Executive SummaryThis paper is focused on the activities and the financial reporting of two companies based in Australia. The companies are Fantastic Holdings Ltd and Super Retail Group Ltd. The paper describes an in-depth financial ratio analysis of both Fantastic Holdings Ltd and Super Retail Group Ltd. Additional information is also provided to present a broader picture of each of the company’s operations. Other sections touch on limitations of ratios, conclusions and recommendations and the references. Fantastic Holdings profitability was generally high owing to better management over price discounting. Super Retail Group’s profitability is influenced by stiff competition and was therefore low.
Fantastic Holdings recorded improved efficiency in 2012 as a result of various cost reduction measures. Super Retail Group had a low efficiency level. Both companies recorded poor financial stability. Financial ratio analysis can supply us with vital insight into a company’s performance; however, there are various limitations that have to be acknowledged when making use of financial ratios as an investigative means. Of the two companies, Fantastic Holdings looks more appealing to any investor. 2.0 IntroductionThis paper is focused on the activities and the financial reporting of two companies based in Australia.
The companies are Fantastic Holdings Ltd and Super Retail Group Ltd. Fantastic Holdings is the parent company for more than 125 stores spanning 5 furnishings retail chains together with, Fantastic Furniture, Plush and Dare Gallery, National Retailers and Le Cornu in South Australia and the Northern Territory plus the Original Mattress Factory in NSW. In addition, Fantastic Holdings is Australia's leading couch maker, has the single country's top mattress manufacturer and manages a nationwide supply chain to service all Fantastic Holding's trading products. Super Retail Group Ltd started operating in 1972.
The group became publicly listed in the ASX in 2004; the Group has developed into one of Australasia’s foremost specialty retailers with more than 585 stores in addition to a turnover of over $1.9 billion per year. Super Retail Group is operates up to 8 selling brands. Its operations span across Australia, New Zealand and China. The Group’s mission is to provide solutions and engaging experiences that enable our customers to make the most of their leisure time. Its vision is to become Australasia’s most highly regarded specialty retailer.
The rest of the paper describes an in-depth financial ratio analysis of both Fantastic Holdings Ltd and Super Retail Group Ltd. Additional information is also provided to present a broader picture of each of the company’s operations. Other sections touch on limitations of ratios, conclusions and recommendations and the references. 3.0 ProfitabilityProfitability ratios review earnings performance relative to sales or investment. The ratios try to gauge management’s abilities and company’s actions thus assess performance for diverse aspects of the business (Drake). Fantastic Holdings recorded a 48.18 percent gross profit margin in 2012, a 1.5 percent increase in profitability.
After tax net profit margin and return on assets also went up to 4.71 percent and 12.18 percent in 2012 respectively. On the other hand, Fantastic Holdings profitability as measured by return on equity reduced from 19.3 percent in 2011 to 19.26 percent in 2012. Super Retail Group, however, reported a decline in profitability as gross profit margin reduced by 2.94 percent to 43.92 percent in 2012. After tax net profit reduced marginally by 0.76 percent to 5.05 percent in 2012 as return on equity and return on assets lost a bigger portion by declining from 18.31 percent to 12.14 percent and 11.06 percent to 7.15 percent in 2011 to 2012 in that order.
Generally, Fantastic Holdings adduced a higher level of profitability than Super Retail Group.