Financial Analysis of Amcor Plc

Read the financial analysis of Amcor Plc including liquidity, profitability, capital structure, asset efficiency, and market value. Get insights into the company's board of directors, investment, corporate governance, auditor's opinion, ethics, and investors.

Running Head: ACCOUNTING AND FINANCIAL MANAGEMENT
1
ACCOUNTING AND FINANCIAL MANAGEMENT

ACCOUNTING AND FINANCIAL MANAGEMENT 2
Table of Contents
Overview of the Company...........................................................................................................................3
Insight of Board of Directors.......................................................................................................................4
Board of Directors: Characteristics and Composition..................................................................................6
Investment...................................................................................................................................................6
Corporate Governance.................................................................................................................................6
Auditor’s Opinion........................................................................................................................................7
Ethics and its incorporation.........................................................................................................................7
Investors of AMCOR..................................................................................................................................8
Financial Analysis.......................................................................................................................................9
Liquidity..................................................................................................................................................9
Profitability..............................................................................................................................................9
Capital structure and Asset Efficiency...................................................................................................10
Cash Flow Management........................................................................................................................11
Market value..........................................................................................................................................11
References.................................................................................................................................................12
Appendix 1................................................................................................................................................13

ACCOUNTING AND FINANCIAL MANAGEMENT 3
Overview of the Company
Amcor Plc is one of the globally recognized packaging companies. The major focus of the
company is to produce the flexible packaging, rigid containers which also includes the cartons
closures, services for food beverage as well as pharmaceutical, medical-device, personal as well
as personal care. The company is listed on the Australian stock Exchange and its office is located
in Warmley Bristol, United Kingdom. As on the date of the 30th June 2017, the company
employed total of 35211 people and generated more than US$9.3 billion in sales from the
business across 200 locations in roundabout 40 countries. The company is also focused in
protecting the environment along with the leadership skills and strategized decisions. The current
after tax profit of the company was USD 724 million (Amcor Limited, AR. 2018).
The overall performance of the company is sound; however the year tends to be the tuff for the
company from the point of view of the market conditions as well. In terms of the earning per
share the company were 62.6 cents comparable to the last year. Despite the heavy market
conditions the free cash flow of the company was super strong to the company. Further the news
was also regarding the acquisition of the Amcor with the Bemis which is one of the largest
suppliers of the flexible of plastic packaging in the Americas. This would be a great example of
the extended leadership skills and in development of the recyclable packaging materials which is
reusable by 2025. The significant values are provided to the customers on behalf of the company
via products and the services. The declaration of the dividends also saw an increase of 4.7%
which represents 73% of the Earnings per share. Overall the performance of the company is
sound (Amcor Limited, AR. 2018).

ACCOUNTING AND FINANCIAL MANAGEMENT 4
Insight of Board of Directors
Names of the
Directors
Career History Remuneratio
n
Number of
shares held
as at the
balance
sheet date
Graeme Liebelt
Bec Hons,
FAICD,FTSE
Managing director and CEO of
Orica Limited for a period of 6 and
half years. He also served as the
Chairman of Dulux Group limited.
He is also knows or his fellow
membership with Australian
Academy of Technological
Sciences and Engineering. He also
served in the position of the
Directos for the ANZ banking
Group Limited since July 2013. He
is director since 2014.
501892 63490
Dr Armin Meyer
Dr. Sc. Techn Dipl.
El. ETH
For the period of 9 years Meyer
was Chairman of the Board of Ciba
Limited. Till 2000 Meyer was the
Executive president of ABB
Limited and a member of the
committee as well. In the year
2013, he was also known for his
directorship of Zurich Financial
Services, one of the global
insurance companies
225432 50000
Ron Delia Mr Delia became the part of the
Amcor Limited in the year 2005.
5626653 825000

ACCOUNTING AND FINANCIAL MANAGEMENT 5
MBA Bsc
Earlier in the years, Delia was
Executive Vice President at Amcor,
based in Melbourne. Before he
joined the Amcor Limited he was
Associate Principal of McKinsey &
Company based in New York
(Amcor Limited, AR. 2018).
Paul Brasher
Bec Hons, FCA
Mr Brasher is Chairman of Incitec
Pivot Limited, Deputy Chairman of
Essendon Football Club and a
member of the board of not-for-
profit organization. Not only ths
Brasher also belongs to Perpetual
Limited from the year 2009 to
2015. He has akso worked as a
partner in Pw inclusive of four
years as Chairman of the Global
Board. This man tends to be one of
the most versatile director and the
key areas that are handled by him
are well versed.
221807 21769
Eva Cheng
BA HONS, MBA
Previously Cheng was with Amway
Malaysia, Esprit holdings from
2012 to 2014 and the Link
Management Limited from 2014-
2015. She was also named as
World’s most Powerful Women
two times by Forbes Magazine
(Amcor Limited, AR. 2018).
197715 11160
Karen Guerra She has held the Senior Executive
Position in Europe which also
198450 46721

