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Result: HD (87)Description of the Key Issues /Problem / OrganisationPresented informationabout the organisation.Clearly articulated thekey issues / problem.10The report provided information about theorganization. E.g. the history, background,dividend, services, key performance indicators,comparative analysis, stock price trends, industryposition, etc.Principles and TheoriesIdentified anddemonstrated anunderstanding ofrelevant principles.Demonstrated the use ofappropriate jargon.Identified and discussedappropriate literature.20Awareness of deeper aspects of liquidity,profitability and financial decision making.Demonstrated the use of appropriate jargon.Identified and discussed appropriate literature.Analysis and EvaluationDescribed method used(where relevant).Used facts and evidenceto support argument /evaluation.Applied principles andtheory to the issue /problem.Presented outcomes /recommendations withjustifications.40• Highly developed analytical and evaluation skills.Demonstrating critical reflection. Clearly articulatedargument throughout. • Analyzed and interpretedthe ratios to evaluate the company’s operationsand performance plus any limitations • Explainedthe concepts and techniques employed • Providedinvestment recommendationsReferencingAcknowledged sourcesof facts appropriately.Used appropriatenumber and quality ofreferences (refer to AIBStyle Guide).Adhered to HarvardStyle referencingconventions.10The report met the requirement on the number ofreferences and acknowledged sources of factsappropriately including the in-text references.Structure and PresentationLogically structured thecontent.Demonstrated clearreport format andpresentation (as detailed10Demonstrated clear report format and presentation- would have preferred a much shorter and briefexec summary - The introduction should have alsoprovided the background, report aims, objectivesand goal of the report and the background to theassignment and why it is useful
in AIB’s guides).Communication Style andLanguageDemonstrated goodwriting style (as detailedin AIB’s guides).Adhered to theconventions of writtenEnglish (grammar,punctuation andspelling).10Adhered to the conventions of written EnglishDemonstrated good writing style • the calculations,definition of variables, and formula could havebeen better placed under appendix
Financial ManagementFinancial analysis of Adelaide Brighton LTD for investment decision makingStudent name:Mark CarolineStudent number:A001532083Subject name:Financial ManagementCode:712FMGTAQF Level:8Subject Credit Points:10Word Count:2 743 words
Executive SummaryThe subject of this analysis is Adelaide Brighton Ltd, established in 1882, distributed instrategic locations across Australia. Adelaide Brighton, the largest importer of cement inAustralia, supplies building, construction and infrastructure markets with material. Proactivemanagement has kept costs under control with a reliable and efficient asset base.The prime motive for business is to make a profit and for investors to have a return on theirinvestments. The analysis of the financial statements looked at liquidity, profitability, capitalstructure and share value providing a rounded analysis. The ratios representing liquidity,profitability and capital structure show an organisation that is sustainable in the long-termand supports investment. Analysis of the capital structure shows potential for theorganisation to grow the capital base.The response from the investor market shows a share value that is above the share valuecalculated using the constant dividend discount model. The financial statements leantowards a recommendation to invest, while the investor market indicates a no-buy position.
Contents1.Introduction...........................................................................................................................................12.Financial Analysis...................................................................................................................................12.1Liquidity: Current ratio...................................................................................................................12.2Profitability: Net profit margin ratio and Return on total assets...................................................32.3Capital structure: Debt ratio and Interest cover ratio....................................................................52.4Market value: Price-earning (P/E) ratio.........................................................................................63.Share Valuation - Constant Dividend Discount Model...........................................................................84.Recommendation................................................................................................................................105.Conclusion...........................................................................................................................................11References...................................................................................................................................................126.Appendix 1...........................................................................................................................................141Financials.........................................................................................................................................142Growth & Ratios..............................................................................................................................153Industry Averages............................................................................................................................164Competitive Environment................................................................................................................177.Appendix 2...........................................................................................................................................21
1.IntroductionAdelaide Brighton Ltd is a publicly owned company, established in 1882 and is registered on theAustralian Stock Exchange (ASX) under the code ABC. Adelaide Brighton (ABC) manufactures anddistributes material across the building construction and infrastructure markets as well asmineral processing market. Major manufacturing facilities are strategically located in SouthAustralia, Western Australia and the Northern Territory, enabling ABL to supply all Australianmajor centres. To support this, ABL have distribution joint ventures in Victoria and Queensland.The majority of revenue, 104.92%, for ABC is derived from the cement, lime, concrete andaggregates segment with concrete products providing 10.09% and unallocated industrysegments returning -15.01%[ CITATION IBI15 \l 3081 ].Adelaide Brighton has a 38.6% share ofthe cement and lime-manufacturing segment, followed by Cement Australia Holdings Pty Ltd andBoral Ltd[ CITATION IBI15 \l 3081 ].This report on the financial analysis of ABC, to support or not support investment in ABC, willlook at liquidity using the current ratio, profitability using net profit margin and return on totalassets, and finally the capital structure using debt ratio and interest cover ratio. The results ofthe analysis will be presented in the recommendation section of this report with concludingremarks in the conclusion.Towards the end of November 2015 the shares recovered to an upward trend. The past fiveyears has seen patterns of upward and downward trends. Overall, there has been an upwardtrend in the share price. The cyclical nature of the share price trends for ABC has seen drops inprice close the beginning of the year with recovery around July. Recovery for 2016 was early,around January reflecting the possibility that the share price might be over inflated and due for adownward trend.2.Financial AnalysisThe financial analysis from financial records published by ABC and reported on by IBISWorld(2016).2.1Liquidity: Current ratioNote: Unless otherwise stated, the values used are from Appendix 1.Page |1
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