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The company named as PTB group limited given to me to analyse its financial statement by measuring the trend analysis and ratio analysis. The work of the company is to provide the range of engine parts and also it repairs the different parts. It also offer following engines for lease, rental, sale or exchange. By analysing all the information which is providing in the company.
I have to analysing trend analysis and ration analysis. However, Trend analysis is done by examining the sales revenue, gross profit, finance costs, repair and maintenance, employee benefit expenses and profit.
However, ratio analysis is examined by using some ratios such as return on assets, return on equity, debt to equity ratio, current ratio and assets turnover ratio. After analysing the ratios I have examined that the company has many variations in its values, some of the values are at good position throughout the years but on the other hand some are not good and ratios have to be improve to get a conclusion and give the recommendations that what else company required to improve the business position or to reach at best position.
The purpose is to find out the company’s income statement in its 2016 and 2018 Annual Reports. Moreover, In this I have to analyze the trend analysis and ratio analysis to know about the financial statement of the years from 2016 to 2018.
Data will be analyzed which is provided in the company named as PTB Group Limited. In this type of analysis will be described such as trend analysis and ratio analysis first and then calculations and graphs will be done by collecting the given data of years in the company. After that, we will get a conclusion from the whole examination and explain the recommendations.
The data which will be explored in this report is from the year 2015 to 2018. The whole data is analyzed from:
The company was established in 2001. The main focus of this company was on providing services in relation to the Pratt & Whitney PT6A and Honeywell TPE331 light turbine engines when it was built-in. In March 2005 the Company planned on the Stock Exchange of Newcastle Ltd (NSX). Moreover, in 2006 it attained IAP Group for $13.8 million in September and it moved from the NSX to the ASX in December due to which Company issued 2.5 million shares at $2 each to raise $5 million. The company declared in October 2006 that it had acquired the aircraft and associated parts of the UK companies, Emerald Airways Ltd and Emerald Airways Engineering Ltd, for approximately $16.25 million.
Furthermore, the services which are performed by the company are as following the trading in Australia and globally in turbine motors and associated components of aircraft and providing clients with financing for turbine motors PT6A and TPE331. The premises are developed on 22 Orient Avenue, Pinkenba, Brisbane. The plant of Pacific Turbine Brisbane is intended to expertly handle engine overhaul, turbine engine component overhaul and repair. The engineering team brings to each and every work world-class knowledge. It is specialises in two turbine engine types: Pratt & Whitney PT6A and Honeywell TPE331 Moreover, Global supply of aircraft components and so on. The company provides the parts needed to support their aircraft at the right cost if. It has excellent supplier and
OEM relationships and can, therefore, provide the client with a range of highly competitive components, repairs and services. (Pacific Turbine Brisbane, 2019)
Trend analysis is the process of time comparing business data to identify any consistent outcomes or trends. You can then create a policy in line with your company objectives to react to these trends. Trend analysis to assist improve company by identifying regions where company is performing well so that duplicate success and in identifying regions where company is failing to provide proof to inform the decision-making process. By analysing the historical data of trend analysis business can be improved. (Business.qld.gov.au, 2019). It is a type of method due to which we can recognize the financial statement of the business. Also we can predict the future trends of the business on the basis of financial performance of business in the previous years by comparing those years with each other. (Readyratios.com, 2019)
|Absolute figure||$m||2018 ($’000)||2017 ($’000)||2016 ($’000)||2015 ($’000)|
|Repairs and maintenance||154||80||92||52|
|Employee benefits expense||5803||5674||5608||6161|
|Trend Analysis||2018 ($’000)||2017 ($’000)||2016 ($’000)||2015 ($’000)|
|Repairs and maintenance||296.15%||153.85%||176.92%||100%|
|Employee benefits expense||94.19%||92.10%||91.02%||100%|
There are so many variations in this study as well as there were not so many downs in gross profit, it gradually decreased and financing costs also declined over the years. In addition, employee benefit costs decreased in 2016 and decreased in 2017 and 2018. Revenue from sales increased until 2017, but in 2018 it turned down. In addition, repairs and maintenance had a lot of ups and downs as it boosted in 2016 but dropped in 2017 after that rose quickly, again to 296.15 percent in 2018. Over the years, profit has risen from 135 percent to 165%.
