1. Results:...............................................................................................................................

2
2. Result analysis:..................................................................................................................2
1. Results:...............................................................................................................................3
2. Result analysis:..................................................................................................................4
1. Results:...............................................................................................................................5
2. Results Analysis:...............................................................................................................6
1. Aristocrat Leisure Limited (ASX: ALL).............................................................................7
2. Michael Hill International Limited (ASX: MHJ)................................................................9

QUESTION 1:

1. Results:

Company Aristocrat Leisure Limited Michael Hill International Limited

Year 2022 2023 2022 2023

Inventory Days 36.55 days 41.06 days 314.96 days 329.55 days

Account Receivable
Days 55.15 days 57.67 days 4.64 days 8.43 days

Account Payable Days

Outstanding 127.08 days 130.50 days 136.01 days 115.44 days

Cash Conversion Cycle

(CCC) -35.38 days -31.77 days 183.59 days 222.54 days

(See appendix Question 1 for Calculations in details and data usage)

2. Result analysis:
a. Aristocrat Leisure Limited (ASX: ALL)
In 2023, Aristocrat Leisure's Cash Conversion Cycle (CCC) rose from -35.38 days to
-31.77 days, reflecting continued efficiency as they collect revenue before paying
 suppliers. Accounts Payable Days increased from 127.08 to 130.50, which means they
have extended vendor payment terms without relying on external financing.
However, inefficiencies are rising in other areas: Inventory Days rose from 36.55 to
41.06, indicating slower turnover, while Accounts Receivable Days increased from
55.15 to 57.67, delaying cash inflows.
As a result, the CCC improvement relies on extended payables rather than better
inventory or receivables management, posing risks if supplier terms change
unfavorably in the future. While liquidity remains strong, optimizing inventory and
receivables is critical for future cash flow efficiency.

b. Michael Hill International Limited (ASX: MHJ)

In 2023, Michael Hill International's Cash Conversion Cycle (CCC) rose significantly
from 183.59 days to 222.54 days, signaling worsening working capital management.
Inventory Days increased from 314.96 to 329.55, highlighting slower turnover and
challenges in converting inventory to sales, likely due to longer production cycles,
overstocking, or weaker demand. Accounts Receivable Days nearly doubled from
4.64 to 8.43, suggesting customers are taking longer to pay or the company is
extending more credit, potentially straining cash flow. At the same time, Accounts
Payable Days fell sharply from 136.01 to 115.44, reflecting shorter payment terms or
a decision to settle commitments sooner, which further pressures cash reserves. The
combination of slower inventory turnover, extended receivables, and reduced
payables efficiency has resulted in a lengthier CCC, raising concerns about
operational efficiency and the company's ability to sustain liquidity without external
financing. For investors, these trends indicate potential cash flow challenges and
operational inefficiencies that need to be addressed.

QUESTION 2:

1. Results:

Company Aristocrat Leisure Limited Michael Hill International Limited

Year 2022 2023 2022 2023

Operating Revenues $5,573,700,000.00 $6,295,700,000.00 $592,773,000.00 $628,972,000.00

Total Assets $10,120,400,000.00 $10,922,300,000.00 $511,179,000.00 $546,488,000.00

NCA - PP&E $549,900,000.00 $682,800,000.00 $148,397,000.00 $196,858,000.00

Total Asset Turnover 0.55 0.58 1.16 1.15

Fixed Asset Turnover 10.14 9.22 3.99 3.20

(See appendix Question 2 for Calculations in details and data usage)

2. Result analysis:
a. Aristocrat Leisure Limited:
In 2023, Aristocrat Leisure's asset management efficiency performance was mixed when
compared to 2022, as evidenced by two important metrics. The Total Asset Turnover ratio
increased from 0.55 in 2022 to 0.58 in 2023, demonstrating a better ability to use total assets
to create revenue. This development implies that the organization successfully scaled its
operations, resulting in better sales compared to total asset growth. Such efficiency
demonstrates management's capacity to optimize the use of its whole resources, which is a
good sign for investors.

