A report on Brierty limited

1. Company: Brierty Limited:
Brierty Limited provides civil and mining contracting,and land development services in Australia. The company
operates through three segments:Civil, Mining, and Land Development. The Civil segment undertakes various civil
construction projects,including highways and roads, railway formations, airport runways, site works, concrete and
pavement works, earthworks, drainage and service installation, sewer reticulation, and road works and sub divisional
infrastructure for the creation of housing lots. The Mining segment offers mining services, such as surface mining,
including site preparation services,which comprise stripping overburden, site works for building infrastructure, road
works, tailings dams, residue disposalareas, airstrips, drilling and blasting,ore haulage rehandling, train loading,
tailings and water storage facilities, and vegetation clearing. The Land development segment develops residential
lands. It provides civil construction and mining services solutions to government and private industry. Brierty
Limited was founded in 1981 and is headquartered in South Perth, Australia.
Source: http://www.brierty.com.au/about-us/our-history.html
Part 1:
Executive Summary:
Overviewof SubjectMatter: The processof evaluationof the financial informationcontainedinthe
financial statementsinordertounderstandandmake decisionsregardingthe operationsof the firmis
called‘Financial StatementAnalysis’.Itisthe processof identifyingthe financial strengthsand
weaknessesof the firmbyestablishingrelationshipsbetweenthe itemsof the balance sheetandthe
statementof profitandloss.
THE PUROSE OFFINANCIALSTATEMENTS
The preparationof profitandlossstatementandbalance sheetisa veryvaluable exerciseforan
organization.The purposesof these financialstatementsare asoutlinedbelow:
• To informownersaboutthe financial positionof the organization.
• To informmanagersthe achievements/shortfallsinthe performance of the business.
• To secure finance andmaintainfinance.
• To monitorperformance of the businessperiodically.
• To fulfill statutoryobligations.
• To assesstax liability.

2. Source:http://seminarprojects.org/t-finacial-statement-analysis
SCOPEOF STUDY:
The study mainlyattemptstoanalyze the financialperformance of the companyselectedforthe study.
The financial authoritiescanuse thisforevaluatingtheirperformance infuture,whichwillhelpto
analyze financial statementsandhelptoapplythe resourcesof the companyproperlyforthe
developmentof the companyandits employeestobringoverall growth.The presentstudyattemptto
developatrendanalysismodel forSalesandWorkingCapital andProfitandLossAccounts.
RESEARCH METHODOLGY
Methodsof data collection;-
Secondarydata the secondarydatais derivedfrom the annual reports,Businessline andfinance
newspaperswebsites.
Methodsof analysis: The mostcommonlyusedtechniquesof financialanalysisare asfollows:
 Comparative Statements
 CommonSize Statements
 TrendAnalysis
 RatioAnalysis
 Cash FlowAnalysis
COMPARATIVESTATEMENT ANALYSIS:
Comparative statementisthose statements,whichhave designed inaway,soas to
provide time perspectivetothe considerationof the variouselementsof financial position
embodiedinsuchstatements.Insuchstatementsfiguresfortwoormore periodsare placed
side byside to facilitate comparison.The twostatementsare proposedforcomparison.Theyare
comparative income statementandcomparative Balance Sheet.
METHODS OF LEAST SQUARES(TREND VALUES)
By the methodof lease square,astraightline trendcan be fittedtothe giventime seriesof
data. It isa mathematical,aswell as,analytical method.Withitshelp,economicandbusiness
time seriesdatacan be fittedandthishelpsinforecastingandpredicting.The trendline iscalled
the line of bestfit.The sum of deviationsof the actual valuesof Y and the trendvalue (Yc) is0
and sumof square of deviationsof the actual value andthe trendvalue isthe least.(Y-Yc) = 0
and (Y- Yc) = least.Sothismethodiscalledthe leastsquaresmethodorthe line of bestfit.
RATIOANALYSIS:
RatioAnalysisiswidelyusedtool of financialanalysis.Itisdefinedasthe systematicuse of ratio
to interpretthe financial statementssothatthe strengthandweaknessof a firmas well asits

3. historical performance andcurrentfinancialconditioncanbe determined.The termratiorefers
to the numerical orquantitative relationshipbetweentwoitems/Variable.Thisrelationcanbe
expressedas.
a. Percentages
b. Fractions
c. Proportionof numbers.
Typesof financial Ratios:
Liquidityratios
Leveragesratios
Activityratios
Profitabilityratios
LiquidityRatio:
LiquidityRatiomeasuresthe firm’sabilitytomeetcurrentobligations,andare
calculatedbyestablishingrelationshipsbetweencurrentassetsandcurrentliabilities.
Leverage ratio:
Leverage ratiosmeasure the proportionof outsider’scapital infinancingthe firm’s
assets,andare calculatedbyestablishingrelationshipsbetweenborrowedcapital andequity
capital.
ActivityRatio:
Activityratioreflectsthe firm’sefficiencyin utilizingitsassetsingeneratingsalesandis
calculatedbyestablishingrelationshipsbetweensalesandassets.
ProfitabilityRatio:
Profitabilityratiosmeasurethe overallperformance of the firmbydeterringthe
effectivenessof the firmingeneratingprofit,andare calculatedbyestablishingrelationships
betweenprofitfiguresonthe one hard,andsalesandassetson the other.
Source:http://www.ncert.nic.in/ncerts/l/leac204.pdf
Findings:
 Revenue and earnings impacted by delayed project starts and tight margins given the current
operating environment.
 WTS2 establishmentinvestmentresultedin increased capital expenditure and associated debt
as expected.
 Targeted increased cash generation and associated debt reduction in FY16 as major projects
transition from setup phase to delivery or completion.

