Accounting financial analysis of Burswood Ltd
BURSWOOD LTD 1. Introduction In the following analytical report the financial success and the long-term business viability of Burswood Limited is assessed. Financial statement analysis of the company’s Annual Reports/General Purpose Financial Reports for the years of 2000, 2001 and 2002 was carried out. The results of the analysis were then compared with the industry standards in order to demonstrate Burwoods Ltd’s standing in the Australian gaming industry. For the purposes of financial statement analysis ratio analysis was used. The analysis is based on data that is publicly available. Finally, a recommendation is made as to whether Burswood Ltd should be considered as a prospective business investment. ... Company Background Burswood Limited holds 100% interest in 8 subsidiaries. The company commenced operations as Burwood Ltd Resort in December 1985 via a Trust Deed. The consolidated entity operates the Burswood complex, which comprises casino, hotel, food and beverage outlets, theatre, convention and entertainment facilities. ... Burswood Ltd currently has around 16, 000 shareholders of which TPIC Limited is the largest shareholder owning 9.97% of issued capital, followed by RBC Global Services Australia Nominees Pty Ltd who owns 9. ... Burswood Ltd, a monopoly casino in Western Australia, has its main competitors such as Jupiters Limited, Reef Casino Trust and Sky City Entertainment Group Ltd in other states. As stated in the annual report, in 2002 Burswood Ltd has experienced a decline in net income from $32 million in 1999 to $20 million in 2002 and over the last three years the company’s annual revenue growth was negative by 0. ... The company had a tough time in the financial period of 2000-2002. ... Within the same period the company has invested $96 million into reconstruction and improvement of the Burswood Ltd thereby increasing its total liabilities. ... Business Analysis In the business analysis of Burswood Ltd the process of Ratio Analysis was chosen as the most suitable for comparison with industry standard indicators which are the most often, and in that case solely, available. Several different ratios were used in order to assess Burswood Ltd’s profitability, financial leverage and activity measures. ... Burswood Ltd’s result of 6. ... However, Burswood Ltd’s net profit margin decreased from 8. ... Burswood Ltd’s rate of return for the three years of 2000-2002 averages 2. ... The industry standard for the gambling industry is 9% and hence Burswood Ltd’s rate of return on total assets does not compare favourably. ... Burswood Ltd’s earnings per share decreased from 8 cents in 2000 to 5. ... Therefore Burswood Ltd presents very poor in comparison with the industry which has recorded 654. ... For Burswood Ltd, comparing to the industry for this ratio means that they are falling behind in this category. ... Burswood Ltd’s rate of return on ordinary shareholders’ equity fluctuates between 6. ... A lower rate of return would be expected as Burswood Ltd’s has been experiencing a decline in revenue during this period. Literature review reveals that many financial analysts believe that the most important of all is the return on investment ratio (ROI). ... In our case Burswood Ltd’s figures of that measure have declined from 6. ... The year 2002 was for Burswood Ltd the year of huge long-term investment and expense which consequently lowered that ratio. ... In profitability assessment another set of financial ratios is measured.
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