Conversely, the Fixed Asset Turnover ratio fell from 10.14 in 2022 to 9.22 in 2023,
indicating a decrease in the efficiency with which fixed assets—specifically property, plant,
and equipment (PP&E)—are converted into revenue. This reduction is due to a significant
rise in fixed assets, most likely from investments in infrastructure or equipment that have yet
to yield corresponding revenue growth. While this investment may set the organization for
future growth, it now signals underutilization or delayed returns.

The difference between these two ratios indicates that, while the company's overall asset
utilization is improving, it is experiencing short-term inefficiencies with its fixed assets.
Investors should pay special attention to how these recent capital investments affect revenue
generation in the future, since this will have a substantial impact on the company's capacity to
sustain long-term growth.
 b. Michael Hill International Limited:
Michael Hill International's ability to manage its assets in 2023 showed divergent patterns
based on two major asset management ratios. The total asset turnover ratio fell slightly, from
1.16 in 2022 to 1.15 in 2023. This marginal decline implies a very tiny decrease in efficiency
when using total assets to create revenue. The minor decrease may indicate a proportional
rise in total assets relative to revenue growth, which could imply continuous investments or a
slower pace of sales growth.

However, the Fixed Asset Turnover ratio fell more sharply, from 3.99 in 2022 to 3.20 in
2023. This dramatic drop demonstrates a significant fall in the efficiency of employing fixed
assets—such as property, plant, and equipment (PP&E)—to generate revenue. The huge
increase in PP&E over the last two years, which was most likely attributable to significant
capital investments, has yet to be translated into equivalent revenue growth. This shows
underutilization, or that these investments are part of a longer-term strategy that has yet to
produce results.

Overall, the data show that, while the company’s total asset management has stayed
reasonably steady, the company is struggling to successfully leverage its fixed assets for
immediate revenue development. Investors should evaluate the potential lag in returns from
recent investments when determining if these fixed assets will improve revenue generation in
the future. The uneven result highlights the necessity of understanding the strategic goals
driving these asset developments.

QUESTION 3:

1. Results:

Company Aristocat Leisure Limited Michael Hill International Limited

Year 2022 2023 2022 2023
Total liabilities $4,097,700,000 $4,196,200,000 $316,084,000 $357,873,000
Total assets $10,120,400,000 $10,922,300,000 $511,179,000 $546,488,000
EBIT $1,518,100,000 $1,701,400,000 $67,189,000 $56,058,000
Interest Expense $254,800,000 $153,700,000 $7,549,000 $9,931,000

Debt Ratio 40.49% 38.42% 61.83% 65.49%

Interest coverage Ratio 5.96 11.07 8.90 5.64

2. Results Analysis:

a. Aristocrat Leisure Limited (ALL)

The debt ratio of Aristocrat Leisure Limited has decreased from 40.5% in 2022 to 38.4% in
2023. Based on Bakry's capital structure ratio theory, 2020. This shows that the company has
reduced its dependence on non-owner financing (borrowed money) and financial leverage as
a financial source. The total assets of the business have increased quite significantly
(approximately 7.9%) and the growth rate is also faster than liabilities, which is a modest
increase (around 2.4%). In addition, this change implies that Aristocrat Leisure Limited
began to use more equity or internal funds of this firm to pay for operating activities. The
reduction in dependence on loans can help it become less vulnerable when facing interest rate
hikes as well as economic downturns.

The company's interest coverage ratio more than doubled in 2022 and 2023, signaling that the
firm’s ability to pay its interest rate obligations has improved very well (Bakry, 2020). This
improvement was driven by higher EBIT ($1,701,400,000 in 2023 versus $1,518,100,000 in
2022), and a sharp decline in interest expense ($153,700,000 in 2023 versus $254,800,000 in
2022). The amendment in the interest coverage ratio figured out that this company had better
operational performance as well as lower financial risk. The decline in interest expense can
reflect lower borrowing costs for a reduction in the company's debt levels.

b. Michael Hill International Limited (MJH)

Michael Hill International Limited’s debt ratio increased slightly by 3.7% in 2023, reflecting
the increasing dependence on borrowing as an important financial source of the company
(Bakry, 2020). The company's total liabilities increased sharply by 13.2% (from
$316,084,000 in 2022 to $357,873,000 in 2023) while total assets only increased modestly by
6.9% (from $511,179,000 in 2022 to $546,488,000 in 2023). The above gives the company
more debt to operate and increase asset growth (or debt has played a major role in expanding
the company's assets in 2023). Taking advantage of loans from lending funds such as banks
can create financial leverage and bring more opportunities for business expansion, it also
raises concerns about financial risk, especially during the economic downturn when
companies have difficulty generating enough cash flow to meet their debt repayment
obligations.

