Financial Ratio Analysis of PWC Australia: A Detailed Case Study

This case study provides a comprehensive analysis of PWC Australia's financial performance, focusing on the company's core business activities, major changes in financial performance as highlighted in the chairman’s message, and managing director’s review. It includes a calculation and interpretation of key financial ratios for 2014 and 2015, such as current ratio, operating margin, cash ratio, and debt ratio, based on the consolidated financial statements. The study also offers an overall assessment of the company, including its strengths, weaknesses, and future prospects, along with recommendations for improvement. The analysis reveals insights into PWC Australia's liquidity, solvency, and profitability, providing stakeholders with valuable information for decision-making. Desklib offers a platform for students to access this and other solved assignments for academic support.

 UBSS cover sheet
JMD1522

 Cover page: showing your name, student number, the subject name, the subject code, the case
topic, and the date of submission. UBSS assignment cover page also needs to be attached
with the assignment.

Table of Contents
Executive Summary.........................................................................................................................3
Introduction.......................................................................................................................................4
Discussion / Findings (explain the answers to the questions)..................................................5
1. Describe the Core Business activity of the company. Provide full details of its
different activities and/or operating segments......................................................................5
2. Discuss any major changes in financial performance from the chairman’s
message or managing director’s review.................................................................................6
3. Calculate the key financial ratios for the selected company based on the
consolidated financial statements, for 2014 and 2015...........................................................7
4. Provide an overall assessment of the company and its future prospects...............11
Conclusion........................................................................................................................................12
List of references.............................................................................................................................13

Executive Summary
The entire project report highlights the level of the performance of the PWC Australia. The
project report also addresses on the areas of core importance that can assist in the
management of the operations in an effective and efficient manner so that the company can
attain a strong and successful position in the market. The report has also addressed on the
analysis of various ratios so that the parties engaged in the operations of the company can
make an effective decision. Besides, the report has provided on the suggestions and
improvements so that the company can deal with the changes leading to enhance
sustainability and growth.

Introduction
The project report elaborates on the functioning of the PWC Australia, and the core activities
in which the company is dealing. PWC Australia is involved in delivering quality services in
relation to advisory and tax with a strong team network of approx. 223000 individuals in 157
countries in the global world. Apart from that, the core areas that are required to make the
focus on has been discussed throughout the project has been elaborated. The project report
also elaborated on the suggestions of the parties that are associated with the functioning of
the company so that the work patterns can be managed in an effective and enhanced manner.
Further provided, the analyses of the various data and ratios have been ascertained so that the
better understanding can be grasped by all the parties in relation to the performance of the
company so that suitable and appropriate decisions can be taken. The project report provides
on the various recommendations and suggestions that can assist the authorities in the proper
management of the activities.

Discussion / Findings (explain the answers to the questions)
1. Describe the Core Business activity of the company. Provide full details of its different
activities and/or operating segments.
PWC Australia is the company that operates its activities in the service sector that enhance
their commitment to delivering the assurance of the quality in relation to the tax operations.
The company is the emerging firm that tends to establish its power in the global parameters.
The major service o0f the concerned business involves:
 Assurance
 Consulting
 Indigenous deals
 Legal Services
However, there is a dark side of PWC Australia as well. Senior Management in
Technology advisory sector does not work. They delegate their work to Juniors and enjoy
their time by playing chess, gossips. They are in the same company for more than 12 yrs and
drawing salaries without doing any work. Not even capable of writing a PPT and word doc.
This creates a level of dissatisfaction among the employees working thereunder. This also
decreases the efficiency in the employees. There are no projects. Not a healthy work
environment in PWC Australia.

2. Discuss any major changes in financial performance from the chairman’s message or
managing director’s review.
With the changes in the environment, it has been observed that the company’s financial
performance is stable. However, the changing trend of the company requires that the
management and the Board of Directors of the company must evaluate the varied changes in
the environment so that the operations can be conducted in a proper manner. This is essential
to ensure that the sustainability of the company can be retained. Apart from that this will
assist the concerned company in the attaining the growth. Apart from that, the focus is
required to be made in the expansion and diversification, not the activities so that the better
and larger section of the market can be captured leading to effective success.
Some of the major challenges while working in PWC Australia have been discussed below:
1. It’s not a 9–5 job. The concerned employee would be thrown in front of the client, wherein he
or she either swim or sink, with none to help and none to guide. Here the major challenge
which the company faces is availability of expert 24x7 for the client and it is not possible
with one individuals.
2. It's either up or out. Less than MBB of course, but much more than a 3.5L + ITeS firms.
From a Consultant to a Partner its only 4 or 5 levels in between, and headcount increasing in
a steady manner, PWC cannot afford to become a middle-heavy organization.
3. As there’s a cut-throat competition in the market if one perform he or she would be rewarded.
If one brings in revenue, he would be treated in an even better manner. Experts got
demotivated if they fails to perform good within the organisation.
It is unreasonable to assume that PWC to be paying or providing me with opportunities like
BCG, McK or a Bain does to its employees but still, the existing employees are satisfied with
their job role and earning sufficient amount of salary.

