Financial Analysis of Coles Myer, Harvey Norman, and Fosters - Example

Download file to see previous pages The paper "Financial Analysis of Coles Myer, Harvey Norman, and Fosters" is a great example of a report on finance and accounting. This report is organized in two sections, with the section I comprising of two parts: part I and part II. Part I presents a financial analysis of three companies: Coles Myer, Harvey Norman, and Fosters. The discussion relies on liquidity, asset management, debt management, profitability, and market value ratios to analyze the three companies. Part II uses the same ratios and other key performance indicators to analyze the financial performance of Rio Tinto. On the other hand, section II presents a diagnostic analysis of Rio Tinto, in which key decision-making practices and financial planning policies will be discussed.

• Section I

• Part 1

This part of the report presents a financial analysis of three companies: Coles Myer, Harvey Norman, and Fosters. The analysis will focus on liquidity, management of assets, and performance of investments (management of debts and financial performance) on a period of three years, from 2008 to 2010.

• Analysis of Coles Myer Group Limited

The group now functions as part of Wesfarmers, after its acquisition in November 2007 and its portfolios trade in the Australian Securities Exchange (ASX. It remains one of the biggest firms in Australia, operating businesses in various industries such as department stores, home, and office equipment supplies, coal mining, supermarkets, insurance, etc (Wesfarmers, n.d.).

• Liquidity Ratios

Ratio

2008

2009

2010

Current ratio

     

Acid ratio

     

 

Generally, the ratios indicate that the company stands in a position to meet its short-range debts when they mature. The current ratio slightly increased over the past three years, from 1.09 in 2008 to 1.23 in 2010, which shows that the firm (in 2010) has $1.09 of current assets for every $1.00 of short-term liabilities. However, the ratio falls below the “commonly accepted value of 2,” an indication that Coles Myer cannot liquidate current assets to settle maturing short-term financial obligations and remain in the business (Lasher 2007, p.84). On the other hand, the quick ratio signifies the inability of the company to liquidate quick assets (current assets excluding inventories) to pay maturing current liabilities. Even though the ratio improves by 23.5% from 2008 to 2010, it is still less than the industry average.

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