ANU BUSN1001 Group Assignment: Ratio and Financial Statement Analysis

Course Context and Purpose

The Australian National University delivers BUSN1001 Business Reporting and Analysis through the Research School of Accounting in the ANU College of Business and Economics, and the group assignment for BUSN1001 carries 15 per cent of the total mark for the course. Assessment takes the form of a comparative financial statement analysis report built from one allocated company’s annual report, capped at 3,500 words and assessed out of 100 marks. The course sits at six units and runs across First Semester, Second Semester and Spring Session, with a stated workload of ten hours a week. Learning outcome seven asks students to analyse financial reports with regard to key aspects of performance such as profitability, solvency and liquidity, and this assessment is where that outcome gets tested rather than described. The report is not a summary of a company’s year. It is an argument about why eight ratios moved the way they did, supported by the director’s narrative and a competitor benchmark.

Assessment Snapshot

Version Note on Prior Offerings

Published versions of this brief from 2024 and 2025 differ from the current one in ways that matter to anyone reusing older copies. Groups ran at three to four students in 2024, with six allocated companies registered through Wattle, and the ratio years were 2022 and 2023. The current offering sets groups at exactly five students, cuts the company list to five, moves registration to Canvas, shifts the ratio years to 2024 and 2025, and adds both the Assessment Contract and the individual peer assessment. The referencing instruction also hardened, since earlier versions asked only for a consistent system and noted Harvard as common in accounting, while the current brief prescribes Harvard outright. Treat any 2024 or 2025 copy as structural guidance only, and take the mechanics from the live Canvas site.

Assessment Task

Calculate a fixed set of financial ratios for the allocated company across two reporting years, then analyse and explain the movement in profitability, asset efficiency, liquidity and capital structure. Two requirements carry the marks, and the second one carries most of them.

Requirement 1: Ratio Template, 20 marks

Calculate the eight prescribed ratios for 2024 and 2025 from the allocated company’s financial statements, complete the template supplied in the brief, and attach the completed template as the first page of the assignment. Marks go to correct numerators, correct denominators, and the stated unit of measurement for each ratio. The eight ratios are return on assets, net profit margin, asset turnover, days debtors, current ratio, cash flow ratio, interest cover ratio and debt to equity ratio. A ninth ratio invented by the group earns nothing.

Requirement 2: Analysis of Performance and Position, 80 marks

Analyse the overall changes in profitability, asset efficiency, liquidity and capital structure between 2024 and 2025 using the ratios from Requirement 1. Two analytical obligations sit inside that sentence. Identify internal factors, such as a strategic change in how the business is run, and external factors that may have caused the movements, drawing on the commentary the directors or managers disclose in the opening pages of the annual report ahead of the financial statements. Compare the company’s ratios with those of a competitor in a similar industry and analyse the differences observed. Critical evaluation of the disclosed narrative is expected rather than summary, and sources beyond the annual report are permitted and encouraged.

The Eight Ratios and Their Traps

Three errors recur in marked work. Groups use closing assets instead of average assets for return on assets and asset turnover, which shifts both ratios and breaks comparability with the prior year. Groups omit the unit, so a return on assets written as 7.4 cannot be distinguished from 7.4 times. Groups substitute their own preferred ratios, usually return on equity or days inventory, and then wonder why Requirement 1 scores poorly. The template defines the task, and the analysis in Requirement 2 can discuss other measures without displacing it.

Submission Requirements

• Write in professional business English, Times New Roman 12 point, double spaced.
• Attach the completed ratio template as page one of the assignment.
• Submit a single file in PDF or Microsoft Word through the group dropbox.
• Name the file with the ASX code followed by every member’s student ID, for example COL u1234567 u7654321 u4321765 u7654123 u6543217.
• Attach a completed and signed group assignment cover sheet.
• Lodge the Assessment Contract by the registration deadline, since penalties may apply to groups that do not.
• Have one member submit, and add all other members before clicking submit.
• Complete the individual peer assessment on Canvas after the group file is submitted.

