Analysis of Financial Performance: Transurban Limited (2017 & 2018)

This report provides a financial analysis of Transurban Limited, examining its performance between 2017 and 2018. The analysis covers key financial aspects, including revenue, gross and operating margins, book value per share, and return on investment. The report highlights trends in sales growth and capital spending, assessing the company's operational efficiency and investment strategies. Furthermore, it explores qualitative aspects such as risk management, sustainability initiatives, customer experience, and diversity efforts, demonstrating Transurban's commitment to long-term value creation and stakeholder engagement. The conclusion summarizes the improvements in dividend pay-out ratio, total assets, sales, and sustainability practices, offering a comprehensive overview of Transurban's financial health and strategic direction.

ACCOUNTING CONCEPTS AND PRACTICES
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Table of Contents
Introduction................................................................................................................................3
Analysis......................................................................................................................................3
Conclusion..................................................................................................................................6
Reference list..............................................................................................................................7
Appendix....................................................................................................................................8
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Introduction
Financial statements are the most important document of a company. this shows the financial
stability of a company for a particular period of time. This paper will analyse several
financial events and elements of Transurban limited. It was founded in the year 1996 and
working with 1500 employees worldwide. It is a company of road operator which develops a
toll road in urban areas. This will be done to conclude on the improvement of the business or
the company. Areas that will be significant in this analysis are changes in investment, an
increase in working capital and cash flow of the company. This will help to analyse the
improvement in the financial cycle of the company for the period 2017 and 2018. This
analysis will help to examine the investment position in the company.
Analysis
Question 1
there are several terms that help in understanding the improvement in the financial position of
the company. The areas are growth in the assets, reduction on the liability, dividend pay-out,
and many more such areas. This part will analyse the financial or monetary improvement in
the company in different segments.
Particulars 2017 $M 2018 $M
revenue 2732 3298
Table 1: revenue for the period between 2017 and 2018
(source: https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf)
Revenue position if the company shows the day to day or operating performance of the
company. There has been an improvement in the percentage of the growth of the revenue.
This states that the sales of the company have been improved (Cooper et al. 2017). This
marks changes in the construction activities of the business.
Particulars 2017 % 2018 %
Gross margin 56.41 81.64
Operating margin 28.44 29.89
Table 2: price to earnings ratio
(source https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf))
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It could be seen that the gross margin if the company has been increased. It is clear that three
is an improvement in the trading activities of the company. it has been showing that sales of
the company have been improved. Operating activities improvement shows that there is an
improvement in the tool revenue for the company in 2018.
Particulars 2017 % 2018 %
Book value per share 3.63 1.85
Table 3: book value per share
(source https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf))
The book value of the company has been decreased. This means that the assets of the
company have reduced to some extent. The stakeholder's equity could be told as decreased
for the company. The per share value of the company has been decreased in comparison to
the total equity available for the common shareholders (Nishimura, 2019). There has been a
downfall in the asses holding of the company. It could be said that the capital of the company
is also decreasing.
Particulars 2017 % 2018 %
return in investment 1.11 1.49
Table 4: return on investment
(source https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf)
There has not been a significant improvement in the investment return for the company. this
is the major area that shows the efficiency of the company. The projects are not seemed to be
so beneficial for the company. there was a little bit rise in the percentage of fur in 2018 which
is 1.49% in 2018.
Particulars 2017 % 2018 %
5-year sales growth 22.51 12.33
5-year capital spending growth 37.97 31.15
Table 5: 5-year growth in sales and capital spending
(source https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf)
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5-year sales growth 5-year capital spending growth
0
5
10
15
20
25
30
35
40
22.51
37.97
12.33
31.15
2017% 2018%
Graph 1: 5-year growth in sales and capital spending
(source: self-created)
The sales growth of the company has seen improvement. This means that the strategy of the
company in increasing the customer experience has been increased. The operational activities
of the company have also improved in the past two years. Capital spending growth has been
slowing down in 2018. The reason in the earning of the company in the common or ordinary
shares is seemed to be remarkable (Parker, 2016). Therefore, there has been any significant
change in the capital structure of the company.
Other areas that could be analysed to mark the improvement of the company are:
Health, environment, and safety- It provides a safe and healthy environment to the
employees of the company. it also includes personnel like contractors, community, and
customers. The company is determined to provide most out its operational activities. This is
the major improvable area for the company (Thai, 2017).
Inclusion and diversity- It has maximized the diversity in the Transurban areas. This has a
major impact on the turnover ratio of the company. It has encouraged the same feeling if
improvement among the employees of the company. The main strategic pillars of the
company are thinking long term, bee a good neighbour and useless. This has guided the
company in managing the operations, plan and identify future initiatives and deliver new
projects.
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Customer experience- The company has helped the customers to meet their particular needs.
This has been done by making easy for the customers to understand and use the toll roads. It
is being transparent to the customers and is flexible too (Amara and Benelifa, 2017). It listens
to the terms and queries of the customers. This brings the company to stand in front of the
competitors. [Referred to appendix 1]
Risk management- This is the major qualitative area of the company in managing the
improvement. It takes the projects which have risks. However, it has a full proof strategy for
undertaking risk-oriented projects. sustainability reporting of the company is a major area
that shows that it has managed to take the projects rationally and smartly. It has worked
towards becoming a carbon neutral company. it manages with the climate change that has
helped it is improving the operational activities. It regularly revises the risk associated with
the current assets. Transurban risks are also regularly checked by the company. Electric and
automated vehicles have emerged and the company is taking the plans accordingly.
(Transurban, 2019)
Conclusion
Thus, it could be concluded that there is an improvement in the dividend pay-out ratio. This
means that the operational activities of the company have been improved. There has been an
improvement in the total assets of the company. The ratio for the book value per share shows
that it has reduced for 2018. Sales of the company have been increasing which is the result of
the improved strategy for the sales. Sustainability is another area that has been maintained by
the company. customer experience has been improved with the help of offering toll road
choices to catch their particular needs.
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Reference list
Journals
Amara, T. and Benelifa, S., 2017. The impact of external and internal factors on the
management accounting practices. International Journal of Finance and Accounting, 6(2),
pp.46-58.
Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
Nishimura, A., 2019. Conceptual Analysis of Value-Based Management and Accounting:
With Reference to Japanese Practices. In Management, Uncertainty, and Accounting 4(2)
(pp. 51-72). Palgrave Macmillan, Singapore.
Parker, L.D., 2016. The global Fayol: Contemporary management and accounting
traces. Entreprises et histoire, (2), pp.51-63.
Thai, K.V., 2017. International public procurement: concepts and practices. In International
handbook of public procurement, 180 (6), pp.297-306.
Website
Transurban, (2019), Reporting, available at: https://www.transurban.com/about-us/reporting,
[accessed on 28.05.2019]
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Appendix
Appendix 1
(source https://www.transurban.com/content/dam/investor-centre/01/FY18-Appendix4E.pdf)
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