This assignment is a part of the financial statement analysis which is considered to be an important tool when it comes to facilitating management in the decision making process.
In Fantastic Holdings Limited (ASX: FAN) and Nick Scali Furniture (ASX: NCX) assignment answers, you need to conduct a study whose focus is on return on equity. The students have to use DuPont analysis for this examination.
Before you begin, know why use DuPont here.
duPont analysis is a method which offers meaningful details that will aid the management in the decision making process. The managers would be in a position to determine the financial position of the company and analyse the impact of decisions made on the financial statements of the company.
Where you will get the information?
Since you have to analyse two organisations, the best way to start digging is the annual report of both the companies. The treasures you can find in these annual reports is something you will not get anywhere else.
Discuss the accounting environment of companies
Fantastic Holdings Limited
Fantastic Holdings Ltd is a registered company on the Australian stock exchange.
The company is primarily involved in manufacturing, retailing and importing of household furniture. Its business segments comprise of retail and property.
The company presents its accounting statements for the financial year ending on June 30 each year.
Accru Felsers acts as the auditor. The auditor is responsible for all the statutory duties. The auditors also provide their independent opinion on the key aspects of the control system and are responsible for reporting to the risk and compliance committee.
Nick Scali Limited
Nick Scali Ltd is a retailer of furniture which operates its functions near the east coast of Australia.
The company focuses on sourcing and retailing household furniture and related accessories. This company also records all its financial statements for the year ended 30 June each year.
The company has appointed Ernst & Young as its auditor.
Identify the key accounting policies
The companies have to comply with the IFRS standards for its business operations and financial disclosures.
Both the companies have to follow certain accounting policies for disclosure in their accounting statements such as the method of calculating depreciation, goodwill and other key factors impacting the decision of the shareholders.
Also, the accounting policies must be in line with the generally accepted accounting principles.
Analysis of financial statements is the key stage
The du Pont analysis refers to analysing the different components of return on equity, with the objective to determine the component which has a major impact on the ROE. The components which affect ROE are net margin, asset turnover ratio and equity multiplier.
If by seeing the above table prepared by the finance management assignment help experts for Fantastic Holdings Limited (ASX: FAN) and Nick Scali Furniture (ASX: NCX) assignment answers, you will see that Nick Scali limited has a higher net profit margin. This means that the company is able to generate a large number of sales and also maintain a low cost of all its operations.
The higher return on equity of the firm indicates that Nick Scali Limited is highly efficient in making proper utilisation of the money gained from shareholders and generates higher net profits for the growth of the company.
For analysing the performance of both the companies
You need the use of following ratios that need to be determined while writing Fantastic Holdings Limited (ASX: FAN) and Nick Scali Furniture (ASX: NCX) assignment answers.
- Profitability ratio
- Liquidity ratio
- Efficiency ratio
- Solvency ratio
Discuss the strategies and financials of companies
Strategy of FHL
The company has its major strategic focus on the growth of its net sales, returns and shareholders value. The prime focus is on increasing its sales and at the same time improving the productivity of its operations.
The sales of the company would be increased by opening up new stores across different geographical locations for all three brands. Also, the focus is given on improving productivity by extending its supply chain and establishing several manufacturing facilities internationally.
Strategy of NCK
The company aims to deliver its products and services by developing an efficient network and working towards achieving efficiency in its operations. The company will be in a position to accomplish this strategy as it has a strong cash position for carrying out the operations and has limited liabilities in terms of repayment of the debt.
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