Report Structure

1. Ratio template on page one, with units stated in every cell.
2. Short introduction naming the company, its industry and the two years under review, in roughly 150 words.
3. Profitability section covering return on assets, net profit margin and asset turnover, with the driver chain made explicit.
4. Asset efficiency section covering days debtors and asset turnover, tied to the revenue model rather than to generic commentary.
5. Liquidity section covering the current ratio and cash flow ratio, read together rather than separately.
6. Capital structure section covering debt to equity and interest cover, with lease accounting flagged where it distorts the comparison.
7. Competitor benchmark subsection integrated into each of the four areas, or gathered into one comparative section if the group prefers.
8. Conclusion that ranks the two or three movements that matter most and states what they imply for the company’s position.
9. Reference list in Harvard style, including both annual reports and any market or media sources used.

Marking Rubric

Requirement 1 is marked out of 20 and Requirement 2 out of 80, for a group total of 100. Requirement 2 is published as grade related descriptors rather than as a fixed criterion split, so the allocation across coverage, driver evaluation, benchmarking and writing above is an indicative reconstruction for teaching and moderation purposes. Every member receives the group score, capped at the group mark even where an individual peer score runs higher.

Assumption and Verification Note

Two details vary by offering and should be confirmed against the live Canvas site before teaching. The company list changes each semester, and the current set covers Treasury Wine Estates, Coles Group, Ampol, Viva Leisure and Domino’s Pizza Enterprises with 2025 annual reports. The word limit is published as an upper limit rather than a range, so a report of 2,600 words that answers every requirement is compliant while a 3,900-word report is not.

Academic Integrity, Referencing and Teamwork

Turnitin originality scores are reviewed, and quoted material must carry quotation marks. Harvard referencing applies to annual reports, market announcements, news coverage and academic sources alike. Groups lodge an Assessment Contract defining roles and procedures, and a non-contributing member can be awarded zero where the evidence supports it. Peer assessment is completed individually on Canvas and cannot lift a student above the group mark.

References and Learning Materials

ASX Corporate Governance Council (2019) Corporate Governance Principles and Recommendations. 4th edn. Sydney: ASX. Available at: https://www.asx.com.au/content/dam/asx/about/corporate-governance-council/cgc-principles-and-recommendations-fourth-edn.pdf

Australian National University (2026) BUSN1001 Business Reporting and Analysis. Programs and Courses. Available at: https://programsandcourses.anu.edu.au/2026/course/BUSN1001

Liew, K.F., Lam, W.S. and Lam, W.H. (2022) ‘Financial network analysis on the performance of companies using integrated entropy-DEMATEL-TOPSIS model’, Entropy, 24(8), 1056. doi:10.3390/e24081056

Phesa, M., Sibanda, M., Matenda, F.R. and Gumede, Z.H. (2025) ‘Impression management tactics in the chairperson’s statement: a systematic literature review and avenues for future research’, Journal of Risk and Financial Management, 18(5), 270. doi:10.3390/jrfm18050270

Trotman, K., Carson, E. and Morgan, K. (2019) Financial Accounting: An Integrated Approach. 7th edn. South Melbourne: Cengage Learning.

Sample Answer: Liquidity and Capital Structure in Grocery Retail

Coles Group reports in an industry where a current ratio below one is normal rather than alarming, and the analysis has to say so before the marker wonders whether the group understands the sector. Supermarket operators collect cash from customers at the register and settle supplier payables weeks later, so the working capital cycle runs on other people’s money and a low current ratio signals structural efficiency rather than distress. Read alongside the cash flow ratio, which divides operating cash flow by current liabilities, the picture sharpens considerably because a firm funding daily operations from trading receipts will post a cash flow ratio that is strong even when the balance sheet looks thin. Lease liabilities under the current lease standard sit in both current and non-current liabilities, and they inflate the debt to equity ratio for any retailer with a large store network, which means a comparison against a competitor with a different property strategy will mislead unless the reader adjusts for it. Interest cover then becomes the more informative solvency signal, since it tests whether earnings before interest and tax can absorb net finance costs without reference to how the assets were financed. Moves in gross margin across the two years will usually trace back to cost of doing business pressures, shrinkage and supply chain costs, and the directors’ commentary will name some of those causes while omitting others. Tracing each ratio movement to a named operational driver, then stating whether the driver is internal or external, is what separates an analysis from a data dump.

