Accounting and Finance - Analysis of Mondi Group's Financial Statements
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This article provides an analysis of Mondi Group's financial statements, including the need for ratio analysis, its benefits and limitations. It also includes information on the company's products, size, operations, and chairman's report.
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Running head: ACCOUNTING AND FINANCE Accounting and Finance University Name Student Name Authors’ Note
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2 ACCOUNTING AND FINANCE Table of Contents What does your company do?....................................................................................................2 Where does it do its business?...................................................................................................2 How does it do its business?......................................................................................................3 Chairman’s / Chief Executive’s reports within financial statements.........................................3 News stories’ for your firm........................................................................................................3 Need for ratio analysis...............................................................................................................4 Benefits of ratio analysis............................................................................................................4 Limitations of ratio analysis.......................................................................................................5 Reference....................................................................................................................................6
3 ACCOUNTING AND FINANCE What does yourcompanydo? Products/Services delivered Mondi Plc is a transnational packaging and paper group that is fully assimilated across the packaging and paper value chain from growing of particularly wood and manufacture and production of pulp as well as paper. This involves packaging paper along with uncoated fine paper to the process of conversion of packaging papers into corrugated packaging, industrial bags, extrusion coatings and release liner. Size of the company The company has around revenue of €7,096 million, operating income of €1018 million during the year 2017 and has 25400 employees and can be considered to be a large firm (Mondigroup 2018). Where does it do its business? The company Mondi Group can be considered to be a multinational firm that has roughly 102 operations across over and above 30 nations, primarily in central Europe, South Africa as well as Russia (Mondigroup 2018). How does it do itsbusiness? The company operates in different segments. In essence, the operating segments of the firm include packaging paper, fibre packaging, consumer packaging and uncoated fine paper (Mondigroup 2018). The entire group identified business units to represent overall nature of the underlying products that are produced.
4 ACCOUNTING AND FINANCE Chairman’s / Chief Executive’s reports within financial statements Annual report of the firm presents the Joint Chairman’s Statement that helps in understanding commitment of the company to grow responsibly. According to their opinion, the company has a robust stratagem together with Mondi’s skilled and hard working teams, selection of cost advantaged assets, different range of products and assimilation of various sustainability risks as well as opportunities into different business decisions. The entire board of the company Mondi Group strongly uphold adherence to the highest standards of corporate governance. Also, over the past five years, Mondi has enhanced basic earnings per share by approximately 12% on an average every year and considerably outperformed the average figure of the peer group on total return of the shareholder(Mondigroup 2018). In addition to this, the joint executive officers of the company are also of the view that the group has capability to deliver long term value to their shareholders. Based on performance of the group in the year 2017, the board have suggested a final ordinary dividend of roughly42.90 euro cents for every share(Mondigroup 2018). Analysis of financial statement of the corporation Mondi Group News stories’ for your firm The news story published in fin 24 during December 2017 reveals the fact that International and Packaging Group entered into an agreement to acquire around 100% of remaining shares in particularly Powerflute that is a segment of Nordic Packaging and Container Holding in a specific deal worth billions(Mondigroup 2018). Need for ratio analysis Financial ratio analysis can be considered to be a significant tool for assessing financial health of a corporation(Price III et al.2011). Ratio analysis can be needed for analytically
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5 ACCOUNTING AND FINANCE evaluating different aspects of the firm Mondi’s operating as well as financial performance namely level of efficiency, solvency, and liquidity along with profitability. Benefits of ratio analysis Ratio analysis can be considered to be an extensively utilized tool of evaluation of financial statement(Dalnial etal.2014).Thishelpsinestablishmentofnumericalelsewise quantitative association between two different figures of a financial assertion to determine strength along with weaknesses of corporation along with current position and historical performance. The benefits of ratio analysis in a business concern are as mentioned below: -Trend analysis using ratio analysis may prove to be effective for forecasting as well as planning various business actions of the upcoming period(Warshavsky 2012) -Accounting ratio can also aid in the process of estimating diverse budgeted figures. For instance, sales budget might be prepared with the assistance of evaluation of last sales (Dechow et al.2011) -Ratio analysis indicates towards degree of efficiency in the process of management and utilization of assets. -Again, ratios can also be considered to be effectual means of communication and play a crucial role in enlightening about the position and progress made by the firm to the owners else wise other parties(Dalnial et al.2014)
6 ACCOUNTING AND FINANCE Limitations of ratio analysis -Ratios are enumerated from the information calculated from financial statements. Therefore, financial assertion suffers from different limitations and might therefore affect the overall quality of analysis of ratio. -Financial statement delivers historical information and do not reflect present conditions. Therefore, it is not effective in forecasting the future period(Nia 2015). -Diverse accounting policies as regards inventory valuation, charge of depreciation and many others can make the accounting data along with accounting ratios of two corporations non- comparable -There is also lack of standard for comparison. Essentially, no fixed standards can be presented for idea ratios.
7 ACCOUNTING AND FINANCE Reference Mondigroup.2018. MondiGroup.Retrieved6April2018,from https://www.mondigroup.com/ Dechow, P.M., Ge, W., Larson, C.R. and Sloan, R.G. 2011. Predicting Material Accounting Misstatements*.ContemporaryAccountingResearch,accessedon16April2016, https://www.thecaq.org/sites/default/files/DECHOW_et_al-2011- Contemporary_Accounting_Research.pdf Price III, R.A., Sharp, N.Y. and Wood, D.A. 2011. Detecting and predicting accounting irregularities:Acomparisonofcommercialandacademicriskmeasures.Accounting Horizons, accessed on 16 April 2016,http://aaapubs.org/doi/10.2308/acch-50064?code=aaan- site Warshavsky, M. 2012. Analyzing earnings quality as a financial forensic tool. Financial ValuationandLitigationExpertJournal,accessedon16April2016, http://www.indianjournaloffinance.co.in/index.php/IJF/article/view/122796 Dalnial, H., Kamaluddin, A., Sanusi, Z.M. and Khairuddin, K.S. 2014. Detecting Fraudulent Financial Reporting through Financial Statement Analysis. Journal of Advanced Management Science,accessedon16April2016, https://www.researchgate.net/profile/Hawa_Dalnial/publication/315806227_Detecting_Fraud ulent_Financial_Reporting_through_Financial_Statement_Analysis/links/ 58e6f5b74585152528de55df/Detecting-Fraudulent-Financial-Reporting-through-Financial- Statement-Analysis.pdf
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8 ACCOUNTING AND FINANCE Nia, S.H. 2015. Financial ratios between fraudulent and nonfraudulent firms: Evidence from Tehran Stock Exchange. Journal of Accounting and Taxation, accessed on 16 April 2016, http://www.academicjournals.org/article/article1424948569_Somayyeh.pdf