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Based on the historical company financial information and business description is given below answer the following: (a) Identify three key ratios you would use as a guide (and why) to help you determine which business you would prefer to invest in? (b) What further information might you consider or need before making a final investment decision?

Based on the historical company financial information and business description is given below answer the following: (a) Identify three key ratios you would use as a guide (and why) to help you determine which business you would prefer to invest in? (b) What further information might you consider or need before making a final investment decision?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Based on the historical company financial information and business description is given below answer the following:
(a) Identify three key ratios you would use as a guide (and why) to help you determine which business you would prefer to invest in?
(b) What further information might you consider or need before making a final investment decision?

 

Čompany B Nufarm Limited (NUF) is a crop protection and specialist seeds companies. NUF product helps farmers to protect their crops (predominately grains, oilseeds, cotton and sugarcane) against damage caused by weeds, pests and disease. Nufarm has manufacturing and marketing operations throughout Australia, New Zealand, Asia, the Americas and Europe and sells products in more Results By Industry than 100 countries. The company also operates a seeds business focused on canola, sorghum and sunflower seeds. Revenue B/Down ROA Crop Protection 94.46 7.0% Seed Technologies 5.6% 8.0% Crop Protection Products : The crop protection business deals in the manufacture and sale of crop protection products used by farmers to protect crops from damage Results By Geography caused by weeds, pests and diseases. The crop protection products consist of herbicides, insecticides, glyphosate, Australia and New Zealand and fungicides. NUF operates this business throughout Europe Australia, New Zealand, Asia, Europe, Africa and the Latin America 100% 7.1% Revenue B/Down ROA 17.8% 1.3% 19.4% 4.9% 26.8% 10.5% Americas. North America 25.2% 11.6% Other 10.89% 10.6% Seed Technologies : The seed technologies business deals in the sale of seeds and seed treatment chemistry focused on canola, sorghum and sunflower crops. 100% 7.1% Company Historicals |($M = $AUD million) Company A Company B %3D Income ($m) 447 379 364 3,111 3,308 3,757 Depreciation ($m) Net Profit ($m) -19 -17.4 -12 -38.6 -38.2 -38 71.6 -102.6 -148.4 103.2 -15.6 38.3 EBIT ($m) 116.5 -53 -148.1 296 257 217 Long term debt ($m) 362 353 364 478 1,148 1,257 Equity ($m) 1,017 977 843 1,351 1,971 2,404 Interest Cover 5.77 -3.04 -9.39 3.18 2.39 2.03 Debt/Equity (%) 36 36.5 43.4 57.1 85 72.9 Return on Capital (%) -1 -8 11 11 4 Return on Equity (%) 7 -2.8 -12.1 9.8 12.9 2.8 Current Balance Sheet Cash Assets ($m) 43 11 8. 235 302 506 Receivables ($m) 14 21 19 1,004 1,176 1,337 Inventory ($m) 29 35 205 763 1,180 1,228 Others ($m) 271 260 49 55 176 Total Current Assets ($m) 357 327 232 2,051 2,713 3,246 Account Payable ($m) 31 28 30 826 1,131 1,221 Debt Due ($m) 4 3 2 437 527 495 Others ($m) 10 4 12 52 53 55 Total Current Liabilities ($m) 45 34 43 1,316 1,711 1,772
Transcribed Image Text:Čompany B Nufarm Limited (NUF) is a crop protection and specialist seeds companies. NUF product helps farmers to protect their crops (predominately grains, oilseeds, cotton and sugarcane) against damage caused by weeds, pests and disease. Nufarm has manufacturing and marketing operations throughout Australia, New Zealand, Asia, the Americas and Europe and sells products in more Results By Industry than 100 countries. The company also operates a seeds business focused on canola, sorghum and sunflower seeds. Revenue B/Down ROA Crop Protection 94.46 7.0% Seed Technologies 5.6% 8.0% Crop Protection Products : The crop protection business deals in the manufacture and sale of crop protection products used by farmers to protect crops from damage Results By Geography caused by weeds, pests and diseases. The crop protection products consist of herbicides, insecticides, glyphosate, Australia and New Zealand and fungicides. NUF operates this business throughout Europe Australia, New Zealand, Asia, Europe, Africa and the Latin America 100% 7.1% Revenue B/Down ROA 17.8% 1.3% 19.4% 4.9% 26.8% 10.5% Americas. North America 25.2% 11.6% Other 10.89% 10.6% Seed Technologies : The seed technologies business deals in the sale of seeds and seed treatment chemistry focused on canola, sorghum and sunflower crops. 