Fundamental Analysis and Prediction of Earnings †Free Samples

Question: Discuss about the Fundamental Analysis and Prediction of Earnings. Answer: Introduction: National storage Australia is one of the largest self storage organizations in Australian market. Through analysis over the company, it has been found that this company has been come into existence to offer various services and the products of the consumers. This company has come into existence in 20th century and currently, this company is diversifying its market into various new markets to enhance the profitability and position of the company. This company is engaged with various other companies and offer them outsourcing option o keep their stock in a proper manner. This company offers Self storage, records management, business storage, climate controlled wine storage and vehicle and trailer hire, vehicle storage, insurance, packaging and other value added services. Currently, 56000 storage units are held the organization to maintain the operations. This company also serves its operations into New Zealand. The National Storage Australia has set its principles and rules of corporate governance according to the Australian stock exchange corporate governance council principles. Thus, it has been found that the approach of corporate governance has been followed by the company in proper way. Corporate governance strategy of the company depict that the comapny is performing its operations and functions in such a manner that the company could perform well in the market through not harming the society. Through the analysis, it has been found that the corporate governance of the company is quite different in its annual report and the website. Though the meaning of both the lines is bit similar and company is trying hard to manage the power and the rights of the society. The company is paying to all the directors according to their experiences and the post. Through the analysis, it has been found that company is also offering various bonus and incentive plan to the directors to enhance the position and the performance of the company (Luo et al, 2014). The incentive plans make the remuneration of the directors quite high and attractive. The remuneration plan of the company depends over the position of the director in the company. Subsidiary and portfolio holdings: Further, through the analysis, it has been found that no subsidiary companies are managed by the company. Entire business of the company is managed under a name only. And through the analysis over the annual report of the company and the current trends of the company, it has been found that it is required for the organization to diversify its market and launch some subsidiary companies to enhance the operations. Through the analysis over the position of the company, it has been analyzed that the position and the performance of the total investment in the company is the 73,26,17,000 in 2017. Through the analysis, it has also been found that the net asset of the company is the 1,43,73,25000 and total net liabilities is 70,47,08,000. This depict that the total investment is quite lesser with the total asset of the company (Morote, Garca-Ybarra Castillo, 2013). This has been managed by the company according to the economic position and performance of the company. It has also been found that various figures of the total assets and the liabilities has been changed in last 3 years which has been changed for making the performance of the company better. Further, the current position of the financial statement has been analyzed and it has been analyzed that the current equity the company is the 73,26,17,000 in 2017 whereas the equity position in 2015 and 2016 was 38,56,62,000 and 39,83,50,000.00. The amount has been enhanced by