Business Finance Report: Comparative Analysis of ARB and GUD Holdings

This business finance report provides a comprehensive analysis of ARB Corporation Limited and GUD Holdings, comparing their financial performance and market positions. The report examines key financial ratios, including NPAT, EPS, PER, and dividend yields for ARB Corporation, along with sales per share, cash flow, and shareholder returns. For GUD Holdings, the analysis covers P/E ratios, growth rates, and capital structure components. The report also includes peer comparisons and valuation histories, offering insights into the companies' strengths, weaknesses, and overall financial health. The report concludes with recommendations based on the financial data presented, providing a valuable resource for understanding the financial aspects of both companies.

BUSINESS FINANCE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of Organisations.........................................................................................................1
Key functional ratios...................................................................................................................5
Peer comparison..........................................................................................................................7
RECOMMENDATION ..................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Finance for business basically associated with analysing the performance of organisations
and market position in global or domestic market. Business for finance is majorly helps to
determine and analyse the external business environment in monetary terms. There are type of
factors and elements remain associated with financial aspect. It is required for presenting the
financial information and data to stakeholders of organisation (Yunus, 2017). There are type of
business finance is required to analyse the main part of defining the monetary requirement for
organisation.
Fund is the principle apparatus that can be utilized by the association for picking up the
maintainable advancement in a successful way. Presently, this can be appropriately said that the
business can not keep running without financing. Fund is the principle source which is required
by the association with a specific end goal to maintain the business in a viable way. Peer group
comparison done in respect of ARB corporate Ltd and GUD Holding Ltd.
MAIN BODY
Overview of Organisations
ARB Corporation Limited
ARB Corporation Limited is that firm which is engaged in with designing, manufacturing
and distributing its motor vehicle accessories. Basically the company is working in different
segments that includes Australia, USA, Thailand and Middle East and Europe. Hence, they also
serve many clients a variety of product that considers air lockers and accessories; ARB
compressor; equipments for protection such as having an rear end protections. Although it also
deal in with Old man electric multiple unit (EMU) 4*4 Suspensions, even they also deal in with
the roof racks and roof bars; drawers and cargo barriers, batteries and battery solutions and the
general accessories as well which include the fire accessories, fuel and water tanks. They provide
the effective product to there clients. Even though, the entity has earned a point of revenue
around 383 million in the year 2017-06 (ARB market corporation, 2018).
There are type of information and details are considered essential aspects in terms of
managing the financial operations are considered in this terms. Organisation basically deals in
four by four wheel drive vehicles and the accessories. As per financial summary of organisation
there are some major elements are defined such as; year to Jun NPAT, EPS, EPS chg (%), PER,
DPS, Yield (%), Franking (%).
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ARB Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2019 F 60.72 76.69 9.10% 28.52 43 1.97% 100.00%
2018 F 55.64 70.27 13.20% 31.12 37 1.69% 100.00%
2017 A 49.15 62.07 6.30% 26.72 34 2.05% 100.00%
As per analysis of financial summary of organisation it is concluded that NPAT for the
year 2019 F was computed as 60.72, 55.64 for the year 2018 F, 49.15 for the year 2017 A. EPS
was calculated as 76.69 foe the year 2019 F, 70.27 for the year 2018 F, 62.07 for the year 2017 A
49.15. as per above analysis it seen that the organisation's percentage change in EPS is as follows
such as 9.10% for the year 2019 F, 13.20% for the year 2018 F and 6.30%. PER is calculated as
28.52 for the year 2019 F, 31.12 for the year 2018 F and 26.72 for the year 2017 A. dividend per
share was calculated as 43.00 for the year 2019 F, 37.00 for the year 2018 F and 34.00 for the
year 2017 A. Yield % is computed as follows such as 1.97% for the year 2019 F, 1.69% for the
year 2018 F and 2017 A for the year 2.05%.
