Financial Statement Analysis of Charter Hall Group

Schedules of relevant ratios and
other useful calculations & A written
report

Executive Summary
This report presents about the financial statement analysis of the ASX listed company.
In this Charter Hall Group is taken a real estate organization and the financial position and
performance of the company is being evaluated and compared with its competitors. Based on
the findings, it can be concluded that the financial position of the company is good but is not
in the position to compete its competitor and therefore, it is recommended to invest in it.

TABLE OF CONTENTS
Introduction................................................................................................................................4
Company analysis......................................................................................................................4
Ratio analysis.............................................................................................................................4
Profitability ratios...................................................................................................................4
Efficiency ratios.....................................................................................................................6
Liquidity ratios.......................................................................................................................7
Gearing ratios.........................................................................................................................8
Recommendations and overall assessment................................................................................9
Has Year 1 been better than Year 2 for the company?..........................................................9
Will the company succeed in the future?...............................................................................9
The likelihood of a merger or acquisition?............................................................................9
Relevant ethical considerations if the organisation becomes insolvent...............................10
Suggest what should the company be doing help it succeeds?............................................10
The impact of the political competitive environment on the business.................................10
External factors that need to be taken into consideration....................................................10
Would you invest in this company?.....................................................................................11
References................................................................................................................................12
Appendix..................................................................................................................................13

Introduction
Financial statement analysis provides support to the business organization in order to
gaining insight about financial performance and position of the business in the industry in
which it is operating. It is also very useful in establishing a comparison with other companies
in the industries in order to know its competitive position. In this report Charter Hall Group is
taken as an organization which is a real estate company. The principle business of the
organization is to invest in the property funds along with the property funds management. It
manages and invests in the equity all across the important real estate industry. The report
provides an insight about the current position and performance of the company. Ratio
analysis will be carried out in comparison to its competitors for knowing its competitive edge
and at last determining the future success of the company.
Company analysis
The 2019 performance highlights of the company are that the group has earned and
operating earnings after tax of $221 million which is an increase of 25.5%. There is an 8.1%
increase in its property investment portfolio amounting to $1.8 billion. The funds under
management has also shown a rise of 31.1% which has amounted to $30.4 billion (Charter
Hall Group Annual Report. 2019). The economic growth of the company in Australia was
weak in the year 2019 more than expected. This has led to the weaker global economic
outlook which has created in Australia downward pressure on the interest rates along with the
US bond yield rates. On an overall basis, the current performance of eth company is sound.
Ratio analysis
Profitability ratios
Charter Hall Group
(see appendix for calculations) 2019 2018 Industry average
Return on assets 10.60% 12.48% %
Return on equity 12.40% 13.52% %
Net profit margin 63% 102% %
Gross profit margin 86% 100% %
Expense ratio/Cost to
Income ratio 64% 56%
%
Cash return on sales 51% 68% %
Earnings per share $0.51 per share $ 0.54 per share $
Price earnings ratio 19 times 18 times times
Earnings yield 5.12% 5.41% %
Dividends per share $0.34 $0.32 $