the company to manage the performance in the future. This has been managed by the company according to the economic position and performance of the company. Through the analysis over the position of the company, it has been analyzed that the current net asset of the company is the 1,43,73,25000 in 2017 and 63,09,15,000 and 89,97,27,000 in 2015 and 2016 respectively. Total current assets of the company was 1,65,80,000.00, 2,38,19,000.00 and 4,51,28,000.00 in 2015, 2016 and 2017 respectively (Nelson, Balakrishnan Sidhu, 2012). These changes have taken place into the performance of the comapny for managing the position of the company. Through the notes in the annual report of the company, it has been found that level of the working capital has been enhanced to manage the working capital of the company. Further, through the analysis over the position of the company, it has been analyzed that the noncurrent liabilities of the company is the 1,43,73,25000 in 2017 and 63,09,15,000 and 89,97,27,000 in 2015 and 2016 respectively. Total current assets of the company was 21,46,09,000, 46,63,23,000 and 65,35,79,000.00 in 2015, 2016 and 2017 respectively. These changes have taken place into the performance of the comapny for managing the position of the company (Parker Vannest, 2012). Through the notes in the annual report of the company, it has been found that total noncurrent liabilities of the company have been enhanced to enhance the investment in the company. Moreover, according to the financial position and statement of the company, it has been analyzed that the net profit of the company is the 2,77,37,000, 2,93,61,000.00 and 4,70,04,000.00 in 2015, 2016 and 2017 respectively. It has been analyzed that the net profit of the company has been enhanced. These changes have taken place into the performance of the comapny according to the total operating expenses of the company. The operating expenses of the company are increasing continuously (Sarsby et al, 2014). More, the financial statement and the position of the company expresses about the performance and the position of the company. It has been analyzed that the net profit of the company is the 2,77,37,000.00, 2,93,61,000.00 and 4,70,04,000.00 in 2015, 2016 and 2017 respectively. It has been analyzed that the net profit of the company has been enhanced. These changes have taken place into the performance and depict about the positive changes into the company Cash flow from operating activities: The cash flow statement of the company has been evaluated, it has been analyzed that the cash flow from operating activities of the company is the 3,75,96,000, 4,92,85,000.00 and 6,50,96,000.00 in 2015, 2016 and 2017 respectively. It has been analyzed that the net profit of the company has is highest cash inflow item whereas the payment to suppliers are highest cash outflow of the company. These changes have taken place into the performance of the comapny according to the total operating expenses of the company. The operating expenses of the company are increasing continuously. Through the analysis over the position of the company, it has been analyzed that the cash flow from investing activities of the company is the -14,92,64,000, -15,79,61,000.00 and -44,36,54,000.00 in 2015, 2016 and 2017 respectively. It has been analyzed that the various investment has been done by the company to manage the functions in the market. The main investment done by the company is the purchase of subsidiary companies. By evaluating the financial statement and cash flow statement of the company, it has been analyzed that the net cash flow from all the activities of the company is the 12,30,000, 38,84,000.00 and 97,33,000 in 2015, 2016 and 2017 respectively. It has been analyzed that the various investment has been done