Per share ARB
Year to
Jun Sales
Cash
flow Earnings
Divid
ends
Fran
king
Book
Value
Average
Annual
P/E
Relative
P/E
Sharehold
er Return
2017 $4.83 78.6 ¢ 62.1 ¢ 34 ¢
100.0
0% $3.44 26.70%
168.20
% -4.20%
2016 $4.51 56.8 ¢ 59.9 ¢ 31.5 ¢
100.0
0% $3.15 24.80%
147.10
% 31.00%
2015 $4.32 52.9 ¢ 57.8 ¢ 129 ¢
100.0
0% $2.86 21.40%
136.50
% 18.40%
There are following aspects defined in above table in terms of sales, cash flow, earnings,
dividends, book value, average annual P/E, Relative P/E and shareholder return. Sales per share
was calculated as $4.83 for the year 2017, $4.51 for the year 2016, $4.32 for the year 2015. cash
flow per share are calculated as 78.6¢ for the year 2017, 56.8¢ for the year 2016, 52.9¢ for the
year 2015. Earnings are calculated as 62.1¢ for the year 2017, 59.9¢ for the year 2016 and 57.8¢
for the year 2015. dividends are evaluated as 34¢ for the year 2017, 31.5¢ for the year 2016,
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129¢ for the year 2015. book value for the year 2017 was calculated as $3.44, $3.15 for the year
2016 and $2.86 for the year 2015 (Siebels and zu Knyphausen‐Aufseß, 2012).
Average annual P/E was calculated as 26.7% for the year 2017, 24.8% for the year 2016
and 21.4% for the year 2015. Relative P/E was calculated as 168.2% for the year 2017, 147.1%
for the year 2016 and 136.5% for the year 2015. there are fluctuations are also seen in respect of
shareholder returns such as -4.2% for the year 2017, 31% for the year 2016 and 18.4% for the
year 2015.
Capital structure of ARB: Total interest is calculated as $11, there is no long term debt
and percent debt is called as 0%, preferred stock has no any percentage, share quity was
calculated as 272,341 and the measures are calculated as 100%.
ARB Market and earnings: the market cap is calculated as $1244 million for the year
2017, net gearing 10.2%, net interest covers were calculated as -1568.8 and dividend yield %
was calculated as 2.2%, NTA per share was calculated as $3.13, EBITDA was calculated as $79,
EBIT was calculated as $67.5. EBT before Abs was calculated as $67.5 million for the year
2017.
GUD Holdings
GUD Holding is an limited company which has various number of dynamic product
which are based on Australia and New Zealand. Therefore, firm is Asia-pacific premiers Brand
portfolio and having an top position and considered as market leaders in specific product or
industries. They serve millions of people with manufacturing and importation, distribution and
having and also sale some of the cleaning product, household appliances and warehouse racking
as well. GUD is having an principal skills as with discipline of product design and development,
offshore sourcing and supply chain management as well. GUD Holding company is having an
primary objective is to have an long term shareholder returns beyond there cost of capital that
leads to have maximisation of its value in Brand portfolio for advantages to shareholders. Even
though the company in 2017-06 earned a revenue of approximately 426 million (Financial
statements of GUD Holdings, 2018.).
Financial summary
As per financial performance of organisation is found that the key ratios are analysed as
P/E ratio was calculated as 20.20, 3.68 in terms of industry and 19.03 in terms of sector. Same as
per P/E was recorded as high as 25.33 in terms of company, P/E and 13.39 in terms of industry
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and 38.14 in terms of sector. P/E low for last year was calculated as 13.27 sector. Beta is
calculated as 1.24 for company, 0.93 in terms of industry and 1.22 in terms of overall sector.
Price to sales also get high in terms of company is calculated as 3.36, 2.71 for industry
and 3592.51 in terms of sector. Price to book is calculated as 5.29 in terms of company, 3.52 for
11.32 in terms of sector. Price to tangible book was calculated as 4.21 industry for industry and
42.76 in terms of sector. Price to cash flow was calculated as 19.13 in term of company, 35.40 in
terms of industry and 187794.96 in terms of sector (Sekaran and Bougie, 2016).
Growth analysis
sales MRQ vs Qtr. For one year calculated as 10.54 in terms of organisation, 8.18 in
terms of industry and 9.80 for sector. Sales (TTM) vs TTM 1 year ago was calculated as 12.72
for company, 7.83 for industry, 12.68 for sector. Five year's growth rate is calculated as -6.94,
7.85 for industry and 3.85 in terms of sector. EPS (MRQ) vs Qtr. For 1 year ago was calculated
as 15.83 in terms of company, 13.26 in terms of sector. Capital spending rate is calculated as 5
year growth rate is computed as -19.01 for company, 7.18 for industry and 2.74 for sector.
