What is this company’s goal? What strategy is it using to achieve this goal? Has this evolved or changed over time?

You work for a company which is thinking of making an investment in Collins Foods Limited. You have been asked to advise management on the basis of the company’s annual reports. You can obtain the financial reports at http://www.collinsfoods.com/investors/news-and-announcements/. In announcement types, select annual reports for 2017, 2016, and 2015.

Questions from your manager
1)	What is this company’s goal? What strategy is it using to achieve this goal? Has this evolved or changed over time? What risks can you identify? What benefits can you identify? Does this look like a sustainable strategy?
2)	Your manager wants to get a better understanding of how the investments in Sizzler have affected the company’s performance. He asked if there were any differences in the company’s business model in relation to the Sizzler investments. If there are, what impact(s) would this be expected to have on the risk/return profile for Collins?
3)	Your manager wants to get a clearer understanding of the performance of the Sizzler Asia investment from 2015 to 2017. He wants to know the carrying amount of this asset at the start of 2015 and the end of 2017. He also wants to know whether it has been impaired and how much it contributes to the revenues and profits of Collins. He suggests the notes relating to segment reporting may be of some assistance.
4)	The company refers to EBITDA and underlying EBITDA or adjusted EBITDA. What is the difference between EBITDA and the other figures? Why would the company use underlying or adjusted EBITDA?
5)	Your manager wants to get an understanding of how the company’s managers view the future performance of its major product lines. Specifically, he wants to get a sense of whether the company’s managers expect the future cash flows of the various restaurants (KFC, Sizzler, Snag Stand) will grow or decline.
Luckily for you, your manager recently met a tipsy accountant, who mumbled something about checking the value in use calculations. This friendly chap suggested your manager ignore information relating to cash flows greater than 5 years. Your manager decided to accept this advice.
6)	Provide advice to your manager stating whether the managers of Collins seem to be deliberately overstating or understating expected growth in cash flows. Include any concerns you have about the method used to develop this advice (see below). Support your response with evidence. Your manager asked you to compare the predictions of one year with the results of the next year, and to use the underlying or adjusted EBITDA figures for the actual results. That is, you will compare expected growth or decline in cash flows in one year with the underlying or adjusted EBITDA in the next year. You may also want to suggest alternative methods to address your manager’s concerns.
7)	Using spreadsheet formulae, calculate the following ratios for 2016 and 2015. (Yes, he meant those years. The responses to questions 1-6 relate to 2017, 2016, and 2015. However, question 7 only relates to 2016 and 2015.)
You discovered that the miserable old goat has only provided you with the figures in pdf documents. A colleague suggested you copy and paste the balance sheets, income statements (don’t worry about other comprehensive income) and the cash flow statements for 2016, 2015, and 2014 (comparison figures in the 2015 reports, into the spreadsheet. Tidy the material up, ensure the figures can be manipulated. That is, ensure the figures are numbers, not text.
The manager wants the ratio analysis to be presented using the structure below. Copy and paste this into a tab on the spreadsheet. The formulae will need to link to the figures from the relevant statements.
	2016	2015
Current ratio
Quick ratio
Gearing
Interest coverage
OCF to interest
ROE
ROCE
Operating profit margin
Gross profit margin
Average inventories turnover
Settlement period for receivables
Settlement period for creditors
Having calculated the figures for the ratio analysis, identify and discuss any issues you think the manager should be made aware of. You must also identify and discuss any issues/difficulties you came across when preparing this analysis. Ensure your discussion covers the impact on the way certain ratios are interpreted.