Report on Financial Performance Analysis and Key Finance Principle

Summary
Write a 2000-word report based on a financial scenario, given the context, financial information and ratios provided. Conduct a peer analysis comparing a competitor company of your choosing with the case study company. Consider all relevant financial principles, concepts and theories. Conduct the necessary financial analysis using appropriate techniques, tools and frameworks. Make decisions and recommendations based on the analysis and consider ethical implications and limitations.

Learning outcomes
Demonstrate understanding of core contemporary financial management theory, techniques and practice.
Critically evaluate and effectively communicate recommendations to address financial management issues.
Apply financial management theory and techniques to professional practice in an ethical manner.
Task
Context
Aftab Pty Ltd is one of the leading family-owned supermarket chains in Australia. In the past, the company has been investing substantially in capital projects. The Vice President (VP) of Operations is very keen to continue spending on capital by opening new stores.

Aftab Pty Ltd is currently struggling to compete in the present market conditions as it has a limited online presence. To improve the situation, one of the suggestions from the CEO is to invest heavily in upgrading its technology.

Whether the company is looking to expand by opening new stores or to invest in technological upgrades, they will need to raise substantial finance and have applied for a bank loan. You have been hired as a financial analyst to analyse Aftab’s current financial condition. During the review, your key focus is on analysing the financial performance of the company and mapping its growth pathway. A summary of selected financial information and ratios for the past 5 years has been provided to you.

Table of Summary finanicials. See print version download below for accessible Excel file

Print version: Aftab Pty Ltd Financial Ratios 2017-2021

Written Report
Write a report for the management team that addresses points 1 to 5 below:

Comment on the five-year performance trends for Aftab Pty Ltd’s liquidity and profitability using the relevant ratios provided. Choose another company in the same industry (e.g. supermarket and grocery stores), preferably a publicly-listed company with easy access to the required relevant financial information for benchmarking (e.g. IBISWorld and/or annual reports). Compare the performance trends of the two companies and discuss the specific areas in which Aftab Pty Ltd compares positively and negatively with the competitor.
Using the DuPont Method, provide a critical analysis of Aftab Pty Ltd’s Return on Equity (ROE) performance for the last five years relative to the competitor you have chosen. (Presume there are no preference shares for Aftab Pty Ltd.)
During 2020, Aftab Pty Ltd experienced a high level of product returns (refunds) due to Covid. The VP of Operations proposed those refunds to be posted in the 2021 results to give some breathing space for 2020. Discuss the ethical implications of this proposal from the VP of Operations.
Aftab Pty Ltd is also considering converting their company into a public company so that it can raise additional finance for expansion by issuing shares to the public. Evaluate the pros and cons of the private company structure as compared to a public company.
Based on your analysis and discussion, make recommendations as to what are the current strengths and weaknesses of Aftab Pty Ltd as compared with the chosen competitor. Highlight any areas (and appropriate suggestions) for improvement. Identify and discuss the limitations of your analysis.
Procedures
Your report should be presented in a report format following the AIB Style Guide. Please use the AIB Report Template document to format your report.
Use the AIB-preferred Microsoft Word settings per the AIB Style Guide.
Please refer to the 8006FMGT Assessment Exemplar for how to structure your presentation and arguments in this assessment. In each section of your report, please define the financial concepts and/or critical theories before calculations/analyses.
The required word length for this report is 2,000 words (plus 10% tolerance, excluding tables and reference list). Please focus on analysis and interpretation of the data, addressing implications, and providing suggestions/recommendations where possible linked to your analysis and supported by relevant financial principles, concepts and/or theoretical frameworks.
We have provided a PDF Formula Sheet of all relevant formulas from the textbook.
To support your arguments, you are required to use at least five (5) relevant and credible references for this report (in addition to the sources of data for the competitor you choose to focus on in Step 1 above).
As per the AIB Style Guide, your references must be from credible sources such as academic journal articles, academic texts, professional/industry-related journals, government reports and formal company documents. Ideally, relevant academic journal articles should be used for academic discussion.
For the guidelines on the Harvard Referencing Style used at AIB for in-text citations and the reference list, check the AIB Style Guide.
Grading criteria and feedback
Your assessment will be marked according to the following grading criteria:

Understanding of financial principles, concepts and theories – 20%
Analysis (Trend and DuPont) of the company and the competitor and the implications – 35%
Discussion of ethical considerations of the proposal – 10%
Evaluation of business structures – 10%
Conclusions, limitations and recommendations – 15%
In-text citations and referencing – 5%
Communication, presentation, structure and language – 5%