There are type of financial position of organisation is defined as per following aspects
such as New Zealand, France, Spain, China and Hong Kong. There are type of revenues and
gross margin is defined such as 426 million revenues are defined in this context. Operating
income AUD is defined in this context such as 19 million. Operating margin also considered as
4.4 million. Net income was calculated as -7 million for the year 2017 (McLean and Zhao,
2014).
Capital structure of GUD Holding company
the capital structure of GUD Holding company is associated in several parts such as
capital leases, there are type of deferred income tax is calculated as 2 million. Pension and other
benefits are analysed as 2 for the year 2017. stock holder's equity is calculated as 286 million,
retain earning was -45 million accumulated equity share capital is calculated as 2 million. Total
share holder position of organisation is calculated as 243 million for the year 2017.
Valuation history
As per valuation graph of organisation following status and results come across which are
as follows;
as per valuation of price of share calculated as -26.12 for the year 2008, 108.32 for the year
2009, 48.71 for the year 2010, 9.64 for the year 2011, 45.63 for the year 2012, 11.10 for the year
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2013, 12.83 for the year 2014, 45.60 for the year 2015, 12.14 for the year 2016 and 8.87 for the
year 2017. the index is defined such as 10.65 for the year 2008, 69.28 for the year 2009, 46.69
for the year 2010, 21.64 for the year 2011, 25.16 for the year 2012, -8.45 for the year 2013,
42.69 for the year 2015, -0.17 for the 2016 and -3.37 for the year 2017.
Prince/Earnings
GUD 11.1 12.5 14.3 12.1 6.9 13.1 29.4 18.7 — 20.3 20
S&P 500 10.9 18.6 15.5 13.7 15 18.6 18.6 19 20.3 22.9 20.6
Price/Book
GUD 3 3.5 2.8 1.9 2.5 1.7 2.5 2.2 3.7 5.2 5.2
S&P 500 1.7 2.2 2.2 2 2.1 2.6 2.7 2.7 2.8 3.2 3.1
Price/Sales
GUD 0.8 1.1 1.2 0.8 1 0.7 0.9 1 1.5 2.5 3.3
S&P 500 0.9 1.2 1.3 1.2 1.3 1.7 1.8 1.8 2 2.2 2.2
Price/Cash Flow
GUD 9.1 6.3 8.4 7.1 12.1 8 17.6 20.7 12.7 23 21.5
S&P 500 6.8 9.1 9.3 8.5 9.2 11.2 11.5 11.5 12.4 14.3 13.5
There are pricing value as follows in terms of managing as various aspects in terms of
making the plans. As per price earnings there are some essential figure are considered in this
context such as price sales are recorded for the year 2010 2.16, 2.20 for the year 2011, 2.80 for
the year 2012, 2.91 for the year 2013, 2.77 for the year 2014, 3.73 for the year 2015, 3.91 for the
year 2016 and 3.88 for the year 2017 and current market position is calculated as 4.21 for 2018.
Price earnings are calculated as 15.08 for the year 2010, 14.80 for the year 2011, 19.20
for the year 2012, 20.04 for the year 2013, 19.37 for the year 2014, 27.93 for the year 2015,
29.47 for the year 2016 and 30.17 for the year 2017. at present the price/earnings is stated as
34.66 (Gregory,Tharyan and Christidis, 2013).
Price/cash flow is computed as 18.66 for the year 2010, 14.24 for the year 2011, 22.81
for the year 2012, 17.99 for the year 2013, 22.58 for the year 2014, 30.51 for the year 2015,
31.09 for the year 2016, 23.84 for the year 2017 and 34.09 for the year 2018.
Price book also contains some positive aspects such as 4.52 was record for the year 2010,
4.33 for the year 2011, 4.88 for the year 2012, 4.78 for the year 2013, 4.55 for the year 2014,
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5.65 for the year 2015, 5.60 for the year 2016, 5.45 for the year 2017 and 6.02 for the current
year.
Key functional ratios
ARB Corporation limited
Short term solvency (Liquidity ratios): Short term solvency ratios which will mainly
attempt for measuring out the ability of company to look out for the short term financial
obligations (Anandarajan, Anandarajan and Srinivasan, 2012). In other words, determination of
these ratios will mainly avoid financial distress. ARB Corp. limited has the liquidity ratios
10.30%.
Long term solvency (Financial Leverage ratios): These are also known as debt ratios
along with common name which is long term solvency ratios. This mainly measures out the
business abilities for meeting up the debt obligations along with interest payments and others.