4. Recommendations:
 The current ratioof the companyis below the standardratiointhe 2 yearsunderstudy,Hence it
shouldbe improvedatleasttothe standard.
 The company shouldtake some measuresforimprovingmore profits;sale shouldbe enhanced
fromintoendthrough innovativemarketingtechniques.
 The company shouldfocustoincrease itscashflow fromoperating,financing&investing
activities.

5. Part 2
ConsolidatedStatementofFinancial Positionas at 30 June 2015
Source:http://www.brierty.com.au/investors-and-media/invester-information/financial-snapshot.html
Currentassetsare balance sheetaccountsthatrepresent the value of all assetsthatcan be converted
intocash withinone year.Currentassetsinclude cashandcashequivalents,accountsreceivable,
inventory,marketable securities, prepaidexpensesandotherassetsthatcan be readilyconvertedto
cash.

6. Non-currentassets are those thatwill nothave theirfull value realizedwithin12monthsof the balance
sheetdate.Examplesof noncurrentassetsinclude investmentsinanothercompany, intangible
assetssuchas goodwill, brandrecognition andintellectual property,andproperty,plantandequipment.
Currentliabilitiesare debtsandobligationsof the companythatare due withinayear.
Bonds,mortgages andloansthat are payable overaterm, more thanone year wouldbe fixed
liabilities orlong-termliabilities.
FINDINGS:
Increase in Current Assets:
$ 77,400,439- $72,080,044/ $72,080,044*100 = 7.38%
Increase in non- current assets:
$90,412,428- $55,574,094/ $55,574,094* 100 = 62.68%
Increase in Current Liabilities:
$82,098,983- $48,884,243/ - $48,884,243* 100 = 67.94%
Increase in non- current liabilities:
$28,957,540- $19,638,312/ $19,638,312* 100 = 47.45%
Decrease in equity:
$56,756,344 – $59,131,583/ $59,131,583* 100 = -4.01%
Decrease in equity can be a reason of worry for the management. Even both the current and non-current
values have gone up in year 2015 as compared to previous year.

7. Part 3:
Consolidated Statement of Comprehensive Income for year ended 30 June 2015:
Source:http://www.brierty.com.au/investors-and-media/invester-information/financial-snapshot.html
FINDINGS:
The Profitand Lossstatement(P&L) isgenerallypreparedannuallyandformspartof the accounting
documentsalimitedcompanyandsole traderneedtoproduce tosatisfythe tax authorities.Itshows
revenuesandcostsandhow muchprofithas beenmade bythe businessoverthe periodithasbeen
preparedfor.

8. The profitand lossstatementconsistsof these majorcomponents:-
· Gross sales - the total resourcesgeneratedbythe firm'sproductsandservices
· Netsales - the revenuesreceivedbythe firmaftersubtractingreturnsanddiscounts(suchastrade,
quantity,cash)
· Cost of goodssold - the cost of merchandise soldbythe manufacturerorretailer.
· Gross margin(profit) - the difference betweensalesandthe costof goodssold:consistsof operating
expensesplusnetprofits
· Operatingexpenses - the costsof runninga business,includingmarketing
· Netprofitbefore taxes - the profitearnedafterall costshave beendeducted. The above snapshot
showsa pro formatradingand profitand lossaccount.

9. Part 4
Statementof cash flows:
The cash flowstatement showshowmuchcashcomesin and goesoutof the companyover
the quarteror the year.At firstglance,thatsoundsa lotlike the income statementinthatitrecords
financial performance overaspecifiedperiod.Butthere isa bigdifference betweenthe two.
Source:http://www.investopedia.com/university/fundamentalanalysis/fundanalysis8.asp
Source:http://www.brierty.com.au/investors-and-media/invester-information/financial-snapshot.html
Terminologies:
Cash Flowfrom Operations
Thisis the keysource of a company'scash generation.Itisthe cash that the companyproduces
internallyasopposedtofundscomingfromoutside investingandfinancingactivities.Inthissectionof
the cash flowstatement,netincome (income statement) is adjustedfornon-cashchargesandthe