Michael Hill International Limited's interest coverage ratio has decreased significantly from
8.9 times in 2022 to 5.64 times in 2023, which shows that the firm's ability to pay its interest
in a timely manner is worse (Bakry, 2020). This decline stems from a sharp decrease of
approximately 10 million USD of EBIT (from $67,189,000.00 in 2022 to $56,508,000 in
2023) and the increase in interest rate costs (from $7,549,000 to $9,931,000). Finally, both
reflect the challenges in business operations as well as the increase in borrowing costs,
reducing the company's financial flexibility. This trend is signaling that there may be
potential risks and restrictions on cash flow if this business continues to rely on loans to
maintain operations without improving its profitability.

QUESTION 4:

The DuPont Method is a financial analysis framework that breaks down a company’s
Return on Equity (ROE) into three key components:

ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

The table provides the ROE calculations for 2022 and 2023 based on the provided values.
 1. Aristocrat Leisure Limited (ASX: ALL)

Year Net Profit Margin (%) Asset Turnover Equity Multiplier ROE
(%)

2022 17,96 0,55 1,68 16,59

2023 19,65 0,58 1,62 18.46

a) Overall Profitability

From 2022 to 2023, the company's Return on Equity (ROE) increased from 16.59% in 2022
to 18.46% in 2023, reflecting a notable improvement in profitability, hence, generating higher
returns for its shareholders. This improvement suggests that the company is effectively
utilizing its resources and equity to create value, which can translate into higher dividends,
potential for stock price appreciation, or reinvestment into growth opportunities.
Furthermore, the increased ROE also indicates that management is performing well in
balancing profitability, asset utilization, and financial leverage, making the company a more
attractive and sustainable investment for shareholders.

b) Main reasons for the change in the profitability

The increase in the company’s profitability was driven primarily by enhancements in

operational efficiency and resource utilization. The rise in Net Profit Margin from 17.96%
to 19.65%, the key contributor, suggesting better control of operational expenses, stronger
pricing power, or lower tax burdens, which allowed the company to retain a higher proportion
of revenue as profit.

Additionally, the slight improvement in Asset Turnover from 0.55 to 0.58 reflects its ability
to increase its sales output relative to the value of its assets, signaling more effective asset
management. The change could be attributed to better inventory management, optimized
production processes, or an increase in demand for the company's products or services.

However, the slight decline in the Equity Multiplier from 1.68 to 1.62 reflects reduced
financial leverage, as the company relied less on debt financing. While this may limit short-
term profitability, it lowers financial risk, strengthens the company’s position, and signals a
shift toward more sustainable growth, prioritizing stability and secure returns for
shareholders.

2. Michael Hill International Limited (ASX: MHJ)

Year Net Profit Margin (%) Asset Turnover Equity Multiplier ROE (%)

2022 7,27 1,16 2,62 22,09

2023 5,24 1,15 2,90 17,48

a) Overall Profitability

In 2023, the company's Return on Equity (ROE) declined from 22.09% in 2022 to 17.48%,
indicating a reduction in the company’s ability to generate returns on shareholders' equity.
This decline suggests a weaker performance in profitability and efficiency compared to the
prior year. For shareholders, this represents a lower return on their investment, which may
raise concerns about operational challenges or financial management in the company during
2023. Despite the decline, the company still maintains a respectable ROE, reflecting its
capacity to generate returns, albeit at a reduced rate compared to 2022.

b) Main reasons for the change in the profitability

The decline in the company’s profitability over the two years was primarily driven by a
reduction in operational efficiency and a shift in financial strategy. The decrease in Net
Profit Margin from 7.27% in 2022 to 5.24% in 2023 was the most significant factor,
indicating higher operational costs, reduced pricing power, or inefficiencies in managing
expenses. This decline highlights the company’s reduced ability to retain revenue as profit,
which weakened overall profitability.

