Report on Financial Analysis of MYOB Group Limited

Added on - 29 Apr 2020

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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 Limited3IntroductionWith 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 (MYOB2016).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 (MYOB2016).
Financial analysis of MYOB Group Limited4A.Industry and market outlookEconomic and industry environment for the industryWith the ramified changes and increasing complexity of the business, it is observed thatthere are several factors of economic and industry which has been affecting MYOB GroupLimited. In Australia, GDP of the company has been increasing by average 5% as compared tolast year data. In addition to this, with the changes in technologies there are several rivalscompanies of MYOB Group Limited which has shown high amount of growth in their totalturnover such as Sasu, Reckon Intuitquickbooks XOXO and Xero. However, technologies orsoftware 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 marketindustry has been declined by high percentage and clients are more inclined towards adoptingcyber computing enterprises resources planning. It has been observed that if MYOB GroupLimited wants to keep up with the challenges of market and industry offers then it should makeeffective efforts to adopt new technologies and cyber computing enterprises resources planningin its business functioning. MYOB group limited is the company of information technology thatdeals 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 theindustry market. They are not even matching the market changes as all the others SoftwareCompany like Xero are doing this may be one of the biggest reasons by the company can be outof the market in the coming years so MYOB should start the techniques that Xero are using likeits 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 areused by other software company in the markets. The other reason of company failure anddownfall in the total turnover of company is related to its inefficiency in running the businessand lack of technologies. If MYOB Group Limited wants to increase its turnover and capitalfunctioning then it should make following changes such as adopting new technologies, ERPsystems 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 hasfaced downfall in its turnover and share price of company has also gone down since last twoyears. This has shown that company is not creating value on its total earning and valuefunctioning. In addition to this, PE ratio of company is also overvalued which reflects thatcompany’s share price is undervalued due to its non-effective business and sluggish marketconditions. As per the IFRS rules and regulations, MYOB Group Limited has to reduced itsassets value by 30% due to the sluggish market condition and negative turnover under theimplemented 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 sluggishmarket condition and low inclination of clients towards the company’s products, risk of thecompany has increased very drastically. Risk of MYOB Group Limited could be determined onthe basis of uncertainty and conditional outcomes of market. It is evaluated that if MYOB GroupLimited could various risk such as financial leverage, low turnover, changes in economic andenvironment factors, Legal risk and political changing factors (White, Sondh and Fried, 2015).Ithas been observed that if company wants to reduce its risk systematic and unsystematic risk thenit has to follow its all the strategies and implemented plans. However, MYOB Group Limitedcould easily control this risk by implementing proper strategic plan. In addition to this, marketrisk is uncertain and cannot curb by the company in its favor. If company wants to implement itsproper strategic plans and procedure then it should implement proper strategies such as PESTLEanalysis and SWOT analysis could reflects how company could reduce the uncertainty ofbusiness. In addition to this, sluggish market condition has also shown that company needs tocreate shield against all the negative factors and create a strategic plan. MYOB Group Limitedhas also entered into strategic alliance with the other organization. The main business alliance ofMYOB Group Limited is made with other organization for increasing their vertical integrationand business to business functioning. For instance, Lucky Café, Kiwi fruit are the some of thedirect clients who have been using software’s and apps developed by MYOB Group Limited inin their accounting reporting work.Ideally, risk of theMYOB Group Limitedis divided into twosignificant parts which are given as below
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