Group reports lose marks most often at the point where benchmarking meets narrative, because students treat the competitor’s numbers as a neutral fact and the chairperson’s statement as a neutral explanation. Neither is neutral. Chairperson and chief executive statements rank among the most read sections of an annual report and are also a documented site of impression management tactics in the chairperson’s statement, where selective emphasis, self-serving attribution of good outcomes and passive framing of poor ones shape what a reader concludes (Phesa et al., 2025). A strong report sets the disclosed explanation against the ratio evidence and notes where the two diverge, for instance a narrative that attributes a margin decline to one-off cost inflation while the two-year trend shows a steady structural drift. Benchmark selection deserves the same scrutiny. Choosing a competitor of similar scale with a similar revenue model gives a defensible comparison, while choosing a firm in an adjacent industry produces differences that measure business model rather than performance. Stating the basis for the benchmark choice in one sentence protects the group from the charge that the comparison was convenient. Where the competitor reports under the same standards, differences in accounting policy choices, depreciation lives or lease treatment should be named rather than assumed away. That single habit of naming the basis of comparison lifts a report from description to analysis.

Reading Negative Working Capital

Negative working capital in retail deserves a paragraph of its own because the interpretation runs opposite to the one students apply in manufacturing. A manufacturer with a current ratio of 0.6 carries genuine refinancing risk, while a grocer with the same figure may be operating exactly as designed, and the discriminator is the cash conversion cycle rather than the ratio itself. Worked evidence from multi-criteria ratio modelling shows that liquidity measures such as the current ratio carry substantial weight when analysts rank firms on financial performance, so the measure matters even where the level looks unremarkable (Liew et al., 2022). The practical move is to compute the movement in days debtors and pair it with a short discussion of payables terms, since a rising days debtors figure alongside stable payables narrows the funding gap and erodes the advantage. Cash flow ratio then confirms whether the operating inflow actually materialised or whether profit was recognised without cash following. Groups that write two sentences on this tension routinely beat groups that write a page on profitability alone, because the marker can see that the ratio was interpreted rather than reported.

Why Average Balances Change Rankings

Students searching for help with this assignment usually ask why their asset turnover figure differs from a classmate’s when both used the same annual report. The answer is almost always the denominator. Return on assets and asset turnover in the template both require average assets, which means opening plus closing total assets divided by two, and a group that divides by closing assets will produce a different answer for a company that acquired or divested during the year. The same logic governs days debtors, where average debtors rather than the closing balance is prescribed. Consequences run beyond a lost mark on Requirement 1, because a distorted asset turnover feeds directly into the profitability story in Requirement 2 and can invert the conclusion. Three habits prevent the problem:

1. Build a working spreadsheet with opening, closing and average columns before writing any prose.
2. Label every figure in the template with its unit, so percentage, times and days cannot be confused at a glance.
3. Cross-check one ratio against the prior year’s published figure or a financial data provider before committing to the narrative.
4. Record the page or note reference for every input, since a moderator may ask where a number came from.

Comparability also depends on consistency, so the group should confirm that both years were prepared under the same accounting policies and note any restatement in a sentence.

Where Teams Lose the Analysis Marks

Most of the 80 marks in Requirement 2 turn on whether the report explains movement or merely reports it, and the published descriptors reward depth of interpretation, not the number of ratios discussed. A report that lists eight ratios and then restates each one in a sentence reads as a spreadsheet transcription and lands in the pass band. The working method that produces higher marks runs in three steps. State the movement and its size. Name the internal and external candidates that could produce a movement of that size. Test the candidates against the disclosed narrative and against the competitor, and keep the one the evidence supports. Internal candidates include pricing strategy, store network changes, cost programmes, financing decisions and acquisitions; external candidates include input cost inflation, wage determinations, interest rate movement, competitor entry, regulatory change and consumer demand shifts. A useful discipline is to write the driver sentence first for each of the four areas and build the paragraphs underneath it, which prevents the section from becoming a tour of every line item. Groups that present a competitor comparison without a stated basis for choosing that competitor lose marks even when the arithmetic is right, so a sentence explaining why that firm is comparable earns its place.

