Financial Statement Analysis and Valuation Report: A2 Milk Company

This report presents a business analysis and valuation of the A2 Milk Company, focusing on its financial performance in 2018 and 2019. The analysis includes horizontal and vertical analysis of the income statement and balance sheet, identifying trends in key areas like property, plant, and equipment, and intangible assets. The report also delves into various financial ratios, including gross profit margin, operating profit margin, net profit margin, and EBIT analysis, along with an ROA analysis to assess the company's profitability and efficiency. The findings, supported by data from the company's annual reports, reveal insights into the company's cost structure, debt position, and overall financial health, providing a comprehensive evaluation of its business performance and valuation.

Running head: Business Analysis and Valuation
BUSINESS ANALYSIS AND VALUATION
NAME OF THE STUDENT
NAME OF THE UNIVERSITY
AUTHOR NOTE

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Business Analysis and Valuation
Table of Contents
Answer for the part b.......................................................................................................................2
Answer to the question e..................................................................................................................3

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Business Analysis and Valuation
Answer for the part b
In order to identify the trend of the business, we have done the horizontal analysis and
also the vertical analysis (S 2020) in the annual report of the A2milk Company for the year 2019
and 2018. In the horizontal analysis, we have deducted the sum from the year 2019 from the year
2018 and along with that there has been a percentage evaluation in order to clearly understand
the trend and also to analyze each and every increase and decrease in the items of the income
statement as well as the balance sheet. From that it has been noted that there has been increase in
the Property, plant and equipment for the amount of $595000 and this happens due to more purchase
in the financial year 2019 and there is an decrease in the intangible asset for the amount $2,107000 due
to amortization and also due to write off (Thea2milkcompany.com, 2020). Other details like sales, EBIT ,
Net income and capital structure there has been an excel file where all the working and details are
present. Here is the pie chart for the expenses for the year 2018-2019.

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Business Analysis and Valuation
Answer to the question e
For the purpose of analyzing the income analysis (The Balance 2020), various types of
ratios has been prepared and also there is an ROA analysis has been made. As per the data and
the outcome of the analysis it has been noted that there has been increased in the gross profit
margin ratio and operating profit margin ratio; however it has been noted that there has been
decrease in the net profit margin. EBIT analysis has shown increase in the earning per share.
However there has been decrease in the ROA analysis of the company. However there has been
the horizontal as well as vertical analysis of the income statement, where individual items of the
income statement has been compared in order to analyze the trend. This analysis further helps in
the sheer understanding of the cost structure of the company and to analyze the ability of the
company in the earning of profit. Ratios that has been prepared are the gross profit margin ratio,
operating profit margin ratio, net profit margin ratio and EBIT analysis and there has been an
ROA analysis as well. All the details has been taken from the annual report of the A2Milk

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Business Analysis and Valuation
Company for the year 2019 and 2018 and it has been noted that the firm is in a good position
with no debts (The a2 Milk Company 2020).
References
S, S. (2020). Difference Between Horizontal and Vertical Analysis (with Comparison Chart) -
Key Differences. [online] Key Differences. Available at: https://keydifferences.com/difference-
between-horizontal-and-vertical-analysis.html [Accessed 22 Jan. 2020].
The a2 Milk Company. (2020). Annual reports and financial results - The a2 Milk Company.
[online] Available at: https://thea2milkcompany.com/results/ [Accessed 22 Jan. 2020].
The Balance. (2020). A Beginner's Guide to Income Statement Analysis for Investors. [online]
Available at: https://www.thebalance.com/investing-lesson-4-income-statement-analysis-357580
[Accessed 22 Jan. 2020].
Thea2milkcompany.com. (2020). [online] Available at: https://thea2milkcompany.com/wp-
content/uploads/The-a2-Milk-Company_FY19-Annual-Report_double-pages-1.pdf [Accessed 22
Jan. 2020].