Meanwhile, the Asset Turnover fell slightly from 1.16 to 1.15, reflecting marginal
inefficiencies in utilizing assets to generate revenue. This could stem from underperforming
investments, slower sales growth, or challenges in optimizing resource use.
However, the Equity Multiplier rose from 2.62 to 2.90, indicating greater reliance on debt
financing. While higher leverage amplifies returns, it exacerbates the impact of reduced
margins, increasing financial risk. This shift suggests the company traded efficiency for
leverage, a less sustainable long-term strategy.

QUESTION 5:
According to the financial analysis of Aristocrat Leisure Limited and Michael Hill
International Limited from 2022 to 2023, Aristocrat Leisure is obviously the better
investment option due to its stronger financial position and efficiency.

Aristocrat Leisure's Cash Conversion Cycle (CCC) remained negative, improving marginally
from -35.38 days to -31.77 days, demonstrating its capacity to collect cash before paying
suppliers. While inefficiencies developed with Inventory Days growing from 36.55 to 41.06
and Accounts Receivable Days from 55.15 to 57.67, these were countered by longer
Accounts Payable Days, which rose from 127.08 to 130.50, ensuring liquidity. Michael Hill,
on the other hand, had his CCC skyrocket from 183.59 to 222.54 days. This rise was driven
by slower inventory turnover (Inventory Days increased from 314.96 to 329.55), longer
customer payment periods (Accounts Receivable Days almost doubled from 4.64 to 8.43),
and shorter supplier payment terms (Accounts Payable Days decreased from 136.01 to
115.44). These data emphasize Michael Hill's diminishing operating efficiency and liquidity
issues.

Asset management efficiency illustrates Aristocrat Leisure's competitive edge. Its Total Asset
Turnover ratio rose from 0.55 to 0.58, indicating greater revenue generation from assets.
While its Fixed Asset Turnover ratio has decreased from 10.14 to 9.22 as a result of recent
investments, they are most likely strategic, positioning the company for long-term success. In
contrast, Michael Hill's Total Asset Turnover ratio fell marginally from 1.16 to 1.15, while its
Fixed Asset Turnover ratio plummeted dramatically from 3.99 to 3.20, indicating
considerable inefficiencies in the use of fixed assets to produce revenue. This decline
indicates underperforming investments with delayed returns, raising issues about resource
allocation and decision-making.
The capital structure analysis also demonstrates Aristocrat Leisure's better financial health. Its
debt ratio fell from 40.5% to 38.4%, showing less reliance on debt and a shift toward equity
or internal funding, which improved its financial stability. Furthermore, its interest coverage
ratio has more than doubled from 5.96x to 11.07x, owing to higher EBIT and decreased
interest payments. This improvement indicates strong operational performance and reduced
financial risk. On the other hand, Michael Hill's debt ratio rose from 61.84% to 65.47%,
indicating a larger reliance on debt to support operations. Its interest coverage ratio declined
from 8.9x to 5.64x, reflecting lower EBIT and higher borrowing costs. These indicators point
to Michael Hill's increased financial fragility and diminished flexibility.

Profitability indicators reinforce Aristocrat Leisure's dominance. Its Return on Equity (ROE)
grew from 16.59% to 18.46%, owing to higher Net Profit Margin (17.96% to 19.65%) and
higher Asset Turnover (0.55 to 0.58). Although its Equity Multiplier fell from 1.68 to 1.62,
indicating lesser financial leverage, this change emphasizes stability and long-term growth. In
contrast, Michael Hill's ROE fell from 22.09% to 17.48%, owing to a lower Net Profit
Margin (7.27% to 5.24%) and a minor decrease in Asset Turnover (1.16 to 1.15). While its
Equity Multiplier climbed from 2.62 to 2.90, indicating higher financial leverage, this
strategy raises risks due to the company's deteriorating margins and inefficiency.

To summarize, Aristocrat Leisure Limited has a far stronger financial position than Michael
Hill International Limited, as indicated by its greater liquidity, asset usage, capital structure,
and profitability. Aristocrat Leisure's capacity to maintain efficient cash flow, proactively
deploy assets, manage financial risk, and increase profitability displays resilience and growth
potential. In contrast, Michael Hill confronts severe issues such as deteriorating operational
efficiency, increased financial risk, and declining profitability, making it a less attractive
investment option. As a result, Aristocrat Leisure is the preferred solution for Genesis
Financial Group.

