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GUD Ratios

Well where to start… I found calculating my firms ratios to be quite straight forward however was confused by some of the amounts I ended up with. Large of negative percentages caused me to doubt that I had calculated correctly however upon discussion with others and observing other students company’s ratios I found that other company’s did have similar ratios to mine. Therefore hopefully this means my ratio calculations are at least on the correct path. Majority of my firms ratios are all positive apart from the 2016 year where Gud seemed to have a lot more negative outcomes, I believe this is due to the acquisition of Brown and Watson pty in July 2015.

Below is my step 8 discussion on what i feel my firms ratios express regarding my company.

Thanks

Step 8

Ratios Analysis and Economic Profit

I have struggled to fully understand what my firm’s ratio’s mean or tell me about my firm’s financial position. I am worried that if I have miscalculated my ratios that I do not have a clear or correct view to base my assumptions on however will attempt to accurately discuss what I feel these ratios mean for my firm.

Gud net profit margin for 2016 is showing a negative percentage which would mean that the firm has used more revenue than it has made profit; this could be due to the purchase of Brown and Watson Pty after the 2015 financial year. For 2015, 2014 and 2013 Gud has maintained a positive net profit margin. Gud also received a negative percentage for 2016 for its return on assets which is likely due to the large amount of capital Gud invested in acquiring Brown and Watson which it has yet to make back its expenses. 2015, 2014 and 2013 all have positive return on assets percentages.

The asset turnover ratio shows how many sales are created from each dollar of a firm’s assets. My firms ratio’s show that GUD had a higher ratio for asset turnover in 2014 and 2013 and that the ratio has dropped in the coming years therefore meaning that GUD is generating less revenue per dollar of assets then it has in previous years. Guds current ratio for 2016, 2015, 2014 and 2013 are all very similar ranging from 2.01-2.27, this would indicate to me that GUD is in a good financial position and would be able to pay any financial obligations it may face.

Guds debt/equity ratio would show that in 2016 and 2014 Gud had higher debt then its equity as both percentages are very high. Guds equity ratio for all four years is quite similar falling between 44.4% and 69.1%, these percentages show me that GUD has quite an equal share it its company’s ownership along with its shareholders and equity providers. By having high equity ratio it shows that GUD has a lot of shareholders investing in the company and could encourage further shareholders to invest as well.

I had trouble understanding what my firms Market ratios meant for its share holders, earnings per share was negative for 2016 but positive for the previous years, with its dividends per share ratio being negative for GUD in all 4 years recorded. The price earnings ratio was

negative for 2016 but positive for 2015, 2014 and 2013, based on these ratios I assume that having the negative percentages is an indication of some issues in the share market.

When looking at my firm’s economic profit (RNOA) at first I would notice that the year 2016 has a negative economic profit amount. On first look this would lead me to believe that the firm is not doing as well as it may seem however I believe this calculation may be negative for 2016 due to the purchase of Brown and Watson Pty in July 2015 with costs carrying over into the 2016 financial year.

Overall I feel Guds ratios have shown that they are a stable company with a lot of investors supporting them. The ratio also shows Gud are able to take risks and invest large capital in new investments for future gains and profit.

Restating My Firms Financial Statements

Wow where to begin… this has definitely been the most challenging step in this course for me so far… i struggled with the entire process! and am still unsure if what i have done is remotely correct…

It has been a great help being able to see and learn from other peoples restated statements in order to help me navigate my own however i have also become quite jealous of those peoples companies whom income statements are half the size of my my own, i thought i had got a good deal with the company i was allocated but now think i would have preferred a smaller company with less items on its statements. But you have to deal with the hand you have been dealt so no point getting down about just have to try and do your best right?

Statement of changes in equity i didn’t really feel like i made much changes when restating so hopefully it has been done right. Restating the balance sheet i found i understood the best out of the three and once i got started was able to make good leeway and think that i got most of that one right. Atm my balance sheet is still not adding up to what it is meant to be tho, I’m not far off so hoping i will be able to figure it out by the due date. I found the income statement quite hard to restate, just not being 100% confident in what i was doing and making a few guesses and assumptions so i am doubting a bit that i have done it correctly.

I am yet to provide any feed back to other students, however it is on my to do list for tomorrow. Not too sure how helpful i will be to others though considering i still don’t know if what i have done is right itself, definitely wouldn’t want to give anyone wrong information. Maybe there are some areas i am able to help with though so i will try and give some informative feedback.

I guess we just need to solider on and keep trying!