by the company to manage the functions in the market. The profitability of National Storage Australia has been evaluated through measuring the profitability ratios. These ratios have been calculated to analyze the performance of the company so that a better decision could be made by the investors. The net profit ratio has been decreased from in 2017 from the year 2015. The current position of the company is not well and this depicts that the expenses of the company has been higher than the revenues of the company in 2017 from 2015. Further, the ratio of return on equity of the company expresses that the position of the company has been lower and the profit margin of the company has also been lower (Yasin, 2014). Though, the current position of the company, it has been found that the profit position of the company has been lower due to various internal and external changes in last 2 years. The asset efficiency of National Storage Australia has been evaluated through measuring the efficiency ratios. These assets turnover ratios of the company have been calculated to analyze the performance of the company so that a better decision could be made by the management of the company (Lou et al, 2012). The position of asset turnover ratio depicts about increment in the position of assets from 2015 in 2017. Though, the current position of the company, it has been found that the position and performance is becoming bit better. The receivable turnover ratio of the company has increased the level from 2015 in 2017. Further, it explains that the position of cash and operations has been better. The company has faced few changes into the policies. The liquidity ratio of the company has been decreased from 2015 in 2017. This analysis express about the performance of the company. Thus, it is suggested to the company to make various changes into the position of debt and assets of the com pany. The Liquidity position of National Storage Australia has been evaluated through measuring the various liquidity ratios. These liquidity ratios of the company have been calculated to analyze the cash and liquid position of the company so that a better decision could be made by the management of the company (Grantz, 2016). Further, the current ratio of the company has been analyzed and it has been better and the level of current assets has been enhanced in current year in comparison of current liabilities from 2015 in 2017. The current position of the company express about better changes in the organization. The quick ratio of the company has been enhanced from 2015 in 2017 due to changes into the quick assets of the company. Further, the quick position of the company has been better from 2015 in 2017 (Zhang et al, 2013). The cash flow ratio of the company has been enhanced from 2015 in 2017. Though, this expresses that the performance of the organization has been better. Capital structure gearing: The capital structure gearing position of National Storage Australia has been evaluated through measuring the various capital related ratios. These capital structure gearing ratios of the company have been calculated to analyze the assets and debt position of the company so that a better decision could be made by the management of the company. The debt asset ratio of the company has been enhanced from 2015 in 2017. Though, the current position of the company is quite better than last year and depict about various positive changes (Hajkowicz, Cook Littleboy, 2012). The debt equity ratio of the company has been decreased from 2015 in 2017. Though, the current position of the company is bit better than last year. Though, this expresses that the performance of the organization has been better. Horizontal analysis of income statement: Item 06/14 Changes 06/15 Changes 06/16 