Financial Statement Analysis
Financial Statement Analysis
Financial Statement Analysis
page 1
Table of content
Executive Summary 1. 2. 3. 3.1. 3.2. 4. Introduction Corporate Governance Financial Analysis Efficiency & Profitability Liquidity & Leverage Conclusion
3 4 6 8 8 12 17 19
Appendix
Financial Statement Analysis
page 2
Executive Summary
This report analyses and assess the current and future profitability, efficiency and financial stability of the McMahon Holdings Ltd. (MAH) and will be compared with two other companies from the same industry, which are UGL Holdings (UGL) and Downer EDI (DOW). The financial position and performances over the past five years are analysed by using key ratios, cash flow, common size and trend analysis. Furthermore, the companies’ financial health, long-term sustainability and future growth are being reviewed.
The result of the financial analysis shows a very volatile performance of MAH. In particular, in the years 2009 and 2011 they suffered from several internal and external events. All these had a negative impact on their EBIT Margin, ROA, ROE and the liquidity ratios. Especially, the debt ratio increased dramatically in the last three years. In addition, the changes in the executive team and publishing of incorrect profit expectations show an unethical behaviour and a missing risk management. This report additionally shows that MAH’s current position is not positive and the prospect of MAH’s future performances has a negative trend mainly in the area of credit control and liquidity management. Recent announcement about revising earning guidelines in September this year have also caused a downfall of MAH’s market share price. The recommendations to improve MAH’s financial situation would include, constantly decreasing the debt ratio and increase of liquidity. A sustainable growth rather than an extensive growth like the current aim of entering new markets would stabilise the company’s performance.
However, the
Financial Statement Analysis
page 1
Table of content
Executive Summary 1. 2. 3. 3.1. 3.2. 4. Introduction Corporate Governance Financial Analysis Efficiency & Profitability Liquidity & Leverage Conclusion
3 4 6 8 8 12 17 19
Appendix
Financial Statement Analysis
page 2
Executive Summary
This report analyses and assess the current and future profitability, efficiency and financial stability of the McMahon Holdings Ltd. (MAH) and will be compared with two other companies from the same industry, which are UGL Holdings (UGL) and Downer EDI (DOW). The financial position and performances over the past five years are analysed by using key ratios, cash flow, common size and trend analysis. Furthermore, the companies’ financial health, long-term sustainability and future growth are being reviewed.
The result of the financial analysis shows a very volatile performance of MAH. In particular, in the years 2009 and 2011 they suffered from several internal and external events. All these had a negative impact on their EBIT Margin, ROA, ROE and the liquidity ratios. Especially, the debt ratio increased dramatically in the last three years. In addition, the changes in the executive team and publishing of incorrect profit expectations show an unethical behaviour and a missing risk management. This report additionally shows that MAH’s current position is not positive and the prospect of MAH’s future performances has a negative trend mainly in the area of credit control and liquidity management. Recent announcement about revising earning guidelines in September this year have also caused a downfall of MAH’s market share price. The recommendations to improve MAH’s financial situation would include, constantly decreasing the debt ratio and increase of liquidity. A sustainable growth rather than an extensive growth like the current aim of entering new markets would stabilise the company’s performance.
However, the