Financial Statements Analysis

In: Business and Management

Submitted By darksaber
Words 2079
Pages 9
Executive Summary
Brambles Ltd. is a pooling solutions company which emphasizing on reusable pallets, crates, containers and associated logistics services. (Brambles, 2013) This report aims to evaluate Brambles' overall financial performance, prospect and provide recommendations on holding or selling Brambles' share finally.
The accounting analysis assesses the influence that may be exerted by Brambles accounting policies through analyzing three aspects of key accounting policies, accounting flexibility and the quality of disclosure.
The financial analysis illustrates that the financial profitability of Brambles is relatively favorable due to the high-level of ROE and ROA in the past five years. In addition, the highest financial leverage in Brambles result in the increased profits were insufficient to offset the increment in cash capital expenditure. Therefore, Brambles' efficiency and liquidity in investment management may induce risk in the future.
The valuation analysis combines the discounted cash flow model, discounted residual income model and sensitivity analysis. The range of estimated share price is within AUD$8.7-$16.62. The current market share price is AUD$9.17. Therefore, the recommendation is strong hold or buy.

1 Accounting Analysis
1.1 Key Accounting Policies
The key success factors for Brambles Ltd. include Goodwill and Property, Plant, and Equipment. The following table summarizes accounting measures: (Brambles Ltd. Annual Report, 2012, p.81, p.82)
Table 1 Accounting Policy Analysis | Goodwill | Property, Plant, and Equipment | Initial Recognition | Goodwill is carried at cost less accumulated impairment losses. | Property, plant and equipment (PPE) is stated at cost, net of depreciation and any impairment, except land which is shown at cost less impairment. | Depreciation /Amortisation | Goodwill is not amortized |…...

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