Changes 06/17 Changes Rental Income 3,97,62,000.00 1.00 5,51,41,000.00 1.00 6,97,09,000.00 1.00 10,58,14,000.00 1.00 Investment Income 37,000.00 0.00 1,70,000.00 0.00 1,55,000.00 0.00 8,53,000.00 0.01 Other Income 58,69,000.00 0.15 83,76,000.00 0.15 98,86,000.00 0.14 1,15,85,000.00 0.11 Pre-tax Profit 1,28,08,000.00 0.32 2,79,97,000.00 0.51 2,91,11,000.00 0.42 5,11,72,000.00 0.48 Tax Expense 71,60,000.00 0.18 -2,60,000.00 0.00 2,50,000.00 0.00 -41,68,000.00 -0.04 Net Profit after Tax Before Abnormal 1,99,68,000.00 0.50 2,77,37,000.00 0.50 2,93,61,000.00 0.42 4,70,04,000.00 0.44 Abnormal -44,03,000.00 -0.11 2,09,96,000.00 0.38 1,46,25,000.00 0.21 5,64,09,000.00 0.53 Abnormal Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Net Abnormal -44,03,000.00 -0.11 2,09,96,000.00 0.38 1,46,25,000.00 0.21 5,64,09,000.00 0.53 Reported NPAT After Abnormal 1,55,65,000.00 0.39 4,87,33,000.00 0.88 4,39,86,000.00 0.63 10,34,13,000.00 0.98 Outside Equity Interests -3,26,87,000.00 -0.82 -5,00,68,000.00 -0.91 -4,41,65,000.00 -0.63 -9,62,66,000.00 -0.91 Shares Outstanding at Period End 24,48,97,096.00 6.16 33,44,56,409.00 6.07 33,64,22,143.00 4.83 51,29,13,914.00 4.85 Weighted Average Number of Shares 14,15,14,780.00 29,43,18,578.00 33,51,29,606.00 49,85,24,137.00 EPS Adjusted (cents/share) -8.99 -7.59 -4.42 -9.88 EPS After Abnormal (cents/share) -12.10 -0.45 -0.05 1.43 Horizontal analysis of balance sheet: Item 06/14 Changes 06/15 Changes 06/16 Changes 06/17 Changes CA - Cash 82,64,000.00 0.019836917 94,94,000.00 0.02 1,33,74,000.00 0.01 2,31,66,000.00 0.02 CA - Receivables 47,21,000.00 0.011332295 62,53,000.00 0.01 91,02,000.00 0.01 1,50,18,000.00 0.01 CA - Investments 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 CA - Other 16,63,000.00 0.003991867 8,33,000.00 0.00 13,43,000.00 0.00 69,44,000.00 0.00 Total Current Assets 1,46,48,000.00 0.035161079 1,65,80,000.00 0.03 2,38,19,000.00 0.03 4,51,28,000.00 0.03 NCA - Investments 50,77,000.00 0.012186838 67,09,000.00 0.01 1,51,01,000.00 0.02 1,05,91,000.00 0.01 NCA - Property 38,13,01,000.00 0.915275434 59,24,04,000.00 0.94 84,41,30,000.00 0.94 1,33,08,78,000.00 0.93 NCA - Other 1,55,71,000.00 0.037376649 1,52,22,000.00 0.02 1,66,77,000.00 0.02 5,07,28,000.00 0.04 Total NCA 40,19,49,000.00 0.964838921 61,43,35,000.00 0.97 87,59,08,000.00 0.97 1,39,21,97,000.00 0.97 Total Assets 41,65,97,000.00 1 63,09,15,000.00 1.00 89,97,27,000.00 1.00 1,43,73,25,000.00 1.00 Creditors 82,78,000.00 0.033880824 1,04,03,000.00 0.04 1,39,24,000.00 0.03 2,03,63,000.00 0.03 Provisions 1,03,75,000.00 0.042463584 1,52,19,000.00 0.06 1,67,05,000.00 0.03 2,60,96,000.00 0.04 Other 43,30,000.00 0.017722151 50,22,000.00 0.02 44,25,000.00 0.01 46,70,000.00 0.01 Total Curr. Liabilities 2,29,83,000.00 0.094066558 3,06,44,000.00 0.12 3,50,54,000.00 0.07 5,11,29,000.00 0.07 Borrowings 14,80,79,000.00 0.606068916 21,21,51,000.00 0.87 45,83,49,000.00 0.91 64,56,21,000.00 0.92 Deferred Tax 2,27,000.00 0.000929083 4,87,000.00 0.00 1,36,000.00 0.00 33,68,000.00 0.00 Other 9,81,000.00 0.004015111 19,71,000.00 0.01 78,38,000.00 0.02 45,90,000.00 0.01 Total NCL 14,92,87,000.00 0.611013109 21,46,09,000.00 0.88 46,63,23,000.00 0.93 65,35,79,000.00 0.93 Total Liabilities 17,22,70,000.00 0.705079668 24,52,53,000.00 1.00 50,13,77,000.00 1.00 70,47,08,000.00 1.00 Share Capital 1,77,58,000.00 0.072681284 3,14,19,000.00 0.08 3,17,07,000.00 0.08 5,91,45,000.00 0.08 Reserves 0.00 0 0.00 0.00 -22,000.00 0.00 11,000.00 0.00 Retained Earnings 32,01,000.00 0.013101295 18,66,000.00 0.00 16,87,000.00 0.00 88,34,000.00 0.01 Other Equity 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 Convertible Equity 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 SE Held Sale 0.00 0 0.00 0.00 0.00 0.00 0.00 0.00 Outside Equity 22,33,68,000.00 0.914217422 