References
ALL n.d., WSU Library - Main EZproxy, Uws.edu.au, Western Sydney University - EzProxy,
viewed 22 November 2024,
 <https://datanalysis-morningstar-com-au.ezproxy.uws.edu.au/ftl/company/profitloss?
ASXCode=ALL&rt=A&sy=2022-01-01&ey=2023-12-31&xtm-licensee=datpremium>.

MHJ n.d., WSU Library - Main EZproxy, Uws.edu.au, Western Sydney University - EzProxy,
viewed 22 November 2024,
<https://datanalysis-morningstar-com-au.ezproxy.uws.edu.au/ftl/company/profitloss?
ASXCode=MHJ&rt=A&sy=2022-01-01&ey=2023-12-31&xtm-licensee=datpremium>.

Prescribed Textbook Bakry, W (ed.) 2020, Financing enterprises, 2nd edn,

Pearson, Melbourne, Australia. [ISBN 9780655702269]

APPENDIX

Question 1:
1. Fundamental formulas:
a. Cash Conversion Cycle (CCC) = Inventory Days + Account Receivables days -
Account Payable Days
b. Inventory Days (Day’s sales in inventory) = Inventory/Average Daily COGS =
Inventory/(Annual COGS/365 days)
c. Account Receivables Days (average collection period) = Account
Receivable/Average Daily sales =Account Receivable/(Annual Credit Sales)/365 days
d. Account Payable Days Outstanding = Account Payable/Average Daily COGS
2. Data & Results:

Company Aristocrat Leisure Limited Michael Hill International Limited

Year 2022 2023 2022 2023

Inventory $249,700,000.00 $309,000,000.00 $181,539,000.00 $203,260,000.00

Annual COGS $2,493,900,000.00 $2,746,500,000.00 $210,384,000.00 $225,122,000.00

Average Daily COGS $6,832,602.74 $7,524,657.53 $576,394.52 $616,772.60

Inventory Days 36.55 days 41.06 days 314.96 days 329.55 days
Account Receivable $842,200,000.00 $994,800,000.00 $7,541,000.00 $14,533,000.00

Operating Revenues $5,573,700,000.00 $6,295,700,000.00 $592,773,000.00 $628,972,000.00

Average Daily Sales $15,270,410.96 $17,248,493.15 $1,624,035.62 days $1,723,210.96 days

Account Receivable Days 55.15 days 57.67 days 4.64 days 8.43 days

Account Payable $868,300,000.00 $982,000,000.00 $78,397,000.00 $71,202,000.00

Account Payable Days

Outstanding 127.08 days 130.50 days 136.01 days 115.44 days

Cash Conversion Cycle

(CCC) -35.38 days -31.77 days 183.59 days 222.54 days

3. Calculations in details:

ARISTOCRAT LEISURE LIMITED (ASX: ALL)

a. Year 2022:
+ Inventory Days = Inve ntory/Average Daily COGS =Inventory/(Annual COGS/365
days) = $249,700,000.00/($2,493,900,000.00/365) = 36.55 days
+ Account Receivable Days = Account Receivable/Average Daily Sales = Account
Receivable/(Operating Revenues/365 days) =
$842,200,000.00/($5,573,700,000.00/365) = 55.15 days
+ Account Payable Days Outstanding = Account Payable/Average Daily COGS) =
Account Payable/(Annual COGS/365 days) =
$868,300,000.00/($2,493,900,000.00/365 days) = 127.08 days
+ Cash Conversion Cycle (CCC) = Inventory Days + Account Receivable Days -
Account Payable Days Outstanding = 36.55 + 55.15 - 127.08 = -35.38 days
b. Year 2023:
+ Inventory Days = Inventory/Average Daily COGS =Inventory/(Annual COGS/365
days) = $309,000,000.00/($2,746,500,000.00/365) = 41.06 days
 + Account Receivable Days = Account Receivable/Average Daily Sales = Account
Receivable/(Operating Revenues/365 days) =
$994,800,000.00/($6,295,700,000.00/365) = 57.67 days
+ Account Payable Days Outstanding = Account Payable/Average Daily COGS) =
Account Payable/(Annual COGS/365 days) =
$982,000,000.00/($2,746,500,000.00/365 days) = 130.50 days
+ Cash Conversion Cycle (CCC) = Inventory Days + Account Receivable Days -
Account Payable Days Outstanding = 41.06 + 57.67 - 130.50 = -31.77 days

