Financial Ratio Analysis of Transurban: A Comparative Study (ACCT2001)

Desklib provides past papers and solved assignments for students. This report analyzes Transurban's financial health and sustainability.

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Assignment
Student id:
Student name:
Assignment code:

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Table of Contents
Question 1:.......................................................................................................................................3
Question 2:.....................................................................................................................................11
Question 3:.....................................................................................................................................14
Conclusion.....................................................................................................................................15
References:....................................................................................................................................16

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Question 1:
Comparison of the financial results of Transurban:
Liquidity ratios:
In terms of the accounting liquidity ratio is the kind of the ratio which provides the indication of
the ability of the company to fulfill their financial obligations or the liabilities in the situation
when they arise (Berk, et. al., 2013). Here is the some of the calculations for presenting the
liquidity status of the company:
Liquidity ratio
Current ratio : CA/ CL
Particulars 2018 2017
Current assets 1821 1275
Current liabilities 2223 2139
Current ratio 0.82 0.60
Cash Ratio : cash +marketable securities / Current liabilities
Particulars 2018 2017
Cash and cash equivalent 1130 988

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Marketable securities 247 157
Current liabilities 2223 2139
Cash ratios 0.62 0.54
Current ratio of the Transurban is increasing as compared to that from the past year which
indicates that company has become more liquid and at present become more viable for making
the payment of the short term obligations of the company as compared to that from the last year
(Berthelot, et. al., 2012).
Cash ratio of the company is also increasing which indicates the percentage of the current
liabilities which the company can pay off from the current assets available with the company.
This ratio of the company is also increasing which indicates that Transurban has now become
more liquid as compared to that from last year to pay off their current dues.
Solvency ratios:
This ratio is generally used for calculating the viability of the company to payoff the short and
the long term liabilities of the company as and when generally the situation arises (Clemson, et.
al., 2012). This ratio indicates the cash flow capacity of the company in relation to that of total
liabilities of the company.
Solvency ratio
Debt- equity ratio : Total debt/ total equity

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Particulars 2018 2017
Total debts 19,660 17,516
Total equity 6,766 5,799
Debt- equity ratio- 2.91 3.02
Interest coverage ratio: EBIT/ Interest expense
Particulars 2018 2017
Earnings before interest and Tax 1011 923
Interest expense 722 749
Interest coverage ratio: 1.40 1.23
In the present scenario, the debt equity ratio of the Transurban is decreasing as compared to that
of the last year which indicates that company is operating more on the borrowed funds instead of
the company’s own fund. This indicates that company is not making any improvement in
solvency position of the company.
Interest coverage ratio of Transurban is also increasing that company is getting under the debt
burden of interest expenses and there are more chances for default or the bankruptancy of the
company. There is lot of the scope for the improvement in this area.

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Profitability ratio:
It is the kind of the metrics which is usually used for evaluating the ability of the company to
generate the profits from the cost, assets invested in the companies (De Cian, et. al., 2012).
Profitability ratios
operating profit margin ratio: Net profits / Net sales *100
Particulars 2018 2017
Net profit: 468 209
Net sales 3298 2732
operating profit margin ratio: 0.14 0.08
Return on equity : Net income / shareholders equity
Particulars 2018 2017
Net profit: 468 209
Shareholder’s equity 6,766 5,799
Return on equity- 0.07 0.04

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Operating profit margin of the company is increasing as compared to that of the past year which
indicates the improvement in the operational activities of the company for effective production
of the products by incurring the low cost of production and generating more revenue from the
sales of the products.
Return on equity of the Transurban is also improving which makes the indication that company
is operating efficiently for generating the sufficient income from the equity funds invested in the
company.
Efficiency ratios:
This kind of ratios indicates that how effectively the company is making the use of the assets and
the liabilities for generating the sufficient profits in the company (Jarrow, 2013).
Here is the calculation of the few of the efficiency ratio of Transurban:
Efficiency ratio
Account receivable turnover ratio : Revenue / Accounts receivables
Particulars 2018 2017
Revenue 3298 2732
Accounts receivables 444 130
Accounts receivables ratio 7.43 21.02
Total assets turnover ratio : Revenue/ total assets

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Particulars 2018 2017
Revenue 3298 2732
Total assets 26,426 23,315
Total assets turnover ratio- 0.12 0.12
Account receivable turnover ratio of the company is decreasing which indicates that the
company is facing the problems for making the collection of the dues from the debtors or the
customers of the company. This needs to be improved for getting the success in the future period
of time.
Asset turnover ratio of the company has not changed as compared to that from the last year. The
company needs to make the improvement for making the efficient use of the assets for
generating the more profits in the company.
Leverage ratios:
Leverage ratios
Debt to asset ratio : Total debts/ total assets
Particulars 2018 2017
Total debts 19,660 17,516
Total assets 26,426 23,315

