Question 2

Following information is from the 2022 financial statements of Coles Group Limited (COL).

Income Statement of Coles Group Ltd

Balance Sheet of Coles Group Ltd

1. If we want to evaluate COLs debt management and profitability, what financial ratios should we investigate? Please provide at least one examples with calculation for each using the information from the above tables.
2. From the income statement of Coles Group Ltd we can learn that the Net income increased by 4.28% compared to previous year, however the EBITDA decreased by 0.47%. Please provide at least 1 possible reason to explain this scenario. And provide at least one possible reason to justify why we use EBITDA alongside with net income for analysing profitability.
3. COL is currently trading at $18 per share, based on this information and the information provided in the table above what is the COLs current P/E ratio? If Woolworths P/E ratio is 30, which stock will investors expect to have higher growth rate in the future given market is efficient and stocks are not mispriced? Coles or Woolworth?

Income Statement \begin{tabular}{lrr} (AUD) & 2022 (i) & Y/Y CHANGE \\ \hline \begin{tabular}{l} Cash and short-term \\ investments \end{tabular} & 589.00M & 25.16% \\ \hline Total assets & 18.84B & 3.93% \\ \hline Total liabilities & 15.71B & 2.63% \\ Total equity & 3.12B & - \\ Shares outstanding & 1.33B & - \\ Price to book & 7.72 & - \\ \hline Return on assets & 5.99% & - \\ Return on capital & 8.64% & - \end{tabular}