Business Valuation and Analysis: Evaluation of Blackmores Limited

Running Head: Business Valuation and Analysis
1
Project Report: Business Valuation and Analysis

Business Valuation and Analysis 2
Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
Ratio analysis....................................................................................................................3
Impact of major expenses on profit margin..................................................................7
Ratio trend....................................................................................................................9
Cash flow analysis............................................................................................................9
Financial risk and cash flow management..................................................................11
Conclusion......................................................................................................................11
References.......................................................................................................................12
Appendix:.......................................................................................................................13

Business Valuation and Analysis 3
Introduction:
Identifying the financial performance and non financial performance of a business sis one of
crucial element in order to forecast the future performance and evaluate the total worth of a business.
The report has been prepared to evaluate the overall financial performance of an Australian company
named by Balckmores limited. The financial data from 2013 to 2018 has taken into concern to
measure the actual performance of the business. The reformatting of financial statement of the
company has been done in order to identify the operating and financial performance of the business.
And the ratio analysis and cash flow analysis has been done to identify the financial condition of the
company.
Company overview:
Blackmores limited is an Australian company which operates in the health supplements. It has
been founded in 1930 at Australia. It was the first health product shop in the Brisbane, Australia. The
market capitalization of the company is around $ 2 billion. 843 people are employed by the company
and the company mainly manufactures the herbal supplements, extensive range of vitamins etc which
are sold across the Australian, Asian and Europe market (annual report, 2017).
Ratio analysis:
Ratio analysis is a process which focuses on the main items of the final financial statements
of a business to evaluate the performance and make decision about the company. In case of
Blackmores, the financial ratios of the company from 2014-2018 has been calculated through
transforming the final financial statement into the operating and financial activities of the business.
The liquidity and profitability ratios of the business have been calculated which are as follows:
Return on equity:
Return on equity is a profitability ratio which measures the total earnings of the company
against the available funds of the business (Madhura, 2014). The return on equity position of
Balckmores limited has been improved in the year of 2016 because of higher profits. But after that the
company is facing huge reduction because of the reduction in the profitability position of the
company. It express that the profitability level of the company is average.

Business Valuation and Analysis 4
Figure 1: Return on equity
(Annual report, 2017)
Return on net operating assets:
Return on net operating assets is also a profitability ratio which measures the total earnings of
the company against the operating assets of the business which is calculated through formatting the
financial statements of the business. The return on net operating assets position of Balckmores limited
has been improved in the year of 2016 from 2013 because of higher profits. But after that in the year
of 2017, the level has been reduced at great level and 2018 explains few positive changes into the
position of the business. It express that the profitability level of the company is average.
Figure 2: Return on net operating assets