BUS103 Accounting for Managers: Metcash Limited Analysis Report

This report provides a financial analysis of Metcash Limited, examining its revenue recognition policy, valuation of plant, property, and equipment, auditor details, and sustainability initiatives. It includes an analysis of profitability ratios (Return on Total Assets, Net Profit Margin), leverage ratios (Interest Coverage Ratio, Debt to Equity Ratio), and efficiency ratios (Asset Turnover Ratio, Inventory Ratio) for the years 2017 and 2018. The report references various accounting standards and prior research to support its findings, offering a comprehensive overview of Metcash Limited's financial performance. Desklib provides a platform to access similar solved assignments and study resources.

A N A LY S I S
Metcash Analysis

Metcash limited
Came into existence in the year 1927.
Principle activities: fresh Produce, Groceries,
Hardware, Alcoholic Beverages (Metcash
Limited, 2018).
Number of employees :6378
Current revenue: $14463
Current profit: $215.6

Revenue Recognition Policy
Revenue is based on AASB and generally
accepted accounting principle.
Revenue: to the extent it gives economic
benefits (Metcash Limited, 2018).
AASB 15 applicable from financial year 2019.

Valuation of Plant property and Equipment
Valued at Cost
Method of Depreciation: Straight line method
De-recognition of assets upon the disposal.

Auditors and the Audit firm
The Ernst and Young is the auditing firm for
the Metcash limited.
The basic role of the review is to convey the
feeling on the fiscal summaries in order to
give the genuine and the reasonable
estimation of the audit reports (Tepalagul and
Lin, 2015).
The outsider reviews are fundamental and
required to give the fair assessment on the
survey of the fiscal summaries.

Initiatives towards the Sustainability
Male to female ratio : 57%
Usage of CSPO
Diversion of 82.5% waste (Metcash Limited,
2018).
Energy reduction by 7%

Profitability Ratios
2017 2018
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
Profitability Ratios
Return on total assets Net profit margin

Leverage Ratios
2017 2018
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
Int
ere
st
cov
era
ge
rat
io
Leverage Ratios
Interest coverage ratio
Debt to Equity ratio

Efficiency ratios
2017 2018
0.00
5.00
10.00
15.00
20.00
25.00
Efficiency Ratios
Asset turnover ratio
Inventory Ratio

Results
2017 2018
Profitability Ratios
Return on total assets
EBIT 6.07% -1.96%
Total Assets
Net profit margin
Netprofit 8.57% -1.01%
Sales

Results
Leverage Ratios 2017 2018
Interest coverage ratio
EBIT 4.64 -2.38
Interest Expense
Debt to Equity ratio
Debt 1.40 1.68
Equity
Efficiency Ratios 2017 2018
Inventory Ratio
Cost of good sold 16.98 16.80
Average Inventory
Asset turnover ratio
Net Sales 3.59 3.89
Assets

References
Tepalagul, N. and Lin, L., 2015. Auditor independence and audit quality: A literature
review. Journal of Accounting, Auditing & Finance, 30(1), pp.101-121.
Tracy, A. (2012) Ratio analysis fundamentals: how 17 financial ratios can allow you to
analyse any business on the planet. Ratio Analysis. New York: Springer.
Warren, C. S., and Jones, J. (2018). Corporate financial accounting. USA: Cengage
Learning.
Saleem, Q. and Rehman, R.U. (2011). Impacts of liquidity ratios on
profitability. Interdisciplinary Journal of Research in Business, 1(7), pp.95-98.
Metcash Limited, (2018) Annual report [Online] Available from
file:///C:/Users/Manita/Downloads/3027570_1705165542_attach-file-1548491556263.pdf
[Accessed on 26th January 2019]
Metcash Limited, (2018) Sustainability [Online] Available from
https://www.metcash.com/corporate-social-responsibility/environment-sustainability/
[Accessed on 26th January 2019]