ARB Corp. limited has the debt ratio about 75.1% ratio.
Asset utilization (efficiency or turnover ratios): This kind of ratio is mainly utilised for
calculating the total revenue which is mainly earned for every dollar for the company own assets
(Baños-Caballero, García-Teruel, and Martínez-Solano, 2014). Example can be taken up of asset
utilisation ratio which is about 52% a company which is earned $.52 for every kind of dollar of
assets which are mainly held by the company. ARB Corp. Limited has the utilisation ratio 1.24
% ratio. There are also some essential aspects are considered in this context.
Profitability ratios: Profitability ratios which is class of financial metros which are
being utilised to assets which ability business for generating the earnings which is compared to
its expenses and other relevant costs for certain kind of tenure (Buckland and Davis, 2016). For
high kind of ratio, there is the high value which is related to the ratio of competitor ratio or
relative to the same ratio form previous period of indicators which company will deal in. ARB
Corp. limited has the profitability ratio of 3.4 percent.
Market value ratios: These kind of ratios are mainly utilised for mainly evaluating the
current share of the price which is publicly held stock of company. These kind of ratio is mainly
employed by the current and potential investors. ARB Corp. limited.
GUD Holding Ltd
The financial performance of GUD Holdings Ltd. Is understood from the analysis of their
different ratios. The different ratios which are analysed in this regard includes liquidity ratios,
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financial leverage ratios, turnover ratios, profitability ratios and market value ratios (Abernathy,
Beyer and Rapley, 2014). These different ratios are analysed on the basis of the performance of
organisation in 2017. All these ratios help to analyse the key financial aspects to understand the
different aspect of organisation. Major products of GUD Holding company. Analysis of all
different ratios on the basis of the figures of GUD Holdings Ltd. In 2017 are defined below:
Liquidity ratio: It is important ratio which provides the information regarding short tern
solvency of organisation. On the basis of the analysis of this ratio determined that organisation is
able to pay off their short terms debts within stipulated period of time of not. The liquid Ratio of
GUD Holdings in 2017 is 1.02%.
Financial leverage ratio: Analysis of this ratio is important to gain the knowledge
regarding long term solvency of organisation. In the present report, the financial leverage ratio of
GUD Holdings Ltd is 2.29% is 2017. It is assessed from this percentage of financial ratio is that
they have good financial condition through which they can easily pay of their long term
liabilities.
Efficiency and turnover ratio: From the determination of this ratio, management of
organisation is able to understand their strength regarding use of their assets and management of
liabilities. Through this also analysed the revenue generation capacity of organisation. The asset
turnover ration of GUD Holdings Ltd is 0.79 in 2017.
Profitability ratios: Through analysis of these ratio able to understand the ability of
organisation about earning of profits from their business operations. The Gross margin ratio of
GUD Holdings Ltd in 2017 is 46.42 % and operating margin ratio which is attained is 4.44.
Market value ratios: These ratios helps to evaluate the current share price of the
organisation in market. It helps the investors in decision making.
Peer comparison
As per analysis of both the reports it it is analysed that the market cap of ARB
corporation was calculated as $1735 million and GUD Holding was marked as $1108 million. It
is seen that the EPS growth of both the organisations are as follows 2017 A in terms of ARB
corporation was 0.0360 and 0.4575 for the organisation GUD Holding. 0.1236 for the year 2018
F in terms of ARB corporation and 0.0622 of GUD Holding for the year 2017. projected EPS
growth is as follows in terms of ARB for 0.1052 for the year 2019 F and 0.1038 for the year
2019 F.
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As per analysis of P/E % is also considered as 2017 A as 35.2287 for ARB corporation
and 21.2246 for the year 2017 A. P/E % for the year 2018 F as 31.3548 in terms of ARB
corporation and 19.9814 for GUD Holding company and forecasted P/E growth is counted as
28.3694 for the Year 2019 F and 18.1025 for GUD Holding.
Dividend yield% is calculated as 2017 A 1.55% for ARB corporation, 3.58% for the
organisation GUD Holding. 1.71% for ARB corporation and 3.95% for the GUD Holding
Organisation. The forecasted dividend yield is calculated as 1.94% for ARB corporation for the
year 2019 and 4.41 for GUD Holding (Titman, Keown and Martin, 2017).