100% 7.1% Company Historicals |($M = $AUD million) Company A Company B %3D Income ($m) 447 379 364 3,111 3,308 3,757 Depreciation ($m) Net Profit ($m) -19 -17.4 -12 -38.6 -38.2 -38 71.6 -102.6 -148.4 103.2 -15.6 38.3 EBIT ($m) 116.5 -53 -148.1 296 257 217 Long term debt ($m) 362 353 364 478 1,148 1,257 Equity ($m) 1,017 977 843 1,351 1,971 2,404 Interest Cover 5.77 -3.04 -9.39 3.18 2.39 2.03 Debt/Equity (%) 36 36.5 43.4 57.1 85 72.9 Return on Capital (%) -1 -8 11 11 4 Return on Equity (%) 7 -2.8 -12.1 9.8 12.9 2.8 Current Balance Sheet Cash Assets ($m) 43 11 8. 235 302 506 Receivables ($m) 14 21 19 1,004 1,176 1,337 Inventory ($m) 29 35 205 763 1,180 1,228 Others ($m) 271 260 49 55 176 Total Current Assets ($m) 357 327 232 2,051 2,713 3,246 Account Payable ($m) 31 28 30 826 1,131 1,221 Debt Due ($m) 4 3 2 437 527 495 Others ($m) 10 4 12 52 53 55 Total Current Liabilities ($m) 45 34 43 1,316 1,711 1,772
Company A Australian Agricultural Company Limited (AAC) is an Australian beef company with a heritage dating back to 1824. The Company is Australia's largest integrated cattle and beef producer and is the oldest continuously operating company in Australia. Cattle, Breeding & Genetics: AAC owns and operates cattle herd with around 400,000 head spread over their Results By Industry properties across Queensland and the Northern Territory. They specialise in grain fed beef and Wagyu beef production. AAC's innovation team works closely with bull breeding units to run breeding programs. They use a range of tools to ensure important traits are evaluated with the highest accuracy possible under our production systems. They employ technologies including performance recording and evaluation, Total Genetic Resource Management (TGRM), feed Australia efficiency testing, walk-over weighing technologies and Revenue B/Down AACO EX LIVINGSTONE 100.0% LIVINGSTONE BEEF 0.0% 100% Results By Geography Revenue B/Down 100.0% 100% genomics. Properties: AAC owns and operates a strategic balance of properties, feedlots and farms, comprising around illion hectares of land in Queensland and the Northern Territory. Each property has a strategic position in the supply chain, in breeding and growing, background or finishing cattle or growing grains and fodder crops to support cattle production. Livingstone Beef: AAC's Livingstone Beef processing facility is located in the Livingstone Valley, approximately 50 kilometers south of Darwin in the Northern Territory. The facility produces export beef, hides and rendered products.
Transcribed Image Text:Company A Australian Agricultural Company Limited (AAC) is an Australian beef company with a heritage dating back to 1824. The Company is Australia's largest integrated cattle and beef producer and is the oldest continuously operating company in Australia. Cattle, Breeding & Genetics: AAC owns and operates cattle herd with around 400,000 head spread over their Results By Industry properties across Queensland and the Northern Territory. They specialise in grain fed beef and Wagyu beef production. AAC's innovation team works closely with bull breeding units to run breeding programs. They use a range of tools to ensure important traits are evaluated with the highest accuracy possible under our production systems. They employ technologies including performance recording and evaluation, Total Genetic Resource Management (TGRM), feed Australia efficiency testing, walk-over weighing technologies and Revenue B/Down AACO EX LIVINGSTONE 100.0% LIVINGSTONE BEEF 0.0% 100% Results By Geography Revenue B/Down 100.0% 100% genomics. Properties: AAC owns and operates a strategic balance of properties, feedlots and farms, comprising around illion hectares of land in Queensland and the Northern Territory. Each property has a strategic position in the supply chain, in breeding and growing, background or finishing cattle or growing grains and fodder crops to support cattle production. Livingstone Beef: AAC's Livingstone Beef processing facility is located in the Livingstone Valley, approximately 50 kilometers south of Darwin in the Northern Territory. The facility produces export beef, hides and rendered products.
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