Closing Note on the Group Report

Five members and 3,500 words sound generous until the ratio template eats the first page and the competitor section expands without limit. I would draft the template first and freeze it, because every downstream sentence depends on those sixteen figures being right. Assign one member to the directors’ narrative and one to the competitor, since those two reading loads are the heaviest and they feed the same sections. The introduction should be written last, once the conclusion is known, so it names the finding rather than the task. Referencing annual reports in Harvard is mechanical but easy to get wrong, so build the references as the group goes instead of reconstructing them the night before. Peer assessment is individual and cannot rescue a group mark, which makes the Assessment Contract worth more attention than it usually gets.

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Ratio and Financial Statement Analysis of Coles Group Limited: FY2024–FY2025

Requirement 1: Financial Ratio Template

Company: Coles Group Limited
Competitor: Woolworths Group Limited
Reporting periods: FY2024 and FY2025
Currency: Australian dollars (AUD), millions unless otherwise stated.

Calculation basis: Return on assets and asset turnover use average total assets. Days debtors uses average trade receivables, including the opening and closing balances. The net profit margin and asset turnover calculations use sales revenue rather than other operating revenue. EBIT, profit after tax, net operating cash flow, total liabilities and total equity follow the consolidated financial statements.

Introduction

Coles Group Limited is a major Australian retailer operating primarily through its supermarket and liquor businesses. Its performance depends on sales growth, effective inventory management, cost control and the efficient use of retail assets. The financial statements for FY2024 and FY2025 provide a basis for evaluating changes in profitability, asset efficiency, liquidity and capital structure. Woolworths Group Limited provides an appropriate competitor benchmark because both businesses operate in Australia’s grocery retail market, although their business portfolios differ. The ratio results indicate that Coles retained relatively strong asset profitability and improved its liquidity position during FY2025, but its profit margin and interest coverage declined. Consequently, the company’s financial position appears generally sound, although higher financing expenses and increasing operating costs place pressure on the returns generated from its expanding asset base (Coles Group Limited, 2025; Woolworths Group Limited, 2025).

Profitability and Asset Utilisation

Coles experienced a modest decline in profitability during FY2025. Return on assets decreased from 10.78% in FY2024 to 10.34% in FY2025, indicating that the Group generated slightly less operating profit relative to its average asset investment. EBIT increased from $2,057 million to $2,077 million, whereas average assets increased from approximately $19,081 million to $20,082 million. Asset growth therefore exceeded the increase in operating earnings, reducing the return generated from each dollar invested in the business. Net profit margin also declined from 2.57% to 2.43%, reflecting the fall in profit after tax from $1,118 million to $1,079 million despite higher sales revenue. The results suggest that sales expansion did not translate into equivalent growth in shareholder returns, since additional operating and financing expenses absorbed part of the revenue increase (Coles Group Limited, 2025).

Operating costs and investment decisions help explain the profitability movement. Coles expanded its automated distribution and online fulfilment capabilities, including two Customer Fulfilment Centres serving metropolitan Sydney and Melbourne. These developments support product availability, delivery performance and customer access to online shopping, although their depreciation and operating expenses place pressure on current earnings. The Supermarkets division recorded a higher cost of doing business ratio, which increased from 21.5% to 22.1%. Management attributed the increase partly to depreciation and amortisation associated with capital investment, additional right-of-use asset depreciation, wage inflation and the operating costs of the fulfilment centres. Savings from the Simplify and Save to Invest programme partly offset these pressures, suggesting that cost-control initiatives produced benefits without fully absorbing the expense of expansion (Coles Group Limited, 2025).

Asset turnover provides further evidence of the relationship between expansion and profitability. The ratio fell from 2.28 times in FY2024 to 2.21 times in FY2025, indicating that each dollar of average assets generated less sales revenue than in the preceding period. Average assets increased faster than reported sales revenue, which rose from $43,571 million to $44,352 million. The decline does not necessarily indicate poor investment decisions because recently opened fulfilment and distribution facilities may require time to reach their intended operating capacity. However, management must demonstrate that these investments eventually generate sufficient additional revenue and cost savings to justify the capital committed. Coles reported normalised sales growth of 3.6% after adjusting for the additional trading week in FY2024, providing a stronger indication of underlying demand than the unadjusted growth rate of 1.8% (Coles Group Limited, 2025).