10. increasesanddecreasestoworkingcapital items - operatingassetsandliabilitiesinthe balance sheet's
currentposition.
Cash FlowfromInvesting
For the most part,investingtransactionsgenerate cashoutflows, suchascapital expendituresfor plant,
propertyandequipment,businessacquisitionsandthe purchase of investmentsecurities.Inflowscome
fromthe sale of assets,businessesandinvestmentsecurities.Forinvestors,the mostimportantitemin
thiscategoryis capital expenditures(more onthislater).It'sgenerallyassumedthatthisuse of cash isa
prime necessityforensuringthe propermaintenance of,andadditionsto,acompany'sphysical assets
to supportitsefficientoperationandcompetitiveness.
Cash FlowfromFinancing
Debtand equitytransactionsdominatethiscategory.Companiescontinuouslyborrow andrepaydebt.
The issuance of stock ismuch lessfrequent.Here again,forinvestors,particularlyincome investors,the
mostimportantitemiscash dividendspaid.It'scash,not profits,thatisusedto paydividendsto
shareholders.
OperatingCashFlow/NetSales
Thisratio,whichis expressedasa percentage of acompany'snet operatingcashflow toits net sales,or
revenue (fromthe income statement),tellsushow manydollarsof cashwe get foreverydollarof sales.
Source:http://www.investopedia.com/articles/stocks/07/easycashflow.asp
FINDINGS:
NetCash inflowfromoperating activities:
-$ 1,787,474– $28,466,646 = -$30,254,120 (Decrease)
The company needstofocuson theiroperationsas the cashinflow hasdippedinone year.
Netcash outflowfrom investingactivities:
-$1,995,728- (-$879,777) = -$1,115,951 (Decrease)
The company’sinvestmentactivitieshasgone downwhichisnotall a healthysign. The managementhas
to lookintothismatter.
Netcash inflowfrom financingactivities:
-$20,635,650 – (-$13,893,595) =- $6,742,055 (Decrease)
Thisdecrease showsthatthe companyis unable togetfundsfromthe market.

11. Part 5
Stockholders' equity:
Equity
Equityrepresentswhatshareholdersown,soitisoftencalledshareholder'sequity.Asdescribedabove,
equityisequal tototal assetsminustotal liabilities.
Equity = Total Assets – Total Liabilities
The two importantequityitems are paid-incapital andretainedearnings.Paid-incapital isthe amount
of moneyshareholderspaidfortheirshareswhenthe stockwas firstoffered tothe public.Itbasically
representshowmuchmoneythe firmreceivedwhenitsolditsshares.Inotherwords,retainedearnings
are a tallyof the moneythe companyhaschosento reinvestinthe businessratherthanpayto
shareholders.Investorsshouldlookcloselyathow a companyputs retainedcapital touse andhowa
companygeneratesareturnon it.
Source:Accounting – AuthorB.S.Raman
Componentsof Shareholder'sEquity
Alsoknownas"equity"and"networth",the shareholders'equityreferstothe shareholders'ownership
interestinacompany.
Usuallyincludedare:
 Preferredstock - Thisisthe investmentbypreferredstockholders,whichhave priorityover
commonshareholdersandreceiveadividendthathaspriorityoveranydistributionmade to
commonshareholders.Thisisusuallyrecordedatparvalue.
 Additional paid-upcapital (contributedcapital) - This iscapital receivedfrominvestorsfor
stock; itis equal tocapital stockpluspaid-incapital.Itisalsocalled"contributedcapital".
 Common stock - Thisisthe investmentbystockholders,anditisvaluedatpar or statedvalue.
 Retainedearnings - Thisis the total net income (orloss) less the amountdistributedtothe
shareholdersinthe formof a dividendsince the company'sinitiation.
 Other items- Thisis an all-inclusive accountthatmayinclude valuationallowance and
cumulative translationallowance (CTA),amongothers.Valuationallowance pertainsto
noncurrentinvestmentsresultingfromselectiverecognitionof marketvalue changes.

12. Cumulative translationallowanceisusedtoreportthe effectsof translatingforeigncurrency
transactions,andaccounts forforeignaffiliates.
Source:Accounting– AuthorB.S.Raman
Source: http://www.brierty.com.au/investors-and-media/invester-information/financial-snapshot.html
This statementconsists offour major categories:
Capital Stock --- Thiscategoryreflectsthe equityfinancingdecision,differentclassesof equitystocks,
and can alsoinclude more esotericitemssuchasESOP’s(see below)
AccumulatedOtherComprehensiveIncome (AOCI) --- Describedabove intermsof transactions(other
than AccountingIncome transactions) thatimpactstockholders’equitywithoutstockholders’being
involvedinthe transaction.
RetainedEarnings ---- ResultsfromAccountingIncome andDividend payments
TreasuryStock --- inthe US a companycan trade itsownstock.
Source:https://www.stock-analysis-on.net/NASDAQ/Company/Alphabet-Inc/Financial-
Statement/Liabilities-and-Stockholders-Equity

13. FINDINGS:
By analyzingthe statement,we canconclude that,share capital hasdipped in2015 as comparedto
2014:
$56,756,344 - $59,131,583 = -$2,375,238
Thisis a massive decrease whichstatesthatcompanyhas not beensuccessful inmultiplyingitsgoodwill.