RECOMMENDATION
As per above analysis of organisation's financial information and data various aspects
come across in terms of both the organisation such as ARB corporation Ltd and GUD holding
company. ARB corporation is an organisation which deals in four wheel drives and manufactures
suspensions, accessories, side bars, rear protection equipments, including frontal protection, side
rails in type of continents and the states such as Thailand, the middle east and Europe. The
company also deals in warn winches, bush ranger winches, recovery points and straps and
accessories.
GUD holding company deals in type of dynamic products which remain based in
Australia and New Zealand. These business are considered essential in terms of Asia-pacific
region's premier brand portfolios. Most of the organisations and market leaders in their
individual products are categorised in several parts. It is required to analyse the main essential
aspects and measurements in terms of diving the structure in effective manner.
As per financial analysis of both the organisations It is analysed that the market cap of
ARB corporation was counted more than the GUD holdings. There is a difference of $627 and
fractional change is 56.58% between both the company's market cap. EPS growth of ARB
corporation was adverse for the year 2017 and become favourable in the year 2018 and apart
form it the EPS growth rate of GUD Holding was recorded favourable in the year 2017 and less
recorded in the year 2018. Earning per share for the year 2018 was also favourable for both the
companies. It is required to analyse the essential aspects in term of emerging the growth graph.
Profit earning ratio was recorded positive and more in terms of making the structure of
organisation in global business environment. It is seen that the profit earning graph of ARB
corporation was recorded more in comparison to GUD Holdings. Dividend yield method of
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organisation is also shows the positive results in terms of making the dividend growth rate and
percentage of organisation. It is considered that the organisation is one of the essential aspect in
terms of making the finance structure of organisation in effective manner.
It is recommended that both the organisations are require to improve the financial
structure in terms of making the organisational structure more viable and effective. ARB
corporation is required to improve the Dividend yield method in terms of making the structure of
organisation. PE% also required to improve for both the organisation. It is also required to
increase dividend yield for ARB corporation. As per market comparison it is required to increase
the market share and price in terms of building the financial structure in terms of making the
structure.
CONCLUSION
As per brief analysis of mentioned report, it can be appropriately said that the targets of
the refereed to association would be accomplished by utilizing different financial representation
frameworks. In this report, different ratios and financial frameworks are utilized as a part of
request to enhance their business targets in a compelling way. By utilizing the financial plans,
incomes and costs can be estimated in a successful way so the business can keep running in a
powerful way. Analysis of financial statements of both the organisations are defined in this
report. Financial growth and analysis done and forecasted growth percentages also defined in this
context.
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REFERENCES
Books and Journals:
Yunus, M., 2017. Social business entrepreneurs are the solution. In The Future Makers (pp. 219-
225). Routledge.
Titman, S., Keown, A.J. and Martin, J.D., 2017. Financial management: Principles and
applications. Pearson.
Siebels, J.F. and zu Knyphausen‐Aufseß, D., 2012. A review of theory in family business
research: The implications for corporate governance. International Journal of
Management Reviews. 14(3). pp.280-304.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
McLean, R.D. and Zhao, M., 2014. The business cycle, investor sentiment, and costly external
finance. The Journal of Finance. 69(3). pp.1377-1409.
Gregory, A., Tharyan, R. and Christidis, A., 2013. Constructing and testing alternative versions
of the Fama–French and Carhart models in the UK. Journal of Business Finance &
Accounting. 40(1-2). pp.172-214.
Buckland, R. and Davis, E.W. eds., 2016. Finance for growing enterprises. Routledge.
Baños-Caballero, S., García-Teruel, P.J. and Martínez-Solano, P., 2014. Working capital
management, corporate performance, and financial constraints. Journal of Business
Research. 67(3). pp.332-338.
Anandarajan, M., Anandarajan, A. and Srinivasan, C.A. eds., 2012. Business intelligence
techniques: a perspective from accounting and finance. Springer Science & Business
Media.
Abernathy, J.L., Beyer, B. and Rapley, E.T., 2014. Earnings management constraints and
classification shifting. Journal of Business Finance & Accounting, 41(5-6), pp.600-626.
Online
Financial statements of GUD Holdings, 2018. [online]. Available through:
<http://financials.morningstar.com/income-statement/is.html?
t=GUD&region=aus&culture=en-US>.
ARB market corporation, 2018. [online]. Available through:
<https://www.investsmart.com.au/shares/asx-arb/arb-corporation-limited>.
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