Financial Performance Analysis: Warehouse Group Limited (NZDB6213)

This assignment presents a financial analysis of Warehouse Group Limited, focusing on its profitability, efficiency, and financial risk over a three-year period. The analysis, presented in a role-play format, assesses key financial ratios, including gross profit margin, operating profit, and net profit margins, revealing a decline in profitability. Efficiency ratios related to debt collection, payments, and inventory turnover are also examined. The project further delves into the company's financial risk by comparing its stock return risk with competitors. The analysis considers stakeholder perspectives, including those of internal shareholders and external investors, providing insights into the company's stability and future prospects. The project highlights the importance of financial analysis in making informed investment and career decisions.

WAREHOUSE GROUP LIMITED

Me (Financial expert): Good Morning everyone.
External stakeholder (employee): Good morning
Internal stakeholder (shareholder): Good morning Ms Annie
Me: hope you both are aware of the topics on which we are going to discuss in this meeting.
Internal stakeholder: yes Ms Annie. Based on your analysis report I can take my future career
decisions. I am working with this company for last 3 years. However, due to some personal
reasons I need to move to another city and I am not sure whether I shall join in that branch of
the company or search for a new option.
External stakeholder: I am getting better return for my investment in another company.
However, I am not sure about the future prospects of Warehouse Limited and hence not able
to take any decision. Hope your analysis will assist me for the same.
Me: I have carried out my analysis on profitability and efficiency of Warehouse Group
Limited covering past 3 years. It signifies that though the gross profit margin is moving
around 32% to 33%, operating profit has been significantly deteriorated and from 4.22% in
2016 it reached to 1.91% in 2018. Further the entity is left with very low margin of net profit
that is 0.77% in 2018 as against 2.80% in 2016. Apart from that the returns on average equity
as well as return on average asset are also not satisfactory as the same are quite low and
deteriorated in 2018 as against 2016. However, it is still adequately profitable.
External stakeholder: is the company efficient in meeting its payments and collecting the
same in time?
Me: Analysing the efficiency ratios of the entity I can say that company’s efficiency in
context of collecting the dues from debtors and payment to the creditors have been improved
over the past 3 years. However, its efficiency in replacing or selling the inventories has been
deteriorated and that can be improved.
Internal stakeholder: anything else you want to highlight?
Me: Yes, want to talk about its financial risk. I have compared its stock return risk with its
competitors Briscoe and found that Warehouse Ltd is comparatively riskier against
Wesfarmers as both its SD and CV are higher. I think it shall be taken into consideration.

External stakeholder: ok, does it mean that the company is not stable at present and from its
performance it can be assumed that it will not be able to maintain its positive performance in
the long run?
Me: well, no one can provide surety on this, however at present it can be considered as a good
option for investment.
External stakeholder: Thank you
Internal stakeholder: Thank you, Ms Annie.
Me: you are welcome. Kindly let me know if you need further assistance.