Analysis of Profits and Share Price in Retail Food Group

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BAO 2203 Corporate Accounting

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Table of Contents
Question 1........................................................................................................................................3
Question 2........................................................................................................................................4
Question 3........................................................................................................................................5
Question 4........................................................................................................................................6
Question 5........................................................................................................................................7
Question 6........................................................................................................................................8
References......................................................................................................................................10

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Question 1
Profits are the main aspect of the business and they shall be maintained in an effective manner.
There are various changes which take place in them with time. This is also the case with the
share price of the company which fluctuates on daily basis. There are the ups and downs which
are faced and that affect the value of the company. Due to this it is required that they shall be
evaluated in proper manner (RFG, 2017). All the changes which are taking place will have to be
determined and together with them the reasons which are responsible for it will also be needed to
be identified. This will be made possible when the information required for carrying out of the
analyzation will be obtained. By the help of that there will be evaluation of the performance
which will be made possible and the steps which are to be taken for the further improvement will
be identified. All of the changes that have occurred in relation to the profits and share price in the
retail food group have been identified and represented below.
Particular
s
Net profits Share price
2016 52963 5.3238
2017 61927 4.6932
2018 -306693 0.41
All of the values have been identified and in that the trend which is involved has been taken into
account. It can be seen that there is an increase in the number of profits which is made from
$52963 in 2016 to $61927 in 2017. The company has made an increase because of the rise which
has been made in the sales which have been done. The cost incurred in the business is also
increasing with sales (Ergun, 2012). It has been noted that increase in the sales is more than that
of the cost and due to that profits are also increasing. In the year 2018 the company has made
huge losses which amounted to $306693. This was a vast decline faced by the company and has
affected its position in an adverse manner. It has been noted that despite the increase in the sales
there is the loss which is made in this year. The company has made the increment in the revenues
but the expenses have also risen with the same. The control has not been established by the
company on the same and due to that there are high amount of the losses which have been made

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by the company. The main expenses which have increased faster include the operations related
cost and also the expenses of occupancy (Li et al., 2014). The company has also taken into
account the impairment losses which have been incurred and due to that the losses have further
increase. They have been charged from the profits and that led to decline in the amount to such
level that losses have been made in the company and that has affected its long term profitability.
In addition to this the share price related data is also collected and from that it can be noted that it
is declining on a continuous basis. There is the link which is available between the profits which
are made in the company and the share price which is prevailing. With the decline in the profits
of the company there is a reduction in the share price also. This is because the losses create a
negative impact on the investors and market. The trust is broken and that led to the adverse
impact on the share price. With the losses company is not able to pay the required amount to the
investors and they are demotivated by the same (Yahoo finance, 2019). They will not be willing
to deal with the company and will not be investing further in the company. As there will be
fewer investors and no one else will be interested in the company so the value of the business
will be reduced and that will be affecting the share price in negative manner to decline the same.
This decision is taken by the investors because they are not sure of the returns which will be
made by the company. If the losses will be continuing then the company will not be able to pay
any amount to the shareholders and so without any return on investment will be made.
Question 2
In the business, there are various assets which are used and there is the change which is required
to be made on them and that is identified to be the impairment. In the case of retail food group
also the same is done and there has been the identification of the losses which amounted to
$123.7 million. There are various new decisions which have been made in the company and
because of them the charge has been made. In the business there are various such franchises
which are operating without any profits. With the new system all of them will be identified and
discontinued which will be creating the impairment losses (Peetathawatchai and Acaranupong,
2012). The centralized functions will also be rationalized in the new process which is also an
important step. This has affected the shareholders’ value and the same has declined and reached
to $18.5 million. To consider this there will be consideration of the new laws which are
applicable under the AASB 9. In that all the systems and processes which are required to be