 

My Company: GUD Holdings Limited

I have spent week 2 studying and learning as much as I can about my company GUD Holdings Limited, to be honest at first look at my company’s website  :  http://www.gud.com.au I was a bit put off, I think it was a combination of factors causing me to stress. From first glance it was not obvious to me what my company actually did; the website also featured its share prices (which I know nothing about) as well as the annual reports all being around 100 pages long! I decided I would leave step three for the moment and try again the next night. I feel that it does really depend on what mood or zone you are in as to whether or not things work for you or fall into place, as the next night I attempted to research what GUD is all about I wasn’t put off at all. I realized that the website is actually very easy to navigate and the home page clearly explains what GUD is as a business. The annual reports all though being extremely long were not as daunting as they first seemed, I was able to look at the information that I found relevant and focus on that. Here is a link to their 2016 annual report if anyone would like to check it out : http://www.gud.com.au/assets/reports/2016-Annual-Report.pdf

I found that GUD is quite a large company that is consists of several different consumer and industrial product companies based in not only Australia but in New Zealand as well. I was quite pleased to have received an Australian company as I was a bit nervous about having to work in a different currency so I was lucky to be allocated GUD. The companies included under GUD are Davey who are Australia’s leading supplier of a quality range of water-related products with use in domestic, farm and community markets, Dexion which manufactures and supplies a extensive range of products that assist industrial and commercial customers in solving storage and material handling issues, Oates which is a well known cleaning product company, Goss, Narva, Projecta, Ryco filters and Wesfil whom are all in the automotive business assisting with different needs varying from parts and general automotive needs to electrical and filtration supplies.

It is through these businesses the GUD is the owner of a premier brand portfolio, with most of GUD’s brands being market leaders in their individual product industries. GUD’s main objectives are to continue to provide shareholders with long term returns that are above the cost of capital and to maximise the net worth of its brand portfolio for the continued benefit of its shareholders. I noted that when I first looked at the GUD website their current share price was $10.95 per share and each day when I have gone back on the amount has increased, currently sitting on $11.32 per share. I thought this is a good sign that currently the business worth is continuing to grow.

When looking through the annual report for 2016 I noted that GUD had acquired 100% of the shares and voting interests of Brown & Watson International Pty Limited on July 1st 2015 while also announcing the sale of their interests in the Sunbeam appliance business and joint ventures. I found this new investment in Brown and Watson to be quite costly with an initial consideration payment of $198 million as well as an additional $19.4 million to be paid in October 2016, along with the Company also incurring $5.5 million worth of acquisition related fees. I then thought to myself that this business must be creating a lot of revenue to be able to invest this amount of money into a new business.

Taking a look at the financial performance review and results for the 2015-2016 financial year ended 30 June it was very easy to see that GUD is continuing to increase its profits with the total revenue for GUD increasing by 16% over the previous year and amounting to just under $710million in total, this was an increase of $98.4 million. Overall the information I got from GUD’s annual report was that this business is thriving and continually taking on new investments with the risks paying off as seen by the increased revenue over previous years. Share holders seem to be receiving good returns on their dividends.

I have found some other information that i thought was quite interesting regarding GUD if anyone would like to have a look.
http://www.fool.com.au/2017/01/31/can-the-gud-holdings-limited-share-price-ride-the-housing-boom/

http://markets.theaustralian.com.au/shares/GUD/gud-holdings-limited

https://www.youtube.com/watch?v=zg5X_8_WOzw

Thanks for checking out my blog ☺

Until next time xx

Week one coming to an end

Well as week one draws to an end i am feeling a lot better about this course then i did before it started. My university journey has not been a very smooth one… i enrolled in university fresh out of high school, studying a bachelor of accounting. In hindsight now i realise i really should have taken some time off before jumping straight into study, i was still unsure of what i was actually interested in or what i wanted to do with my future and i feel this uncertainty was the start of my problems. I wasn’t happy in my chosen bachelor and my grades reflected it, passing some subjects but failing some also. Not wanting to disappoint my family i continued on with my studies and changed to a bachelor of business hoping it would be better suited to me. Unfortunately i continued to struggle and ended up changing my degree again to psychology, it wasn’t until i continued to fail that i realised i was not ready and was going to continue to fail until i was 100% committed and knew what i wanted to do. I eventually withdrew from uni and pre sued full time work. I have always thought of returning to university to complete my studies but have always had fear and anxiety of failing again which kept me from returning for 7 years. 5 years ago now i began working as a medical receptionist at a medical centre and realised i really enjoyed administration/ office work, i am still unsure of where i would like to end up in the future however i did realise that returning to uni could help me get where i want to be.

So here i am, taking it very slow, one subject at time as i do not want to risk failing again and this time round i am also working full time, raising my 1 year old son as well as finding out we will be adding another addition to the family in September. But I’m older now, I’ve gained experiences, grown up and learnt to prioritise better and am in a busy yet stable time of my life with great support and a lot of love from those around me so i think i can do this…

At the beginning of the week i was dreading this course, from a first look at the assessment criteria i thought i was doomed. I have never blogged before so that was/is very new to me, the thought of having to interact with others on peer wise and in our assignments really made me uneasy and doing it via distance also had me fearful that i would not have enough support. However since diving in it really hasn’t been too bad… i wont speak too soon of course this is only week one after all but so far peer wise turned out to be quite enjoyable and i actually ended up spending a bit too much time participating. Ive created my blog account and I’m posting my first blog right now and i found chapter one to be quite interesting so fingers crossed.

I just received my Company as well but i will leave that for my next blog post 🙂

Thanks to anyone who takes the time to read this as i know how valuable time really is.