35,23,77,000.00 0.91 36,49,78,000.00 0.92 66,46,27,000.00 0.91 Total Equity 24,43,27,000.00 1 38,56,62,000.00 1.00 39,83,50,000.00 1.00 73,26,17,000.00 1.00 Vertical analysis of income statement: Item 06/14 06/15 06/16 06/17 Rental Income 3,97,62,000.00 0.39 5,51,41,000.00 0.26 6,97,09,000.00 0.52 10,58,14,000.00 Investment Income 37,000.00 3.59 1,70,000.00 -0.09 1,55,000.00 4.50 8,53,000.00 Other Income 58,69,000.00 0.43 83,76,000.00 0.18 98,86,000.00 0.17 1,15,85,000.00 Pre-tax Profit 1,28,08,000.00 1.19 2,79,97,000.00 0.04 2,91,11,000.00 0.76 5,11,72,000.00 Tax Expense 71,60,000.00 -1.04 -2,60,000.00 -1.96 2,50,000.00 -17.67 -41,68,000.00 Net Profit after Tax Before Abnormal 1,99,68,000.00 0.39 2,77,37,000.00 0.06 2,93,61,000.00 0.60 4,70,04,000.00 Abnormal -44,03,000.00 -5.77 2,09,96,000.00 -0.30 1,46,25,000.00 2.86 5,64,09,000.00 Abnormal Tax 0.00 0.00 0.00 0.00 Net Abnormal -44,03,000.00 -5.77 2,09,96,000.00 -0.30 1,46,25,000.00 2.86 5,64,09,000.00 Reported NPAT After Abnormal 1,55,65,000.00 2.13 4,87,33,000.00 -0.10 4,39,86,000.00 1.35 10,34,13,000.00 Outside Equity Interests -3,26,87,000.00 0.53 -5,00,68,000.00 -0.12 -4,41,65,000.00 1.18 -9,62,66,000.00 Shares Outstanding at Period End 24,48,97,096.00 0.37 33,44,56,409.00 0.01 33,64,22,143.00 0.52 51,29,13,914.00 Weighted Average Number of Shares 14,15,14,780.00 1.08 29,43,18,578.00 0.14 33,51,29,606.00 0.49 49,85,24,137.00 EPS Adjusted (cents/share) -8.99 -7.59 -4.42 -9.88 EPS After Abnormal (cents/share) -12.10 -0.45 -0.05 1.43 Vertical analysis of balance sheet: Item 06/14 Changes 06/15 Changes 06/16 Changes 06/17 CA - Cash 82,64,000.00 0.15 94,94,000.00 0.41 1,33,74,000.00 0.73 2,31,66,000.00 CA - Receivables 47,21,000.00 0.32 62,53,000.00 0.46 91,02,000.00 0.65 1,50,18,000.00 CA - Investments 0.00 0.00 0.00 0.00 CA - Other 16,63,000.00 -0.50 8,33,000.00 0.61 13,43,000.00 4.17 69,44,000.00 Total Current Assets 1,46,48,000.00 0.13 1,65,80,000.00 0.44 2,38,19,000.00 0.89 4,51,28,000.00 NCA - Investments 50,77,000.00 0.32 67,09,000.00 1.25 1,51,01,000.00 -0.30 1,05,91,000.00 NCA - Property 38,13,01,000.00 0.55 59,24,04,000.00 0.42 84,41,30,000.00 0.58 1,33,08,78,000.00 NCA - Other 1,55,71,000.00 -0.02 1,52,22,000.00 0.10 1,66,77,000.00 2.04 5,07,28,000.00 Total NCA 40,19,49,000.00 0.53 61,43,35,000.00 0.43 87,59,08,000.00 0.59 1,39,21,97,000.00 Total Assets 41,65,97,000.00 0.51 63,09,15,000.00 0.43 89,97,27,000.00 0.60 1,43,73,25,000.00 Creditors 82,78,000.00 0.26 1,04,03,000.00 0.34 1,39,24,000.00 0.46 2,03,63,000.00 Provisions 1,03,75,000.00 0.47 1,52,19,000.00 0.10 1,67,05,000.00 0.56 2,60,96,000.00 Other 43,30,000.00 0.16 50,22,000.00 -0.12 44,25,000.00 0.06 46,70,000.00 Total Curr. Liabilities 2,29,83,000.00 0.33 3,06,44,000.00 0.14 3,50,54,000.00 0.46 5,11,29,000.00 Borrowings 14,80,79,000.00 0.43 21,21,51,000.00 1.16 45,83,49,000.00 0.41 64,56,21,000.00 Deferred Tax 2,27,000.00 1.15 4,87,000.00 -0.72 1,36,000.00 23.76 33,68,000.00 Other 9,81,000.00 1.01 19,71,000.00 2.98 78,38,000.00 -0.41 45,90,000.00 Total NCL 14,92,87,000.00 0.44 21,46,09,000.00 1.17 46,63,23,000.00 0.40 65,35,79,000.00 Total Liabilities 17,22,70,000.00 0.42 24,52,53,000.00 1.04 50,13,77,000.00 0.41 70,47,08,000.00 Share Capital 1,77,58,000.00 0.77 3,14,19,000.00 0.01 3,17,07,000.00 0.87 5,91,45,000.00 Reserves 0.00 0.00 -22,000.00 -1.50 11,000.00 Retained Earnings 32,01,000.00 -0.42 18,66,000.00 -0.10 16,87,000.00 4.24 88,34,000.00 Other Equity 0.00 0.00 0.00 0.00 Convertible Equity 0.00 0.00 0.00 0.00 SE Held Sale 0.00 0.00 0.00 0.00 Outside Equity 22,33,68,000.00 0.58 35,23,77,000.00 0.04 36,49,78,000.00 0.82 66,46,27,000.00 Total Equity 24,43,27,000.00 0.58 38,56,62,000.00 0.03 39,83,50,000.00 0.84 73,26,17,000.00 References: Hajkowicz, S. 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