Question

A/R and Inventory for your company (i.e. the company you work for) or any publicly traded company of your choosing (use Yahoo Finance to get their financial statements).

   Metrics for three years

   Bullet point explanations of significant changes, if any

Debt/Equity Structure for the same company

Changes in structure over past 3 years (use Liabilities+Equity / Equity as the metric)

Bullet point explanations of significant changes, if any

Answer 1

I have chosen GWA Group Ltd for the in-depth analysis.

GWA Group is engaged in designing, research, manufacture, marketing, import, and distribution of the building fittings and fixtures to the commercial and residential premises in New Zealand, Australia, and other international markets. It has two segments: Door & Access system; and Bathroom & Kitchens.

The extract from the balance sheet about GWA group related to average receivable, inventories, debt, equity, and debt-equity ratio is presented in the excel sheet as follows for three years:

1 2 3 4 5 6 Extract of three year data of GWA group Ltd (in thousands of AUD) Particular 2015 2016 2017 Accounts receivable $63,855 $51,983 $65,862 Inventory $83,498 $76,361 $72,319 Debt $134,355 $203,161 $197,661 Equity $305,894 $307,698 $320,603 Debt/Equity 1.44 1.66 1.62

The formula for debt/equity structure is structure is applied as provided in the question:

Debt-Equity structure = (Debt + Equity)/Equity

PART – 1)

Changes in accounts receivable and inventories:

• The amount of accounts receivable has been declined between 2015-2016 but again rises in 2017 to $65,862,000 while the amount of inventories declined considerably from 2015 to 2017.
• The inventory of the company reduces and then account receivable also reduces then it means that the firm has greater cash sales but also its sales has reduced comparative to 2015.
• In 2016 the firm's strategy was to strengthen new products and reduced cost base while in 2017, the company is working on improving its strategy to deliver stronger platform for managing the market cycle which is the reason that accounts receivables again increase in 2017.
  

PART – 2)

Changes in structure of debt/equity:

• The GWA group has good management for the debt payments and is earning sufficient income with which it can pay back its contractual debt obligations
• The company has strong position of debt/equity ratio as the firm has 1.44 debt for each AU dollar of equity in 2015 but this position rises to 1.66 in 2016 and reduces little to 1.62 in 2017.
• The increase in this ratio in 2016 shows that firm has raised its debt for planning about new projects in 2017.