ACCOUNTING AND FINANCIAL MANAGEMENT 6
Bsc includes the President and the
Director General of Colgate
Palmolive. Currently she is serving
as a Director of Davide Campari-
Milano S.p.A and
Electrocomponents PLC
Board of Directors: Characteristics and Composition
The critical supervision and the team work of the Board of Directors have led the company reach
to altogether a different medium. The major goal of the formation of the Board of Directors is to
approve the financial statements, to supervise the operations of the business and to take the
strategic business decisions in order to take the organization to the next level. The director’s
report also talks about the key matters that have been handled by the board of the Directors. The
board of the Directors is to achieve the highest standards of the corporate governance. The Board
accepts that Amcor's compensation projects keep on being very much adjusted and boost solid
operational execution and the production of significant worth for investors (Cole, 2016). Thus,
there has been no change this year in our way to deal with compensating Amcor officials. The
remuneration of the board has also been disclosed in the previous section and they are paid for
the similar roles in relevant markets around the world of AMCOR LIMITED.
Investment
The AMCOR group has invested presented in the notes to financial Accounting of Amcor
Limited. The group has investments in the foreign operations worth 371.9 USD in comparison to
the previous year with just 279.5 USD. In the financial year 2018, as such there are no new
investments; however the projects like Sonoco Products Company, Hebei Qite Packaging
Company Limited and Plasticos Team S.A.S are fulfilled (Amcor Limited, AR. 2018).
Corporate Governance
The corporate governance statement issued by the company demonstrates the achievement of the
highest standards by meeting the expectations of the regulators and the shareholders in

ACCOUNTING AND FINANCIAL MANAGEMENT 7
compliance with all the necessary and the appropriate accounting standards. The corporate
governance determines the race for the excellence by the AMCOR LIMITED against the self-
performance, and thereafter with the competitors. The company has issued following policies
such as Accounting complaints policy, Anti-Bribery and Corruption Policy, Audit Committee
Charter, Code of conduct and ethics policy and various other types of the policies that could lead
to a sustainable and secure future of the company (Amcor Limited, CGG 2018).
Further for the purpose of the safety of the customers and the overall environment, the company
is making use of the organic products to pack the materials, incorporated 48147 tons of post-
consumer recycled raw materials. The company was also ahead in receiving A grade in Climate
Disclosure Leadership Index. The GHG emissions have been reduced by 7.2% from the year
2017 and have been successful in achieving the goal of 15% reduction in waste-to-disposal. The
water usage was judicious and overall the company achieved 163% of the growth in
sustainability customer interactions in AFA, AFEMEA, and Capsules (Amcor Limited, CGG
2018).
Auditor’s Opinion
As per the analysis from the Annual report of the Amcor Limited it can be observed that the
Price Water House and Coopers are the independent Auditors of the company for the year ended
30th June 2018. It has been declared by the Auditing firm, that no contraventions were found with
respect to the Corporations Act 2001, and the professional code of conduct followed by the
company. For the purpose of conducting the audit the group materiality of USD 44million was
used which is a part of the net profit of the company. The profit before tax has been chosen as
the general benchmark for the comparison purposes. The group is structured into five business
groups and the audit team visited the head office for further evidences and the information. The
overall opinion of the PwC with regards to AMCOR LIMITED was fair and true. The
remuneration of the auditors tends to be $7048 and apart from this the other services that have
been performed by the company are of $917 in terms of the monetary value (Amcor Limited,
AR. 2018).

ACCOUNTING AND FINANCIAL MANAGEMENT 8
Ethics and its incorporation
The major purpose of the code of the ethics and its incorporation in the business is to provide a
framework to work effectively as well as efficiently. The ethical practices that are adopted by the
company are to create the innovative and the integrity in all dealings, to bring innovative ideas to
create the value based products, not only respect all kinds of the culture present in the form of
the employees but also showcases the responsible and result oriented performance. The honest
and the ethical code of principles and practices are followed by the AMCOR LIMITED. To help
encourage this, an independent Whistleblower Service has been set up to empower collaborators
and outsiders, for example, providers, shoppers, contractual workers and clients, to report
potential wrongdoing inside the association. This would not only create the chances of
sustainability for the company at the same time, these results in winning the hearts of the
customers as well as the shareholders. Amcor accepts that it isn't just required to keep the
national laws in every nation in which it works, however that it should likewise lead its business
as per globally acknowledged practices and methodology. This would create a name with a
respect tied with it for the future years of growth (Amcor Limited, COE. 2018).
Investors of AMCOR
Name Shares Held % held
HSBC Custody Nominees
(Australia) Limited
487433504 42.09%
J P Morgan Nominees
Australia Limited
242272980 21.35%
Citicorp Nominees Pty
Limited
61192355 5.28%
National Nominees Limited 47736211 4.12%
BNP Paribas Norms Pty Ltd 14510177 1.25%
From the above table it can be clearly stated that the HSBC Custody Nominees Limited stands at
first position in terms of the highest as well as the largest shareholder of the AMCOR LIMITED.
The company holds 42.09% of the shares of the AMCOR LIMITED followed by J P Morgan
Nominees Australia Limited holding 21.35% shares which equals to 242272980. During the

