is $3.64 currently, there is the downfall in the priceof the share of the company this is one of the part of the company that is not attractive in the industry market. They are not even matching the market changes as all the others Software Company like Xero are doing this may be one of the biggest reasons by the company can be out of the market in the coming years so MYOB should start the techniques that Xero are using like its software can run in any of the device with the web Brower, it do not require any software app
Financial analysis of MYOB Group Limited5to be downloaded for using the software so MYOB should follow some of the method that are used by other software company in the markets. The other reason of company failure and downfall in the total turnover of company is related to its inefficiency in running the business and lack of technologies. If MYOB Group Limited wants to increase its turnover and capital functioning then it should make following changes such as adopting new technologies, ERP systems and implementing new innovative software’s in its business to business functioning (White, Sondh and Fried, 2015).Key factors that affects the company’s attractiveness for investment.The main key factors that affects the company’s attractiveness for investment is related toits negative share price increment and rivals offering in the market. MYOB Group Limited has faced downfall in its turnover and share price of company has also gone down since last two years. This has shown that company is not creating value on its total earning and value functioning. In addition to this, PE ratio of company is also overvalued which reflects that company’s share price is undervalued due to its non-effective business and sluggish market conditions. As per the IFRS rules and regulations, MYOB Group Limited has to reduced its assets value by 30% due to the sluggish market condition and negative turnover under the implemented impairment test.
Financial analysis of MYOB Group Limited6B.Risk analysis of MYOB Group LimitedMYOB Group Limited has been running its business effectively but due to sluggish market condition and low inclination of clients towards the company’s products, risk of the company has increased very drastically. Risk of MYOB Group Limited could be determined on the basis of uncertainty and conditional outcomes of market. It is evaluated that if MYOB Group Limited could various risk such as financial leverage, low turnover, changes in economic and environment factors, Legal risk and political changing factors (White, Sondh and Fried, 2015).It has been observed that if company wants to reduce its risk systematic and unsystematic risk then it has to follow its all the strategies and implemented plans. However, MYOB Group Limited could easily control this risk by implementing proper strategic plan. In addition to this, market risk is uncertain and cannot curb by the company in its favor. If company wants to implement its proper strategic plans and procedure then it should implement proper strategies such as PESTLE analysis and SWOT analysis could reflects how company could reduce the uncertainty of business. In addition to this, sluggish market condition has also shown that company needs to create shield against all the negative factors and create a strategic plan. MYOB Group Limited has also entered into strategic alliance with the other organization. The main business alliance of MYOB Group Limited is made with other organization for increasing their vertical integration and business to business functioning. For instance, Lucky Café, Kiwi fruit are the some of the direct clients who have been using software’s and apps developed by MYOB Group Limited in in their accounting reporting work. Ideally, risk of the MYOB Group Limited is divided into twosignificant parts which are given as below
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