MICHAEL HILL INTERNATIONAL LIMITED

a. Year 2022:
+ Inventory Days = Inventory/Average Daily COGS =Inventory/(Annual COGS/365
days) = $181,539,000.00/($210,384,000.00/365) = 314.96 days
+ Account Receivable Days = Account Receivable/Average Daily Sales = Account
Receivable/(Operating Revenues/365 days) =
$7,541,000.00/($592,773,000.00/365) = 4.64 days
+ Account Payable Days Outstanding = Account Payable/Average Daily COGS) =
Account Payable/(Annual COGS/365 days) =
$78,397,000.00/($210,384,000.00/365 days) = 136.01 days
+ Cash Conversion Cycle (CCC) = Inventory Days + Account Receivable Days -
Account Payable Days Outstanding = 314.96 + 4.64 - 136.01 = 183.59 days
b. Year 2023:
+ Inventory Days = Inventory/Average Daily COGS =Inventory/(Annual COGS/365
days) = $203,260,000.00/($225,122,000.00/365) = 329.55 days
+ Account Receivable Days = Account Receivable/Average Daily Sales = Account
Receivable/(Operating Revenues/365 days) =
$14,533,000.00/($628,972,000.00/365) = 8.43 days
+ Account Payable Days Outstanding = Account Payable/Average Daily COGS) =
Account Payable/(Annual COGS/365 days) =
$71,202,000.00/($225,122,000.00/365 days) = 115.44 days
+ Cash Conversion Cycle (CCC) = Inventory Days + Account Receivable Days -
Account Payable Days Outstanding = 329.55 + 8.43 - 115.44 = 222.54 days

Question 2:
 1. Fundamental formulas:
a. Total Asset Turnover = Sales/Total Assets
b. Fixed Asset Turnover = Sales/Net property, plant and equipment
2. Data & Results:

Company Aristocat Leisure Limited Michael Hill International Limited

Year 2022 2023 2022 2023

Operating Revenues $5,573,700,000.00 $6,295,700,000.00 $592,773,000.00 $628,972,000.00

Total Assets $10,120,400,000.00 $10,922,300,000.00 $511,179,000.00 $546,488,000.00

NCA - PP&E $549,900,000.00 $682,800,000.00 $148,397,000.00 $196,858,000.00

Total Asset Turnover 0.55 times 0.58 times 1.16 times 1.15 times

Fixed Asset Turnover 10.14 times 9.22 times 3.99 times 3.20 times

3. Calculations in details:

ARISTOCRAT LEISURE LIMITED (ASX: ALL)

Year 2022:
Total Asset Turnover = Operating Revenues/Total Asset =
$5,573,700,000.00/$10,120,400,000.00 = 0.55 times
Fixed Asset Turnover = Operating Revenues/NCA - PP&E =
$5,573,700,000.00/$549,900,000.00 = 10.14 times
Year 2023:
Total Asset Turnover = Operating Revenues/Total Asset = $628,972,000.00/$546,488,000.00
= 1.15 times
Fixed Asset Turnover = Operating Revenues/NCA - PP&E
=$628,972,000.00/$196,858,000.00 = 3.20 times

MICHAEL HILL INTERNATIONAL LIMITED (ASX:MHJ)

a. Year 2022:
Total Asset Turnover = Operating Revenues/Total Asset = $592,773,000.00/$511,179,000.00
= 1.16 times
Fixed Asset Turnover = Operating Revenues/NCA - PP&E =
$592,773,000.00/$148,397,000.00= 3.99 times
b. Year 2023:
Total Asset Turnover = Operating Revenues/Total Asset =
$6,295,700,000.00/$10,922,300,000.00 = 0.58 times
Fixed Asset Turnover = Operating Revenues/NCA - PP&E
=$6,295,700,000.00/$682,800,000.00 = 9.22 times