Asset Efficiency

Days debtors improved from 3.58 days in FY2024 to 3.17 days in FY2025. The reduction indicates that Coles maintained a shorter average receivables collection period, which supports working capital management and reduces the period between recognising a receivable and collecting payment. Average trade receivables declined from approximately $427 million to $385.5 million, despite an increase in sales revenue. However, supermarket transactions largely involve immediate customer payments, so the ratio requires careful interpretation. Coles’ reported trade receivables also include commercial income due from suppliers, meaning the figure does not represent only outstanding customer credit sales. Consequently, the improvement provides useful evidence of receivables management, although it cannot independently establish that all collection processes became more efficient (Coles Group Limited, 2024; Coles Group Limited, 2025).

Liquidity Position

The current ratio increased from 0.59 times to 0.61 times, indicating a modest improvement in the Group’s capacity to meet short-term obligations using current assets. Current assets increased from $3,986 million to $4,178 million, while current liabilities rose from $6,771 million to $6,856 million. The ratio remained below one, meaning current liabilities continued to exceed current assets. Such a position requires attention, although it does not automatically indicate financial distress for a supermarket operator that receives frequent cash and electronic payments from customers. The cash flow ratio provides additional insight because it measures operating cash generation against current liabilities. Coles improved from 0.41 times to 0.43 times, supported by an increase in net operating cash flow from $2,793 million to $2,936 million during FY2025 (Coles Group Limited, 2025).

The two liquidity ratios therefore present a more favourable picture than the current ratio alone suggests. Operating cash generation increased despite higher interest payments and income tax payments, indicating that the business maintained its capacity to generate cash from normal trading activities. The combination of a low current ratio and a stronger cash flow ratio is consistent with the working capital structure of a high-volume retailer. Nevertheless, the Group should maintain sufficient cash reserves to meet supplier, employee, tax and lease obligations without excessive reliance on continuous sales receipts. Liquidity performance therefore improved, although the relatively narrow margin between operating cash generation and short-term obligations leaves limited room for a prolonged disruption in trading.

Capital Structure and Solvency

Coles’ debt to equity ratio declined from 4.49 times in FY2024 to 4.33 times in FY2025. Total liabilities increased from $16,253 million to $16,488 million, but total equity grew from $3,617 million to $3,806 million. The movement suggests a modest improvement in the relationship between the Group’s liabilities and its equity base. However, the ratio remains high and needs to be interpreted in the context of Coles’ extensive retail property leases. At the end of FY2025, the Group reported approximately $8,343 million in lease liabilities, consisting of current and non-current obligations. Since the prescribed formula includes all liabilities, it captures lease obligations alongside trade payables, provisions and interest-bearing borrowings.

Interest coverage presents a less favourable movement. The ratio declined from 4.65 times in FY2024 to 3.84 times in FY2025, showing that EBIT covered financing costs fewer times than in the preceding year. Total financing costs increased from $442 million to $541 million, including lease interest expenses that rose from $363 million to $425 million. The increase reflects the financial cost of maintaining leased retail premises alongside conventional borrowing obligations. AASB 16 requires lessees to recognise most qualifying lease arrangements through right-of-use assets and corresponding lease liabilities, with interest on lease liabilities recognised as a finance expense (Australian Accounting Standards Board, 2024). Consequently, the debt to equity ratio should not be interpreted as a measure of conventional bank borrowing alone. The decline in interest coverage nevertheless warrants attention because continued growth in financing expenses could restrict future investment flexibility.

Competitor Benchmarking: Coles Group and Woolworths Group

Woolworths Group provides a useful FY2025 comparison because it operates a major supermarket business within the same Australian retail market. The comparison shows stronger profitability ratios for Coles. Its return on assets of 10.34% exceeded Woolworths’ 6.45%, while its net profit margin of 2.43% compared favourably with Woolworths’ 1.38%. Coles also recorded asset turnover of 2.21 times against Woolworths’ 2.04 times. These results suggest that Coles generated stronger returns from its reported asset base and converted a greater proportion of sales into profit. However, Woolworths operates a more diversified group that includes Australian and New Zealand food retailing, BIG W, Petstock and business-to-business operations. Differences in business composition therefore limit direct conclusions about the relative efficiency of the two supermarket operations (Woolworths Group Limited, 2025).

