ONLY WUESTION e) Please.

I provide answer for a) to d).

Q1: ADBRI Limited (ABC, formerly Adelaide Brighton Limited) is an integrated construction material and lime producing group of companies focused on the construction, engineering, infrastructure and resource sectors in Australia. ABC has three main operating divisions being: Cement, Lime, Concrete and Aggregates and Concrete Masonry Products. Acrow (ACF, formerly NMG Corporation Limited) operates in the Australian construction services industry, hiring formwork, falsework and scaffolding equipment and undertaking sales of formwork and scaffolding related consumables. The Formwork operation involves the supply of the temporary mould that supports concrete structures in their construction. The Scaffolding operation supplies scaffolding equipment and access solutions to builders and building contractors when working at heights. Below are extracts of ACF and ABC Limited's income statements and balance sheets for 2019. Item ACF ABC Limited Income Statement Income Statement Operating Revenue 68,858,910.00 1,516,400,000.00 Other Revenue 881,092.00 4,100,000.00 Total Revenue Excluding Interest 69,740,002.00 1,520,500,000.00 Operating Expenses (59,347,836.00) (1,266,300,000.00) EBITDA 10,392,166.00 254,200,000.00 Depreciation (3,261,936.00) (91,200,000.00) Amortisation 0.00 (2,400,000.00) Depreciation and Amortisation (3,261,936.00) (93,600,000.00) EBIT 7,130,230.00 160,600,000.00 Interest Revenue 11,261.00 1,600,000.00 Interest Expense (975,131.00) (20,100,000.00) Net Interest Expense (963,870.00) (18,500,000.00) PreTax Profit 6,166,360.00 142,100,000.00 Tax Expense (59,153.00) (18,400,000.00) Net Profit after Tax 6,107,207.00 123,700,000.00 Item ABC Limited Balance Sheet 116,800,000.00 211,200,000.00 7,500,000.00 155,200,000.00 0.00 0.00 28,500,000.00 519,200,000.00 43,600,000.00 0.00 Cash Receivables Prepaid Expenses Inventories Investments NCA Held Sale Other Total Current Assets Receivables Inventories Investments PP&E Intangibles (ExGW) Goodwill Future Tax Benefit Other Total NCA Total Assets Account Payable Short-Term Debt Provisions NCL. Held Sale Other Total Curr. Liabilities Account Payable NLong-Term Debt Provisions Other Total NCL Total Liabilities Share Capital Reserves Retained Earnings Other Equity Convertible Equity SE Held Sale Outside Equity Total Equity ACF Limited Balance Sheet 3.289,617.00 13,262,932.00 708,663.00 3,413,361.00 0.00 71.296.00 259,316.00 21,005,185.00 0.00 0.00 0.00 46,992.624.00 0.00 7,301,902.00 0.00 (1.00) 54,294,525.00 75,299,710.00 12,431,424.00 2,102,006,00 3.519.102.00 65,878.00 0.00 18,118,410.00 2.128,080,00 4.837,086.00 2,593,082.00 0.00 9,558,248.00 27,676,658.00 34,814,339.00 2,062,063.00 10,746,650.00 0.00 0.00 0.00 184,800,000.00 1,118,300,000.00 10,800,000.00 272,500,000.00 0.00 4,500,000.00 1,634,500,000.00 2,153,700,000.00 144,900,000.00 5,700,000.00 33,800,000.00 0.00 8,600,000.00 193,000,000.00 0.00 622,000,000.00 141,300,000.00 100,000.00 763,400,000.00 956,400,000.00 739,000,000.00 200,000.00 455,700,000.00 0.00 0.00 0.00 2,400,000.00 1,197,300,000.00 47,623,052.00 Required (Show the workings of calculations): (a) Using the financial information provided above, calculate each of the following financial ratios for ACF and ABC (Use closing balance to calculate and round up numbers to 2 decimal places 0.xx or x%). ACF ABC FY 2019 Return on Equity (ROE) Net Profit Margin Asset Turnover Capital Structure Leverage (b) Using the financial information provided above, prepare a common-size income statement for both companies (Use closing balance to calculate and round up numbers to 2 decimal places 0.xx or x%). (c) Decompose ROE using the traditional approach. What drives the difference in ROE between ACF and ABC? (d) Comment on ACF and ABC's EBITDA margin and Operating expense/Sales ratios. How did strategic decisions made by these companies affect these ratios? (e) Calculate each of these asset turnover ratios for ACF and ABC and complete the table below (Use closing balance to calculate and round up numbers to 2 decimal places 0.xx or x%). Operating Working Capital Turnover Accounts Receivable Turnover Inventory Turnover Accounts Payable Turnover Days' Accounts Receivable Days' Inventory ONLY 4 SUB PARTS out of 8 have been answered Ans-1-(a). Ratio ACF ABC Formula applied Return on Equity 12.82% 10.35% Net Profit/Shareholders Equity Net Profit Margin 8.76% 8.14% Net Profit/Revenue Asset Turnover 10.93 10.71 Revenue/Total assets Capital Structure leverage 9.22% 34.32% See note Note: ACF ABC Equity 47623052 1194900000 Equity Outside Equity 12400000 External Borrowing LT Borrowings 4837086 622000000 External Borrowing Total 52460138 1819300000 External Borrowing%9.22% 34.32% Common Size Incoome statement Details ACF ABC Total Revenue (excld Int) 100% 100% Operating Expenses 85.10% 83.28% EBITDA 14.90% 16.72% Depreciation 4.68% 6.00% Amortization 0 0.16% EBIT 10.22% 10.56% Net Interest Expense 1.38% 1.22% PRE TAX PROFITS 8.84% 9.35% Tax Expense 0.08% 1.21% Ans-1-(b). NET PROFIT AFTER TAX 8.76% ROE of ACF is better than ABC since external borrowing is very high for ABC (34%).This means a heavy Interest charge against profits and thus making avaialble profits for Equityholders lesser. But ACF total revenue consists of 1.26% share of other revenue which in case of ABC stands at 0.27%.OPerating revenues are stronger for ABC. Ans-1-(d). EBITDA margin for ACF (16.72%) is better than ABC (14.90%).This directly is the result of better operating efficiencies which are clearly visible in the Operating Expense to Sales ratio for the two companies. Operating expense is 85.10% of Revenue for ABC whereas for ACF it stands at a lower 83.28%.This efficiency of (85.10-83.28) or 1.82% is directly contributing to the EBITDA of ACF.Looks better economies in the service industry as compared to manufacturing sector. 8.14% Ans-1-(c)