for Sky City Entertainment Group Limited and tourism industry.
Discussion of findings 3
Industry background 3
Investigation of Financial information 5
Accounting elements 5
Ratios analysis 6
Profitability and Efficiency Ratios 6
Financial Stability Ratios 7
Financial Structure Ratios 7
Investment Ratios 8
Share Market Data 8
Brokers Recommendation 8
Share performance 9
Reference List: 10
The purpose of investigating the Sky City Group Limited (SKC) and tourism industry is to give a financial advice to a client who has recently asked for it in Vision ...view middle of the document...
However, the forecast for international visitor arrivals is based on the article of Roberts, A. (2012), and, potentially, the trend will go downwards because of the position of world economy, natural disasters and their consequences on the New Zealand’s economy and businesses.
SkyCity Entertainment Group Limited is one of the biggest companies in New Zealand it was founded in Auckland on 1st of February 1996. Nowadays, it operates monopoly casinos in New Zealand (Auckland, Hamilton and Queenstown) and Australia (Adelaide and Darwin) (SkyCity, 2012). As it is an entertainment company, it goes alongside with tourism industry.
Consumer price index (CPI) is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly, also called cost of living index (Investorwords, 2012)
Appendix B, Graph 1 illustrates the comparison of total revenue of SKC against CPI. Adjusted earnings represent the real revenue; in other words, it means what an individual can buy for his/her earnings without inflation rate. As the result of worldwide economic recession there were huge fluctuations over the years. However, by 2010 the economy has stabilised and deflated revenue increased in real term, it means the increase in deflated revenue was faster than the increase of inflation rate.
Investigation of Financial information
In order to give proper financial advice, financial performance and position of the company have to be identified, which will be achieved by analysing the changes in accounting elements; business performance (profitability and efficiency ratios); financial stability (liquidity and financial structure ratios) and investor ratios.
Assets are resources controlled by the entity as a result of past events, from which future economic benefits are expected to flow to the entity. Liabilities are present obligations arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. Equity is the residual interest in the assets after deducting all liabilities. (Smart M., 2010) According to Appendix C, Graph 1 the overall trend of total equity is rising over the years. This means that assets of the company are increasing, or there is a decrease in liabilities. There was a sharp increase in year 2009 by almost $270 000 000.
Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases in liabilities that result in increases in equity, other than those relating to contributions from equity participants (Smart M., 2010). There are two most significant changes in income over the last 5 years. First – due to economic recession there was a huge decrease in 2009. Second – as the result of economic recovery and decrease in liabilities, or increase in assets the...