Question 3:
1. Fundamental formulas:
a. Total liabilities = Total current liabilities + Total non current liabilities
b. Total Assets = Total Current assets + Total non current assets
c. EBIT = Total Revenue Excluding Interest - Operating expense - Depreciation-
Armotisation
d. Debt Ratio = Total liabilities / Total assets
e. Interest coverage Ratio= EBIT/ Interest Expense

ARISTOCRAT LEISURE LIMITED (ASX: ALL)

 a. Year 2022:
Total liabilities = 1,316,600,000 + 2,781,100,000 = $4,097,700,000
Total Assets = 4,180,600,000 + 5,939,800,000 = $10,120,400,000
EBIT = 5,574,800,000 - 3,558,700,000 - 202,500,000 - 295,500,000 = $1,518,100,000
Debt ratio = 4,097,700,000 / 10,120,400,000 = 40.5%
Interest coverage ratio = 1,518,100,000 / 254,800,000 = 5.96 times

b. Year 2023:
Total liabilities = 1,527,100,000 + 2,669,100,000 = $4,196,200,000
Total asset = 4,547,300,000 + 6,375,000,000 = $10,922,300,000
EBIT = 6,322,700,000 - 4,143,000,000 - 224,000,000 - 264,300,000 = $1,701,400,000
Debt ratio = 4,196,200,000 / 10,922,300,000 = 38.4%
Interest coverage ratio = 1,701,400,000 / 153,700,000 = 11.07 times
MICHAEL HILL INTERNATIONAL LIMITED (ASX: MHJ)
 a. Year 2022:
Total liabilities = 158,596,000 + 157,488,000 = $316,084,000
Total asset = 292,132,000 + 219,047,000 = $511,179,000
EBIT = 601,686,000 - 482,533,000 - 50,211,000 - 1,733,000 = $67,189,000
Debt ratio = 316,084,000 / 511,179,000 = 61.8%
Interest coverage ratio = 67,189,000 / 7,549,000 = 8.9 times

b. Year 2023:
Total liabilities = 155,001,000 + 202,872,000 = $357,873,000
Total asset = 244,862,000 + 301,626,000 = $546,488,000
EBIT = 630,436,000 - 516,654,000 - 54,843,000 - 2,881,000 = $56,058,000
Debt ratio = 357,873,000 / 546,488,000 = 65.5%
Interest coverage ratio = 56,058,000 / 9,931,000 = 5.64 times
 Question 4
1. Fundamental formulas:
a. Equity Multiplier = Total Assets/Total Equity
b. ROE = Net Profit Margin x Asset Turnover x Equity Multiplier
2. Data & Results:

Michael Hill International

Company Aristocat Leisure Limited Limited
2022 2023 2022 2023
Net Profit Margin 17.96% 17.65% 7.27% 5.24%
Total Assets $10,120,400,000 $10,922,300,000 $511,179,000 $546,488,000
Total Equity $6,022,700,000 $6,726,100,000 $195,095,000 $188,615,000
Asset Turnover 0.55 0.58 1.16 1.15

Equity Multiplier 1.68 1.62 2.62 2.90

ROE 16.60% 16.62% 22.10% 17.46%

3. Calculations in details:

ARISTOCRAT LEISURE LIMITED (ASX: ALL)

a. Year 2022:
● Equity Multiplier = Total Assets / Total Equity

=10,120,400,000 / 6,022,700,000= 1,68

● ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

= 17.96 x 0,55 x 1.68 = 16.59%

b. Year 2023:
● Equity Multiplier = Total Assets / Total Equity

=10,922,300,000 / 6,726,100,000 = 1.62

● ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

 = 17.65 x 0.58 x 1.62 = 18.46%

MICHAEL HILL INTERNATIONAL LIMITED (ASX: MHJ)

a. Year 2022:
● Equity Multiplier = Total Assets / Total Equity

=511,179,000 / 195,095,000 = 2.62

● ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

= 7.27 x 1.16 x 2.62 = 22.09%

b. Year 2023:
● Equity Multiplier = Total Assets / Total Equity

=546,488,000 / 188,615,000 = 2.90

● ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

= 5.24 x 1.15 x 2.90 = 17.48%