|2018 ($’000)||2017 ($’000)||2016 ($’000)||2015 ($’000)|
|Average total Assets||74767.5||69004.5||63342|
The following Formulas are used:
Return on assets: Profit(loss)/Average total assets*100 = x%
Return on Equity: Profit available to owners/ Average equity*100 = x%
Debt to Equity ratio: Total liabilities/ Total equity*100 = x%
Current Ratio: Current assets/Current liabilities = x times
Assets turnover ratio: Sales revenue/ Average total assets = x times
|2018 ($’000)||2017 ($’000)||2016 ($’000)|
|Return on assets||4.34%||4.27%||4.05%|
|Return on Equity||7.04%||7.15%||7.05%|
|Debt to Equity ratio||58.85%||66.19%||68.85%|
|Assets turnover ratio||0.53584779||0.66634785||0.66608254|
Categorise each ratio into the relevant group:
After the calculations Profitability is categorise to Return on equity and Return on Assets whereas Efficiency is related to the Assets turnover ratio. After that, Liquidity belong to the current ratio and Capital structure relevant to Debt to Equity ratio.
Describe the purpose of each ratio
Return on assets: It is the profitability ratio. The purpose of Return on Assets is to get more and more profit by generating a revenues. It is calculated by dividing the entity’s profit to the average total assets and multiply this value with hundred to get value in percentage. In numerator, profit or EBIT can be used. It reveals the entity’s profitability which means it has capability to convert dollar income into profit. (Birt et al., n.d.)
Return on Equity: It is also a profitability ratio. It analyses a company’s capacity to produce earnings from its stakeholders ‘ corporate investments. It is expressed in percentage and it is calculated by the following formula which is mentioned above. In the numerator, profit is attained from profit or loss statement whereas the denominator, equity, is acquired from the equity segment belong to balance sheet. (Birt et al., n.d.)
Debt to Equity ratio: Debt equity ratio is an economic calculation that shows the relative percentage of the equity and debt used by a shareholder to finance the assets of a company. It is under the capital structure ratio which reflects the entity’s financial decision. If the ratio exceed hundred percent then the entity relies more on debt financing than on equity financing. However, it is totally opposite in this case that is , if the ratio exceeds fifty percent, the entity relies more on debt financing rather than equity financing. (Birt et al., n.d.)
Current Ratio: It is under the financial liquidity ratio. It is used to evaluate the capacity of a company to fulfill its short-term debt commitments. Even so, a high current ratio is not exactly good, as it could be due to over-investment in credit, receivables or inventories of unprofitable assets. The formula for the calculations is cited above. (Birt et al., n.d.)
Assets turnover ratio: It is under the efficiency ratio and it demonstrates how effectively sales can be generated by a business using its assets. In addition, turnover of the accounts receivable is also referred to as turnover of the debtors. The formula used for calculation is exposed above. (Birt et al., n.d.)
Return on Assets (profitability) gradually risen 4.05% to 4.34% from the year 2016 to 2018 respectively. Return on equity (profitability) was 7.05% in 2016 then it inclined to 7.15% in the year 2017 but in the year 2018 it again reduced to 7.04%. Moreover, Debt to Equity ratio (capital structure) declined 68% to 58% from the year 2016 to 2018. The Current Ratio (liquidity) was very high in the year 2016 but it turn down in 2017 rapidly then it increased slightly in 2018. Additionally, Assets turnover ratio (efficiency), this shows no large distinction, the value stays here constantly.
The company had so many ups and downs throughout the years. It is in the good position but there is some values which need more improvement such as sales revenue, employee benefit expenses, etc. They all require to increase for the better development of the company. If I consider ratios then they also should be expanded.
For the better development and to see more progress:
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