3. Calculate the key financial ratios for the selected company based on the consolidated
financial statements, for 2014 and 2015.
As with any other firm with more than 100K employees, there will be work-related politics
driven out of personal motivations. A job-seeking person in PWC Australia will get to travel
across Australia (if not the world) on various assignments and will work with people with
varied walks of life (after all, diversity is BIG at PWC). Networking is another big
component of work life, and he will need to know various colleagues from the various service
area, industries and levels to rise up in the firm.
Finally, the most important thing that needs to be considered is to remember and keep in
mind that there is no shortcut to success, and this firm is no different.
The agenda discussed in the annual general meeting for the financial year 2016 were three
points among other insignificant issues. These major points were inconsistent with the three
main agendas of the PWC Australia. The main three points that were included in the agendas
were new accounting standards, business issues along with the panel.
There is a tendency to transfer the profit remaining after paying the taxes to the Price water
Cooper Nederland U.A. as a management fee. Thus, at the end of the financial year, it does
not have any net profits. Such profits have also been shown under cash flow statements under
the cash flow from operating activities. As such, net profit ratio cannot be computed. In other
words, ratios of which financial variables are dependent on the statement of profit and loss
cannot be determined. Also, generally PWC Australia does not have the tendency to pay a
dividend to its promoters or shareholders. There is no such provision as such but being a
service-oriented organization it aims to preserve its profit for the better provision of service.
However, profit before the tax can be compared. It can be observed that the profit before tax
of financial year ending on 30th June 2016 has decreased in comparison to the financial year
ending on 30th June 2015. Thus it can be interpreted that the profit has decreased relative to
the previous year. However, the only operating margin has been computed.
Although some basic solvency ratios have been computed which helps to gain a detailed
understanding of solvency position of PWC Australia.

Particulars 2016 2015
Current assets
£292,60
9
£279,87
9
Current
liabilities
£196,79
0
£179,61
8
Operating
profits
£142,26
9
£157,65
5
Revenue
£744,07
7
£697,30
9
Cash and cash
equivalents £17,668 £10,216
Total assets
£292,60
9
£279,87
9
Total liabilities
£255,79
3
£237,58
3
Key
performance
indicator 2016 2015
Current ratio 1.49 1.56
Operating
margin/
operating profit
margin 0.19 0.23
Cash Ratio 0.09 0.06
Debt Ratio 0.87 0.85
The above computations indicate a detailed comparison between 2016 and 2015. Such
comparison facilitates the reader or user of the report to take correct financial decisions so
that they can earn higher amount of profits with the nominal or minimum amount of risk. Key
performance indictors include nalysis of current assets , current liabilities, operating profit,
cash ratio and debt ratio. The performance in last previous two years provides that company
is successfully running with stability in its operation. Besides investors or traders, such
comparison also helps other stakeholders to act accordingly since there can be other persons
as well who are interested in the business affairs of PWC Australia or any business enterprise.
It can be clearly observed that current assets have increased from £279879 to £292609
indicating a nominal increase of 4.54%. However, the current ratios have decreased. This is
because the rise in current liabilities is significantly greater than that of current assets.
Another prominent feature that needs to be considered is that current ratio of both the years

has failed to achieve the standard ratio of 2:1. This indicates that liquidity ratio of PWC
Australia is not satisfactory.
Also, a rise in debt ratio indicates that total liabilities have increased in relation to total assets.
This creates a question mark on the payment capability or capacity of PWC Australia. The
company needs to generate sufficient amount of total assets so that it funds can be prepared to
pay off liabilities and can be repaid on time.
Also, Earning per share cannot be computed due to non-availability of net profits or profit
remaining after payment of sufficient amount of tax. Along with EPS, dividend payout ratio
can also be not computed since it has not paid any dividend either in 2016 and 2015.
However, cash ratio has been computed by taking cash and cash equivalent in the numerator.
There has been a nominal rise in the cash ratio. This indicates that PWC Australia has been
able to generate more cash relative to the previous year 2015. This is a positive factor for the
concerned business enterprise.
In the last, operating profit ratio or margin has decreased in the year 2016. Such decrease
arises despite the fact that operating profit has increased. Also, it is interesting to note that
cash has also increased and even that it has failed to decrease operating profit.

4. Provide an overall assessment of the company and its future prospects.
 In order to attain effective growth and success, the company must evaluate all the positive
and negative aspects effectively of the market environment so that the changes in the internal
environment can be managed in accordance with the external environment.
 Apart from that, the company is also required to have a proper command of the activities so
that the resources can be effectively utilized leading to the greater profitability.
 In the forthcoming year, the company is also planning to expand and diversify its operations
and activities. As such the company must elaborate on the various strategies so that the
operations can be effectively conducted.
There are many employees that are working with PwC for about 3 years with one of the
highest revenue generating businesses - Assurance. In itself, it is an overall good experience
with better work-life balance (compared to EY and Deloitte), a wider network of clients and
launches various initiatives to improvise work lives of its client-serving professionals. That
being said, it is a very sales-focused firm (especially at Manager and above levels) with fairly
long hours (not the typical 9– 6 pm). So expect a call/email from a Partner/Director/MD on a
Friday evening and expect to get a sales deck ready by Monday! However, such experience
will really build presentation and communication skills of the concerned employee or
personnel working at any level apart from helping gain varied technical and functional skills
once he or she is staffed on the project.
PWC Australia is decent in everything except the pay. The pay is poor compared to industry
standards. The pay hike is erratic most of the times. This year, they have revised the package
for new joiners which means that a junior of a 2017 pass out will earn almost 80% more
salary than the guy who passed out in 2017. This is pathetic and unheard of. Next year, PWC
Australia can prepare itself for mass attrition with such policies.

Conclusion
The project report concludes that the concerned company is effective in operations and as
such has major opportunity to expand and flourish in the market. Apart from that, the project
report concludes on the various core activities in e\which the comp-[any is dealing in so that
the major core areas can be analyzed and more effective decisions can be taken. In addition,
the project report elaborates on the various opinions of the chairman and the board of director
with regards to the financial performance of the company so that the changes can be
effectively met leading to a better success in the market arena. Further provided the \various
ratios has been collected so that the management of the concerned company can make better
analysis and evaluation of the financial statements of the company. The report also concludes
with various recommendations and suggestions that can be considered by the concerned
company so that they can manage their operations leading to a better position in the market.