Financial Statement Analysis

1. Executive summary

The main company to analyze is Southern Cross Media Group Limited (SXL). The radio and television businesses are mature markets; thus the revenue growth is likely to be modest. Moreover, SXL’s profitability will be impacted in 2012 by lower advertising revenues as well as passive customer attitude (MORNINGSTAR, 2011). SXL’s percentages of return on assets (ROA) and return on equity (ROE) were basically lower last five years, since SXL had a high amount of total assets. This expresses a poor operating performance and less profitability. However, the number of current ratio and debt ratio last five years are acceptable to invest especially dept ratio was continuously kept lower. Hence, when the company go bankrupt, funds will be likely to recover. To determine the value SXL, it basically had higher ratios of EV/EBITDA and EV/EBIT last five years. In short, to invest SXL is expensive.

2. Contents

Introduction (P.2)

Findings (P.2-5)

* Trend Analysis

* Ratio Analysis

i. Profitability Ratios

ii. Safety Ratios

iii. Valuation Multiples

Conclusion (P.5)

References (P.6)

Appendices (P.7-9)

3. Introduction

In recent years, the business environment has changed due to globalization, natural disasters, or the global financial crisis (GFC). As a result of these environmental alterations, the majority of companies have some difficulties in operating their business in some particular sectors, such as financing. In the media industry, according to IBIS World (2011), “Over the five years through 2010-11, real industry revenue is anticipated to decline at an average annual rate of 4.4%. This is a result of a significant fall in advertising revenue associated with GCF in 2008-09 and the associated spike in unemployment” (2011, p. 7).

Main Company

* Southern Cross Media Group Limited (SXL) has a unique portfolio of media assets including regional radio, metropolitan radio, regional free-to-air television and online...