ACCOUNTING AND FINANCIAL MANAGEMENT 9
financial year 2017-2018, around 6200000 shares, of ordinary nature were purchased on the
market at an average price of 16.09 per share (Amcor Limited, AR. 2018).
Financial Analysis
Under the section of the financial analysis the technique of the ratio analysis has been conducted
to get an insight of the performance of the AMCOR LIMITED in an overall manner. The ratios
that have been analyzed in this section are the liquidity, capital structure, asset efficiency,
profitability, market value and the overall cash inflow and the outflow.
Liquidity
Liquidity Ratios 2018 2018
Current Ratio Current Assets 3285.8 0.70
Current Liabilities 4696.8
Quick Ratio Quick Assets 3263.1 0.69
Current Liabilities 4696.8
Under the liquidity scenario, the performance of the company is not satisfactory in terms of the
regular ratios as the current ratio is below 2:1 and the quick ratio is below 1:1. The major reasons
for such performance are due to increase in the inventories as well as the current assets from
previous years along with the increase in the interest bearing liabilities of the current nature. To
improve the position the company must focus on the long term liabilities to make the cash
conversion cycle health. This can also be improved by getting rid of the obsolete assets which
are not giving any value to the company (Chiaramonte and Casu, 2017).
Profitability
Profitability 2018 2018
Net Profit Net income 735.4 8%
Net sales 9319.1
Return on Equity Net income 735.4 53%
Net Equity 1400

ACCOUNTING AND FINANCIAL MANAGEMENT 10
Operating profit margin Operating profit 1856.8 20%
Net sales 9319.1
In case of the profitability the overall profitability of the company in comparison to the previous
years is higher yet low. The net profit margin of the current year pertains to 8% whereas the
same was 6.74% in the previous years. This indicates that the company has improved in terms of
the other income as well as reduction in the operating expenses. The return on equity is also
smooth at 53%, operating margin being 20% for the year 2018. The overall performance is
satisfactory and the company shall focus on diversifying in the other areas to gain more
customers and revenue (Dizkirici, Topal and Yaghi, 2016).
Capital structure and Asset Efficiency
The capital and the efficiency ratio determine the ability of the company to create a structure of
the funds acquired with the help of the debt as well as equity. The debt to equity ratio is 1.91,
whereas the debt to total assets is 0.30 only. This indicates that the overall performance of the
company in the formation of the capital structure is normal and it can be improved in two ways.
For the purpose of gaining the tax advantage the debt shall be chosen, else equity. The current
position of the company suggests the increase of funds through equity. The ability to pay the
interest costs is fast at 4.98 times and this indicates that the company is well verse in paying the
interest of the long term range (Friederich and Payne, 2015).
Capital Structure 2018 2018
Debt to Equity Debt 2671 1.91
Equity 1400
Times interest coverage
ratio EBIT 1085.5 4.98
Interest Expense 217.9
Debt to Total Assets Debt 2671 0.30

ACCOUNTING AND FINANCIAL MANAGEMENT 11
Total Assets 9046.7
Cash Flow Management
The management of the cash flow can be observed with the help of the cash flow statement
presented in the annual report of the company. From the analysis it can be stated that the cash
flow from the operating activities have increased during the period of a year from 1285 to 1354.
The company has paid for the acquisition of the plant and the machinery amounting to $372 and
for the controlled business and activities as well for $13.2. Some of the borrowings have been
repaid whereas some of them have been acquired again. The overall cash inflow scenario has
been equivalent to the previous year almost. The net cash available is $542 whereas the same
was 557 in the previous year. The overall management of the cash is sound and smooth and the
company must maintain it (Kasych and Tsyhan, 2017).
Market value
Market Value ratios 2018 2018
EPS Net income 735.4 0.53
Weighted average outstanding
shares 1400
Price to Earnings Ratio Market Price 15.56 29.36
EPS 0.53
The market value ratios determine the position of the company with respect to the market factors.
The major factor that is being used is the share price of the company. The two parameters that
have been chosen are EPS and P/E ratio. The earning per share of the AMCOR LIMITED is 0.53
whereas the P/E ratio is 29.36. The earning per share determines the earnings available for the
shareholders whereas the price to earnings ratio determines the amount invested by the company
and the returns associated with it. The P.E ratio is sound due to the market value of the AMCOR
LIMITED and this indicated that the investors must invest in the business to get the future
opportunities and growth in terminal value (Kajananthan and Velnampy, 2018).

