Financial Report Analysis: Assessing Tourism Australia's Performance

This report provides a comprehensive overview of financial reports and their significance in assessing an organization's financial performance. It begins with an executive summary that highlights the importance of financial activities in determining overall business performance, emphasizing key elements like sales, revenue, and assets. The report then introduces the core components of financial statements, including balance sheets, income statements, and cash flow statements, explaining their individual purposes. The discussion section delves into the role of financial reports in decision-making, investment analysis, and stakeholder communication. The report uses Tourism Australia as a case study, demonstrating how financial statements are used to evaluate the company's performance, profitability, and financial health. It examines key indicators like net income, operating margins, and debt ratios. The conclusion reinforces the importance of financial statements in understanding a company's financial position and supporting informed business decisions. The report also includes a detailed reference list.

Running head: INTERPRETING FINANCIAL REPORT
INTERPRETING FINANCIAL REPORT
Name of Student:
Name of University:
Author Note:

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INTERPRETING FINANCIAL REPORT
EXECUTIVE SUMMARY
Financial activities of any organization set the track of its overall financial performance
assessing the potential and operational quality of the business. in any business sales, revenue,
cost, profit, asset liabilities are common terms that require to be well managed. The financial
report records all the facts related to them in form of statement in order to create information
base that further utilized and analyzed by various component like individual, investors,
employees or even by the business organization itself to assess its own growth trajectory and
detect the operational position in light of the market condition. This report presents brief
discussion on what is financial report and what importance does it have and it can be used to
interpret the financial operation based on a company, Tourism Australia operating in the tourism
industry of Australia.

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TABLE OF CONTENT
INTRODUCTION:..........................................................................................................................2
DISCUSSION:.................................................................................................................................2
CONCLUSION................................................................................................................................5
REFERENCE..................................................................................................................................7

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INTRODUCTION:
In order to derive the picture of overall financial performance of a company at certain
point of time, the financial report plays pivotal role. The statements of the report are consisted of
balance sheets, cash flow statement and income statement. The financial statements are presented
in the explanatory notes that focus on clarification of issues related to use of inventory, change of
equity of the owner, contingencies in liability and other material aspects related to business.
The paper aims to highlight the importance of financial report as well as how this is
applied to derive financial positions and overall performance of the company further influencing
the decision and strategy of the business planning.
DISCUSSION:
FINANCIAL REPORT AND PURPOSE
The financial report or statement of any organization is the document recording the
activities it performs on the financial sector and its further position in the market with an detailed
analysis of the overall performance exerted in certain time period (Carraher and Van Auken
2013). The basic financial statements consist of balance e sheet, income statement, cash flow
statement and statement of changes in equity.
Balance sheet depicts the financial position reporting on the value and condition of
company is owned assets, liabilities, and equity of the owners at a pint of time given. Income
statement is the report of the earned profit, income and incurred expenditure of any company
during a stated period. Statement of changes in equity let the company feature about the changes
made in the equity structure in the company during a time (Weil, Schipper and Francis 2013). To

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know about a company’s cash flows activities operative in investments, financing and other
functioning.
The broader purpose of the financial report is to enlighten layman about a particular
company’s financial position, performance and transformation over time that have useful
implication for the users in creating knowledge of business issues and activities and helping in
choice & decisions made by individual or firms as well. Other purposes are:
 Helps in decision making and further financial analysis by any company
 Information used in annual report to the shareholder made by management
 Motivates and determines the Collective bargaining agreement of employees with the
management
 Have huge role in investment. The data and financial analysis made in the report is
authentic source of the investors to have knowledge about the proceedings of the
company that would help to know the overtime performance and scope of profit from
investing in that company (Lusardi and Mitchell 2014). Financial reports are well studied
by investors and greatly affect the investment decisions helping them to assess the
viability associated with the investment made to the business.
 Helps in decision making of the financial institution regarding allocation of the working
capital to any prospect company (Collier 2015). The report help the bank or financial
institution to decide whether loans can be granted to them or debt securities like long
term loans by bank, debentures can be extends so that the company can undertake their
expenditures or expansionary plans to boost the business growth.

