BUSS503 Assessment 4: Financial Analysis of The Warehouse Group

This report provides a comprehensive analysis of The Warehouse Group, examining its financial performance, market value, and capital market dynamics. The report begins with an introduction to the company and then delves into a discussion of its financial performance, utilizing various financial ratios to assess profitability, liquidity, and efficiency. It then evaluates the firm's value by comparing its market capitalization to its book value, providing insights into whether the company is overvalued or undervalued. The analysis further extends to the capital market and market commentary, examining the company's share price trends over time. Non-financial reporting aspects, such as employee numbers and customer base, are also considered. The report concludes with recommendations based on the findings, offering an informed perspective on the company's overall health and future prospects. The report is based on the BUSS503 Financial Decision Making course assessment requirements.

Running head: ANALYSIS OF WAREHOUSE GROUP
ANALYSIS OF WAREHOUSE GROUP
Name of the Student:
Name of the University:
Author Note

1ANALYSIS OF WAREHOUSE GROUP
Table of Contents
Introduction................................................................................................................................2
Warehouse Group...................................................................................................................2
Discussion..................................................................................................................................3
Financial Performance...........................................................................................................3
Value......................................................................................................................................4
Capital Market and Market Commentary..............................................................................4
Non-financial Reporting.........................................................................................................5
Conclusion and Recommendation..............................................................................................6
References..................................................................................................................................7
Appendix....................................................................................................................................8

2ANALYSIS OF WAREHOUSE GROUP
Introduction
The report titled “Analysis of Warehouse Group” is prepared to analyse the
performance of the company in the various aspect. This report analyse the financial
performance of the company by calculating the different financial ratios in the basis of the
annual report of 2018 (Thewarehousegroup 2019). Further this report analyse the value of the
firm by comparing the market value of the company by its book value. This report also
analyse the last 5 years performance of the firm in the basis of the share price. Lastly, this
paper analyse the non- financial information of the firm.
Warehouse Group
Stephen Tindall founded The Warehouse Group in the year 1982. This group consist
the Warehouse Stationery, Warehouse, Torpedo7 Group and the Noel Leeming. The
headquarter of the Warehouse Group is situated at the Northcote, Auckland, New Zealand.
This the largest retail group of New Zealand. The main business of the group is to operate the
discounted retail departmental store, which deals with the grocery and non- grocery products.
This company has more than 250 retail store, 2- distribution centre and 13 online stores in the
New Zealand.

3ANALYSIS OF WAREHOUSE GROUP
Discussion
Financial Performance
Net Profit Margin
Return on Equity
Current Ratio
Inventory Turnover
Debt to Equity ratio
Earning per Share
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Financial Ratios
2017 2018
As per the calculated financial ratio and the graph shown above, explained that the
company is performing well. The net margin ratio and the return on equity ratio talks about
the performance of the firm that is company is showed the growth in their profitability in
2018 compared to 2017 that is consider as good (Thewarehousegroup 2019). The liquidity of
the firm as per the current ratio and inventory turnover indicates that the firm has the good
liquidity. The liquidity of the firm reveals about the capacity of paying off its debts. The Debt
of equity ratio show the debt of the company in per share basis. The company manages to
decrease its debt to equity in 2018 compared to 2017 that also be consider as good (Robinson
et al., 2015). Lastly, the investor’s or the market performance ratio of the firm that is earning
per share is also increased in the year 2018 that shows company is performing well and can
easily attract the outsider investor.
The overall financial performance of the firm shows the increasing trend in terms of
profitability, liquidity, efficiency and the market performance that shows the future
sustainability of the firm.