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Debt to asset ratio- 0.74 0.75
Debt to EBITDA Ratio: Total debts / Earnings before interest tax,
depreciation and amortization
Particulars 2018 2017
Total debts 19,660 17,516
EBITDA 1649 1526
Debt to EBITDA Ratio- 11.92 11.48
Debt asset ratio of the company is also decreasing which indicates that financial position of the
company is improving and company s in position to pay off the existing debt burden of the
company (Junior, et. al., 2014). The debt to ebit ratio of the company is increasing which
indicates that company is under the great debt burden.
Possible reasons for improvement
Company should take the possible efforts for reducing their borrowing cost. It is the duty of the
management to make the timely preparation of the financial statements of the company for
timely identification of the problem in the financial performance of the company and should
make use of the key performance indicators for measuring the present financial and the
operational performances of the company. The management also needs to prepare the budgets for

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making the decisions in advance for the future expenditures and the other activities of the
company.
Other information which can be used by the company for the assessment of the financial
health of the company:
Cash flow statements, equity statements are the other tools which can be used by the
management for the assessment of the financial performance of the company.
Source: Transurban 2018
Question 2:
Transurban is meeting the UN Sustainable development goals in the following manner:
By 2030 the Company is aiming to reduce by one third of the total prematurity mortality rate
which generally causes due to the non communicable infections and the diseases by making the
treatment and the prevention of such communicable disease (Robinson, et. al., 2015). The
company is also aiming to promote the well being and the mental health of the suppliers and the
employees of the company.
Secondly by 2020 the company is aiming to reduce the number of the global accidents and the
injuries which are generally caused by the traffic and the road accidents. For the implementation
of this strategy the company will take the initiatives in respect of the development of the strategic
frameworks for the road safety. The company is also aiming for making the improvement in the
road designs and the optimizations for reducing the safety risk of the people. The organization is
also aiming for conducting the activities and the seminars for creating the road safety awareness
among the people.
One of the sustainable goals of Transurban is to end all kind of the discrimination and injustice
against all the girls and the women of the society. In respect of this framework the management
of the company legally enforces the framework for promoting, enforcing and monitoring the
equality and the non discrimination on the gender basis. The company has taken the initiatives by
making the recruitment of the female employees in the company and also promoted the women
leadership by providing the internal trainings. The flexibility in the working environment and the

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scholarship in the women engineering is also provided by the company (Robinson, et. al., 2015).
The management of the company also promotes the equal participation in the decision making
process within the organization and also in the economic, political and the public life.
By the end of 2030, the company is also aiming to make the increment in the sustainability in the
shares of the renewability of the energy in global energy mix. For the implementation of this the
company has taken the initiatives in respect of the installation of the renewable energy sources
are places across the number of the facilities and the assets of the company.
By the end of the year 2030 the company is also aiming to double the rate for making the
improvement in the energy efficiency. For the achievement of the goal and the objectives of the
company, initiatives have been taken for the development of the tunnel ventilation and the
lightning.
The company has also the plans for making the contribution to the economic growth of the
company in respect of the national circumstances of the company. The company is aiming to
contribute at least of the 7% GDP growth annually in the least developed states and the
countries. For encouragement of economic growth of the country the company has taken the
initiatives for job creations and creation of the projects which are making the contribution in
respect of the financial health of the company.
Creation of the job opportunities for the youth is also one of the aims for the achievement of the
sustainable growth of the company. In respect of this goal the company has promoted the orient
ship policies and the programs which generally support the productivity, innovation and the job
creation in the economy (Williams and Dobelman, 2017). For the creation of the employment
opportunities the company has taken the initiatives in respect of the seven development projects
which will create the significant job opportunities for the youth of the country.
Resource efficiency is also one of the aims or the goal of the Transurban by 2030 in the
production and consumptions of the environmental resources. In respect for making the
achievement of this goal the company has taken the initiatives in respect of the increased use of
the sustainable material in the company which generally includes the: entering into the
partnership with the Beyond Zero Emission and the Boral which aims to make the reduction in

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the carbon emissions in the concrete use and Making use of the sustainable material in the
construction of the roads.
Protection of the labor rights and also promoting the safe and the secure working environment to
all the workers of the company particularly the women migrants was also one of the major
sustainable goals of the company.
The opinion of the analyst in respect of the sustainable goals of the company is that company is
really making the contribution for the development of the society and company should positively
engage in making the contribution to the society for the growth of the company.
Source: Transurban 2018