Financial Report

Running Head: Financial Report 0
Billabong International Limited
Financial Report
5/17/2019
The report has prepared so that the use of the accounting information can be understand. In this
report the practical are evaluated to know the monetary place of the company so that the knowledge
and skills of the accounting information can be ascertained. The annual report of the company
Billabong International Limited has been studies which are the merchandiser of surf wear and other
outdoor action clothing and their financial position is ascertained. By evaluating and ascertaining the
monetarist ratios of the company it is analyzed that the company has incurring the losses and they
have the high debt which is not good for the company. So for improving their financial position of the
company, they have to make the proper budgets and plans and also reduce their operating expenses.
As the company financial leverage position is also not good so by making the budgets and using the
proper marketing techniques, the company can improve their financial position.

Financial Report 1
Contents
Background Company Overview.................................................................................................................2
Analysis of the ratio....................................................................................................................................3
Conclusion and findings............................................................................................................................13
Recommendation.......................................................................................................................................14
References.................................................................................................................................................15
Appendix...................................................................................................................................................17

Financial Report 2
Background Company Overview
Billabong International Limited is a private company which deals in retail products of the
clothing. The company was founded in 1973 in the Gold Coast, Queensland, and Australia. The
company was originated by the Gordon Merchant. The company has the headquartered in the
Burleigh Heads, Queensland, and Australia. The company has earned the net revenue of A$1.27
billion and has the net income of the A$25.7 million in the year 2014 (Beaver, et al., 2015). After
the year 2014, the profit of the company has declined. The company is the surf company which
deals in the clothing products and it also produces some accessories such as the backpacks,
watches, snowboard products, etc.
The company engages in the delivery, advertising, wholesaling and trade of the
accessories, wetsuits, eyewear, etc. The company also provides the hardware products surf,
snow, skate, and sports accessories under the different brand names. The company operates only
online retail e-commerce products (Kanapickienė and Grundienė, 2015). The company offers
many products for more than the 2200 brands which include swimwear, jeans, t-shirts, shorts,
pants, jackets, sports eyewear, fleece tops, jumpers, sweaters, etc. The products of the Billabong
are sold to over the 60 countries world widely through the licensees and it can also be sold
directly from the company. In the Australia Billabong product is the leading product (Legg,
2017).

Financial Report 3
Analysis of the ratio
Profitability ratio: This ratio is the financial metrics of the company Billabong
International Limited as it benefits in examining the earning ability of the company. With the
help of this ratio, the company can evaluate how much profit or loss they have incurred and what
is the profitability position in the market (Abdul-Baki, 2014). The owners and investors use this
ratio so that they can evaluate the asset and equity of the company.
Return on Equity
=
Return on Asset = Net Profit / Total asset
Return on Equity
Year 2016 2017 2018
Net Loss -23,739 -77,129 -18,400
Shareholder's
Equity
259,289 175,244 160,488
Ratio -0.09155 -0.44012 -0.11465
Return on Asset
Year 2016 2017 2018
Net Loss -23,739 -77,129 -18,400
Total Asset 744,248 578,124 582,919
Ratio -0.0319 -0.13341 -0.03157
The above two ratios are analyzed so that the profitability of the company can be defined.
Return on asset is evaluated so that the profitability of the company can be determined in terms
of its assets. The company has incurred the loss every year so their profitability ratio is not good.
Return on asset is considered as the best when they are above 5% (Mules, et al., 2014). But in
this company in the year 2016 and 2018, the company has the ROA of 3% which is not
indicating the good performance

Financial Report 4
The return on equity is also evaluated so that the profitability of the company Billabong
International Limited can be evaluated in terms of its equity. The return on equity is considered
good in the company when it carries in the range between 15- 20%. In the year 2016, the net loss
of the company 23739 which has increased in the year 2017. In the year 2018, the company has
done better performance from the last two years but still, they had incurred the loss of 18400
(Billabong International Limited, 2018). In the year 2017 and 2018, the company has issued less
equity in comparison to the year 2016 which also results in declining their profit.

Financial Report 5
Efficiency Ratio: This ratio is helpful in analyzing the efficiency of the company. It
helps in evaluating and analyzing the assets, equities, and liabilities of the company (Terry-
Armstrong, 2014). As the company Billabong International Limited deals in the commercial
things so this ratio is helpful in tracking the performance. It measures the current performance of
the company and shows the capacity of the company to produce revenue by using its properties.
Asset Turnover Ratio = Net Revenue / Average Total Assets
Equity Turnover Ratio = Net Revenue / Average Shareholder's
Equity
Asset Turnover Ratio
Year 2016 2017 2018
Net Revenue 1,103,535 979,452 476,465
Average Total Asset 1146238 950248 871981
Ratio 0.962745 1.030733 0.546417
Equity Turnover Ratio
Year 2016 2017 2018
Net Revenue 1,103,535 979,452 476,465
Average Shareholder's
Equity
400081 304888.5 248110
Ratio 2.758279 3.212492 1.920378
The asset turnover ratio and the equity turnover ratio is evaluated so that the efficiency of
the company Billabong International Limited can be ascertained (Lantto and Sahlström, 2019).
The above two ratios are evaluated so that the efficiency ratio in the company can be determined
and the monetary situation of the company can be ascertained with the help of the assets and the
equity. With the help of the asset turnover ratio, the company can evaluate the sales income of
the company by using the assets of the company.
As the company is incurring the losses so they have a high turnover ratio. The net
revenue of the company is declining from the previous year 2016 and 2017 as a comparison to