4ANALYSIS OF WAREHOUSE GROUP
Value
The value of the firm can be calculated by using the book to market ratio. The book to
market ratio calculates the value of the firm by comparing the market value that is, market
capitalization with the book value of total equity that is, net total asset (Ball, et al., 2016). The
book value of the company is determined by subtracting the net liabilities from the net assets.
While, the market value of the firm is calculated by multiplying the current share price of the
firm with the total number of ordinary share outstanding.
Here, the Warehouse Group have the book to market ratio of 0.66 as on 20/05/2019,
as the market value of the firm is more than the actual value of the firm. This situation means
that the Warehouse Group is overvalued (Jenkins & Williamson, 2015). The investors and the
analyst use the book to market ratio to analyse the valuation of the firm. The managers
prefers the overvaluation of the firm but the investors preferred to invest in those stocks,
which are undervalued.
Capital Market and Market Commentary
The above chart is the share price chart of the Warehouse Group for the last 18 years.
The share price of the company reflect the market performance of the firm. As per the above

5ANALYSIS OF WAREHOUSE GROUP
chart, this can be observed that the market performance of the is decreased in the last 18 years
(Jancenelle, Storrud-Barnes & Javalgi, 2017). As the share price of the firm was at it hike of
more than $ 8 but in the current date the share price of the Warehouse Group is decreased to
$ 2.1. The firm company observed the sudden drop in the share price in the last quarter of
2000 and after that company was not able to recover and touch the benchmark of $ 8 in the
next 2018 year. The last growth in the share price of the firm is report in the year 2007, where
the firm touches the price of $ 7 per share. After the 2017, the company only showed the
downward trend in the share price. This graph reveals that the market performance of the firm
is decreasing year to year.
Several factors affect the financial performance of the firm. The one of them is the
technology change that mainly effect the performance of the firm (Kristofik, Lament &
Musa, 2016). As the new technology developed the online retail market with attractive
discount rate, affect the sale of the firm, which effect the financial performance off the firm.
This paper recommends the firm to do more focus in their online retail business as the
company is already late in the online retail or shopping industry.
Non-financial Reporting
In the non-financial report the Warehouse Group reveals that the company have the
employee of 7000 in there general merchandise business sector along with the 93 stores and
have 1.5 million customers per week on an average (Crowther, 2018). While, in the office
stationery product business, the company have more than 1000 employees and the 70 stores
along with the 230,000 customers per week on an average.
The above non-financial information of the firm shows that the Warehouse Group
have a large number of customer base in both of its business along with the big employee in

6ANALYSIS OF WAREHOUSE GROUP
the team. The paper consider this figure as the advantage of the firm and it positively affect
the decision making process of the report.
Conclusion and Recommendation
This paper concludes that the financial performance of the firm shows that the
company performed well compared to the last year’s performance. This company shows the
growth in the terms of profitability, liquidity and the efficiency. The market to book ratio
shows that the company is overvalued, hence recommend the investors to currently hold their
investment plans. The market performance of the firm in the basis of the share price,
company is showing the decreasing trend in their market performance. The report
recommends to focus more in their market performance. Lastly, the non-financial information
shows that company have a big employee team as well as the huge customer base, which is
one of the biggest strength of the company.

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References
Ball, R., Gerakos, J., Linnainmaa, J. T., & Nikolaev, V. (2016). Book-to-market, retained
earnings, and earnings in the cross section of stock returns.
Crowther, D. (2018). A Social Critique of Corporate Reporting: A Semiotic Analysis of
Corporate Financial and Environmental Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting. Routledge.
Jancenelle, V. E., Storrud-Barnes, S., & Javalgi, R. R. G. (2017). Corporate entrepreneurship
and market performance: A content analysis of earnings conference
calls. Management Research Review, 40(3), 352-367.
Jenkins, W., & Williamson, D. (2015). Strategic management and business analysis.
Routledge.
Kristofik, P., Lament, M., & Musa, H. (2016). The reporting of non-financial information and
the rationale for its standardisation. E+ M Ekonomie a Management, 19(2), 157.
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons.
Thewarehousegroup. (2019). About Us. Retrieved from
https://www.thewarehousegroup.co.nz/about-us
Thewarehousegroup. (2019). Retrieved from
https://www.thewarehousegroup.co.nz/download_file/1582/611

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Appendix
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2.