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ASSESMENT OF FINANCIAL PERFORMANCE:
.
Australia is world’s most attractive tourist destination that records 7.8 million
international visitors every year. This has led to existence and operation of various companies
providing support to tourists all over the world (Brigham and Houston 2012). Tourism Australia
is one such reputed firm that is famous for its innovation based marketing campaigns conducted.
The company aims to develop Australia as the most desirable tourist destination on Earth. It is
non-profit corporate entity operative under the Australian government supervision.
The broad objectives of the company are:
 Influencing people for travelling in Australia and setting up events
 Fostering sustainable tourism industry
 Helping the growth of economic benefit emanating from tourism in Australia
As per the law section 42 o f the public Governance of Australia, the company Tourism
Australia does have its own financial report for general purpose use by any sources (Higgins
2012). The preparation of the report follows accrual basis having accordance with historical cost
method except few assets and liabilities that have been measures at fair value in terms of
financial accounting. Statements are presented in Australian dollar.
The financial report of Tourism Australia allow the investors to take advantage of the wealth
of the information it provides that further helps in evaluation of the company as destination of

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investment (Healy and Palepu 2012). In terms of analyzing overall and profitability, net income
generated by the company in tourism industry is the major component to start with the financial
report study. Income statement of the company is fine indicator of profitability since it adds
value on the receipt of the company over all the costs made in form of production cost,
depreciation, interest cost, tax and other expenses being deducted. But due to possibility of over
or understatement, this factor should not drive as the exclusive evaluation factor for any
company.
Operating margin of the profit is another indicator for capturing profitability and efficacy. It
makes comparison on the amount it earn before the tax and interest paid on the generated sales
(Asare and Wright 2012). This further helps the investor assess the managerial efficacy to
handle all sorts of costs and be able to generate revenue over cost to add more to the profit.
Higher operating margin of profit indicates costs are well managed and sales are growing faster
than the rise in cost.
The financial statement is source of company’s stock price assessment and also the earning per
share which reflects the profitability and return to the shareholders.
. The balance sheet of the company contains snapshot view of overall financial health of
the company along with asset liability valuation, Capital expenditures situation and evident
picture of the debt. The information of the report helps in calculation debt ratio such as current
ratio that asses the ability of Tour Australia to handle the outstanding debt.
CONCLUSION
From the above discussion, it can be justified about the importance of financial statement
in determining the financial picture of any organization. Financial statements are purposed to

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develop information of all kind of financial activity that a company undertakes and their
subsequent analysis of the resultant outcome. These outcomes determine the parameter of the
indicators that signals the investors about the profitability of investing in companies to expand
business or pay for liabilities of its functioning. Through the making of balance sheets, income
statement, equity statement the company enlightens about the core activities in the financial
domain and the valuation it contributes to the company’s growth overall.

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REFERENCE
Asare, S.K. and Wright, A.M., 2012. Investors', auditors', and lenders' understanding of the
message conveyed by the standard audit report on the financial statements. Accounting
Horizons, 26(2), pp.193-217.
Brigham, E.F. and Houston, J.F., 2012. Fundamentals of financial management. Cengage
Learning.
Carraher, S. and Van Auken, H., 2013. The use of financial statements for decision making by
small firms. Journal of Small Business & Entrepreneurship, 26(3), pp.323-336.
Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision
making. John Wiley & Sons.
Healy, P.M. and Palepu, K.G., 2012. Business analysis valuation: Using financial statements.
Cengage Learning.
Higgins, R.C., 2012. Analysis for financial management. McGraw-Hill/Irwin.
Lusardi, A. and Mitchell, O.S., 2014. The economic importance of financial literacy: Theory and
evidence. Journal of Economic Literature, 52(1), pp.5-44.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.