Asset efficiency and liquidity also favour Coles, although the differences deserve measured interpretation. Woolworths recorded 2.49 debtor days compared with Coles’ 3.17 days, indicating a shorter receivables period under the prescribed calculation. In contrast, Coles achieved a stronger current ratio and cash flow ratio, suggesting relatively better short-term financial coverage. The interest coverage comparison also favours Coles, with its 3.84 times coverage exceeding Woolworths’ 2.69 times. Furthermore, Coles reported a lower debt to equity ratio, suggesting a comparatively smaller liability burden relative to equity. However, both businesses recognise significant lease obligations, and differences in store networks, lease arrangements and business portfolios influence their capital structures (Woolworths Group Limited, 2025; Australian Accounting Standards Board, 2024).

The competitor’s reported results also require critical evaluation before the ratios support a firm conclusion. Woolworths recorded a $1,505 million goodwill impairment relating to New Zealand Food in FY2024, which substantially affected its comparative earnings and asset base. FY2025 also included impairment charges relating to BIG W, MyDeal and Healthylife. Such exceptional items influence profit margins, return on assets and the interpretation of annual changes. Phesa et al. (2025) explain that management narratives in annual reports may emphasise favourable achievements and give less prominence to adverse developments. Consequently, ratio analysis should receive greater weight than promotional descriptions of strategic progress, and exceptional accounting items should remain visible during competitor evaluation.

Conclusion

Coles Group maintained a relatively favourable financial position during FY2025, although its profitability and debt-servicing capacity weakened. The declines in return on assets, net profit margin, asset turnover and interest coverage indicate that asset expansion and higher financing expenses placed pressure on operating returns. Improvements in the current ratio, cash flow ratio, debtor days and debt to equity ratio provide more positive evidence of working capital management and financial stability. The Woolworths comparison supports Coles’ stronger profitability, liquidity and interest coverage, although the differences in business composition and accounting outcomes limit direct comparisons. Management should focus on converting its recent capital investments into sustainable sales growth, controlling operating expenses and protecting operating cash generation. Future performance will depend on whether the financial benefits of automation and retail expansion exceed their continuing operating and financing costs.

References

Australian Accounting Standards Board (2024) AASB 16 Leases. Compiled standard applicable to annual periods beginning on or after 1 January 2024. Melbourne: AASB. Available at: https://aasb.gov.au/admin/file/content105/c9/AASB16_02-16_COMPnov22_01-24.pdf (Accessed: 11 November 2026).

Coles Group Limited (2024) 2024 Annual Report. Hawthorn East: Coles Group Limited. Available at: https://announcements.asx.com.au/asxpdf/20240827/pdf/0672jttzr8m7h3.pdf (Accessed: 11 November 2026).

Coles Group Limited (2025) 2025 Annual Report. Hawthorn East: Coles Group Limited. Available at: https://announcements.asx.com.au/asxpdf/20250826/pdf/06nb7wd5dtx19k.pdf (Accessed: 11 November 2026).

Liew, K.F., Lam, W.S. and Lam, W.H. (2022) ‘Financial network analysis on the performance of companies using integrated entropy-DEMATEL-TOPSIS model’, Entropy, 24(8), 1056. https://doi.org/10.3390/e24081056.

Phesa, M., Sibanda, M., Matenda, F.R. and Gumede, Z.H. (2025) ‘Impression management tactics in the chairperson’s statement: a systematic literature review and avenues for future research’, Journal of Risk and Financial Management, 18(5), 270. https://doi.org/10.3390/jrfm18050270.

Woolworths Group Limited (2025) 2025 Annual Report. Bella Vista: Woolworths Group Limited. Available at: https://www.woolworthsgroup.com.au/content/dam/wwg/sustainability/reports/f25/Woolworths%20Group%20Annual%20Report%202025%20.pdf (Accessed: 11 November 2026).