ACCOUNTING AND FINANCIAL MANAGEMENT 12

ACCOUNTING AND FINANCIAL MANAGEMENT 13
References
Amcor Limited, AR. (2018) Annual report [Online] Available from
file:///C:/Users/SYSTEM~1/AppData/Local/Temp/Rar$DIa0.424/3507756_1140618019_Amcor
AnnualReport2018-1.pdf [Accessed on 177th July 2019]
Amcor Limited, CGG (2018) Corporate Governance Guidelines [Online] Available from
https://assets.ctfassets.net/f7tuyt85vtoa/7Mk19e0Jg8DsDR3Jl7KI7H/aa8b33fb0e1d3262850036f
b9ba889b8/Corporate-Governance-Guidelines-2019.pdf [Accessed on 177th July 2019]
Amcor Limited, COE. (2018) Code of Ethics [Online] Available from
https://assets.ctfassets.net/f7tuyt85vtoa/3puoDXcsE7tjGnHtNfwRTo/02d6c76937121b9adf5c2fe
207dc16db/Code-of-Buisness-Conduct-and-Ethics-2019.pdf [Accessed on 177th July 2019]
Amcor Limited, SR. (2018) Sustainability report [online] Available from
https://assets.ctfassets.net/f7tuyt85vtoa/2EkF2w9NlScqM6uocc0ccU/d979dd59f6e43b70a486a4
940a6b1e2e/Amcor_Sustainability_Review_2018.pdf [Accessed on 177th July 2019]
Chiaramonte, L. and Casu, B., 2017. Capital and liquidity ratios and financial distress. Evidence
from the European banking industry. The British Accounting Review, 49(2), pp.138-161.
Cole, S., 2016. Good governance and the curious case of the alternate director. Governance
Directions, 68(10), p.603.
Dizkirici, A.S., Topal, B. and Yaghi, H., 2016. Analyzing The Relationship Between
Profitability and Traditional Ratios: Major Airline Companies Sample (Karlilik ve Geleneksel
Oranlar Arasindaki Iliskinin Incelenmesi: Büyük Havayolu Sirketleri Örnegi) 1. Journal of
Accounting, Finance and Auditing Studies, 2(2), p.96.
Friederich, S. and Payne, R., 2015. Order-to-trade ratios and market liquidity. Journal of
Banking & Finance, 50, pp.214-223.
Kajananthan, R. and Velnampy, T., 2018. Liquidity, Solvency and Profitability Analysis Using
Cash Flow Ratios and Traditional Ratios: The Telecommunication Sector in Sri Lanka. Research
Journal of Finance and Accounting, 5(23).

ACCOUNTING AND FINANCIAL MANAGEMENT 14
Kasych, A. and Tsyhan, R., 2017. Concept of Accounting and Analytical Provision of Cash Flow
Management. Accounting and Finance, (3), pp.28-37.

ACCOUNTING AND FINANCIAL MANAGEMENT 15
Appendix 1
AMCOR LIMITED
Liquidity Ratios 2018 2018
Current Ratio Current Assets 3285.8 0.70
Current Liabilities 4696.8
Quick Ratio Quick Assets 3263.1 0.69
Current Liabilities 4696.8
Capital Structure 2018 2018
Debt to Equity Debt 2671 1.91
Equity 1400
Times interest coverage
ratio EBIT 1085.5 4.98
Interest Expense 217.9
Debt to Total Assets Debt 2671 0.30
Total Assets 9046.7
Profitability 2018 2018
Net Profit Net income 735.4 8%
Net sales 9319.1
Return on Equity Net income 735.4 53%
Net Equity 1400
Operating profit margin Operating profit 1856.8 20%
Net sales 9319.1
Total Asset turnover Net Sales 9319.1 1.03
Average total Assets 9065

ACCOUNTING AND FINANCIAL MANAGEMENT 16
Efficiency Ratios 2018 2018
Days Inventory
Outstanding Inventory * 365 495962 66.46
Cost of goods sold 7462.3
Days Receivable
Outstanding Accounts receivable * 365 468477.5 50.27
Credit sales 9319.1
Market Value ratios 2018 2018
EPS Net income 735.4 0.53
Weighted average outstanding
shares 1400
Price to Earnings Ratio Market Price 15.56 29.36
EPS 0.53