Transurban Group: Financial Analysis and UN SDG Assessment Report

This report presents a comprehensive analysis of Transurban Group's financial performance, comparing the financial results between 2017 and 2018 using the company's annual report. The analysis includes a detailed examination of various financial ratios such as Net Profit Margin, Operating Profit Margin, Return on Equity, Current Ratio, Liabilities to Equity Ratio, Non-Current Liability to Equity, and Total Liabilities to Assets, providing insights into the company's profitability, liquidity, and solvency. The report highlights the changes in these ratios and discusses the underlying reasons for the observed trends. Furthermore, the report explores how Transurban is meeting the UN Sustainable Development Goals (SDGs), evaluating the company's initiatives in this area and offering an opinion on their effectiveness. The report concludes with recommendations for Transurban to improve its financial position and sustainability efforts, emphasizing the importance of managing debt and maintaining a strong liquidity position. The report is based on the provided assignment brief, including the use of the 2018 annual report and FY18 UN Sustainable Development Goals progress report.

INTRODUCTION
Transurban group is a company listed in the Australian Stock Exchange.
The company is engaged in the business of development, financing and
management of the toll roads. Transurban group is also engaged in
managing the relationship between the client and customer. The principal
segment of the company includes Victoria (VIC), New South Wales (NSW),
Queensland (QLD) and the Greater Washington Area (GWA). The company
Victoria segment work includes operation related to City Link and
widening of City Link. The company is also involved in managing and
developing urban toll road network in Australia and United states. The
main subsidiaries of the group include Transurban Holdings Limited and
Transurban Holdings Trust. The Beta of the company stands at 0.45 which
means the stock is less risky. The market capitalisation of the company
stands at $24,311 million. The ROE of the company stands at 5.02 %
which is less as compared to the industry average. The ROI of the
company stands at 1.05% as compared to the industry which is at 5.21%.
(Reuters.com, 2019)
COMMENTS ON THE FINANCIAL RATIOS OF THE COMPANY AS COMPUTED
Transurban Group
Particulars 2018 2017
Net Profit Margin 14% 8%
Operating Profit Margin 30% 33%
Return on Equity 7% 4%
Current Ratio 0.819163 0.596073
Debt Ratio
Total Liabilities to Asset 0.743964 0.659532
Liabilities to Equity Ratio 2.905705 3.020521
Non-Current Liability to Equity 2.57715 2.651664
Interest EBIT 1.354571 1.198932
1) Net Profit Margin: It is also called Net Profit Margin Ratio. It is the
ratio which shows the net profit or the percentage of profit which
the company earns from its yearly total revenue. The net profit of
the company is computed through net profit of the company divided
by total revenue of the company which is expressed in form of
percentage. The profit margin ratio is also different for each

company depending on the industry to which it belongs. (CFI
Education Inc., 2019)
As compared to the previous year the company Transurban group
Net Profit Margin has undergone a change as compared to the
previous financial year 2017.The Net Profit Margin has been
increased from 8% in the year 2017 to 14% in the year 2018.This
shows that the company is moving towards the positive side and
has added profit and revenue in the financial year 2018.
2) Operating Profit Margin: It also measures the profitability of the
company. It measures how much profit of the company is left after
deducting variable cost of production. This ratio is also considered
to very important for the creditors of the company and the outsiders
because it helps to depict how strongly the operations of the
company is managed. (MyAccountingCourse.com, 2019)
As compared to the previous year the company Transurban group
Operating Profit Margin has undergone a change as compared to
the previous financial year 2017.The Operating Profit Margin has
been decreased by 3% in the year 2018 to 14% in the year
2018.This shows that the company margin of profit has been
decreased by a minimum of 3 Percent..
3) Return on Equity: It means the return available to the owner of
the company. It shows how good the company is in generating the
return to the shareholder of the company. In other words, it means
the return given to the shareholders on their investment. (Bennett,
Coleman & Co., 2019)
As the profit of the company has been increased compared to the
previous year so the percentage of ROE has also been increased
giving a better return to the shareholders of the company on their
investment.
4) Current Ratio: It is also known as working capital ratio of the firm.
It assesses the ability of the company to meet its short-term liability
of the company within a year. It also considers the weightage of
current assets versus the weightage of current liability of the
company. (CFI Education Inc., 2019)
The ratio of the company is less than 1 in both the financial year
which means the company does not have sufficient assets to meet
its liability due within 12 months. The company should focus on the
improvement of this ratio, so that the company would be able to
meet its short-term obligations.
5) Liabilities to Equity Ratio: It measures the financing of the
company that comes from the creditors of the company and the
financing from investors of the company. The lower the ratio the
better is the result. (MyAccountingCourse.com, 2019)

The ratio of the company has been increased from the previous
financial year 2017. It means the percentage of dependant on debt
is more as compared to the financing form equity.
6) Noncurrent Liability to Equity: It measure how much the
company has derby as compared to equity of the company. The
higher the debt the burden is more on the interest expenses and the
net profit will be reduced. It also means the outside financing is
more as compared to the equity investor financing.
The ratio of the company has been decreased from the previous
financial year 2017 .It means the percentage of dependant on debt
is more as compared to the financing form equity as the proportion
is greater than 1.The ratio should be less than 1 which means the
debt financing is less as compared to equity financing .It also
indicate that the company operation is very much healthy as the
dependency on debt is less, but the non-current liability is greater in
case of Transurban Group as compared to equity.
7) Total Liabilities to Assets: It is also known as solvency ratio. It
also measures how much the assets of the company are made up of
liability. (Liabilities To Assets Ratio, 2019)
The ratio of the company has been increased as compared to the
previous year. In the previous year it was approximately around
66% but in the current financial year it is approximately around
74%. It means that 74% of the company are liabilities.
CONCLUSION
On the basis of the analysis the company has a strong parameter on the
gross profit margin,net profit margin and on the basis of margin return to
shareholders of the company. The company should also look the other
aspects such as Current ratio,Quick ratio of the firm so as to maintain the
liquidity position of the company and working capital need and should
minimise the debt to equity ratio. The ratio mentioned should be
improved so that the company does not depend more on outside financing
as compared to the equity financing as depending on outside financing
create more burden on interest expenses also.

References
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on-equity
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corporatefinanceinstitute.com:
https://corporatefinanceinstitute.com/resources/knowledge/finance/net-profit-margin-
formula/
CFI Education Inc. (2019, May 23). What is the Current Ratio? Retrieved from
/corporatefinanceinstitute.com:
https://corporatefinanceinstitute.com/resources/knowledge/finance/current-ratio-formula/
Liabilities To Assets Ratio. (2019, May 23). Retrieved from ycharts.com:
https://ycharts.com/glossary/terms/liabilities_to_assets
MyAccountingCourse.com. (2019, May 23). Debt to Equity Ratio. Retrieved from
www.myaccountingcourse.com:
https://www.myaccountingcourse.com/financial-ratios/debt-to-equity-ratio
MyAccountingCourse.com. (2019, May 23). Operating Margin Ratio. Retrieved from
www.myaccountingcourse.com:
https://www.myaccountingcourse.com/financial-ratios/operating-margin-ratio
Reuters.com. (2019, May 22). Transurban Group (TCL.AX). Retrieved May 22, 2019, from
www.reuters.com: https://www.reuters.com/finance/stocks/company-profile/TCL.AX