Financial Reporting Analysis
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This document provides an analysis of the financial positions and performance of Kathmandu Holdings Ltd and Breville Group Ltd. It includes an overview of the companies, background research, analysis of economy-wide and industry-specific factors, company-specific factors, financial ratio analysis, lending decisions, and investment decisions.
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Running head: FINANCIAL REPORTING ANALYSIS
Financial Reporting Analysis
Name of the Student:
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Author’s Note:
Financial Reporting Analysis
Name of the Student:
Name of the University:
Author’s Note:
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1FINANCIAL REPORTING ANALYSIS
Table of Contents
Overview....................................................................................................................................2
Background Research.................................................................................................................2
Economy-wide Factors...........................................................................................................2
Industry Specific Factors........................................................................................................3
Company Specific Factors.....................................................................................................3
Financial Ratio Analysis........................................................................................................3
Lending Decisions......................................................................................................................3
Business Memorandum..........................................................................................................3
Investment Decision...................................................................................................................4
Business Memorandum..........................................................................................................4
References..................................................................................................................................6
Table of Contents
Overview....................................................................................................................................2
Background Research.................................................................................................................2
Economy-wide Factors...........................................................................................................2
Industry Specific Factors........................................................................................................3
Company Specific Factors.....................................................................................................3
Financial Ratio Analysis........................................................................................................3
Lending Decisions......................................................................................................................3
Business Memorandum..........................................................................................................3
Investment Decision...................................................................................................................4
Business Memorandum..........................................................................................................4
References..................................................................................................................................6
2FINANCIAL REPORTING ANALYSIS
Overview
The financial analysis on the Kathmandu Holdings Ltd and Breville Group Ltd was
done thereby incorporating the profitability, liquidity and solvency position of the company.
There were various factors and considerations analysed for both the companies in terms of
their financial positions and the financial performance of the companies.
Background Research
The primary activity of the Kathmandu Holdings is in the form of transnational chain
of retail stores, selling various travel and adventure outdoor apparels and necessary
equipment via its retail stores. The operations of the company is diversified making the
company a leading operator in New-Zealand, Australia and UK. On the other hand Breville
Group Ltd operates as a manufacturer and maker of small appliances that are sold widely on a
global basis. The brand name Breville is quite famous in Australia for household appliances
manufactured for the purpose of carrying operating activities. The majority of the operations
of both the company is significantly based in Australia whereby they derive significant
revenue from these economy.
Macro-economic factors and business factors whereby the operations of the company
is based will be the key reason affecting the overall operations of the company. The key
difference between the above companies is there line of business line of operations whereby
they undertake several operations. Breville manufactures small household appliances and on
the other hand Kathmandu Holdings manufactures adventure gear bags and travel
accessories.
Overview
The financial analysis on the Kathmandu Holdings Ltd and Breville Group Ltd was
done thereby incorporating the profitability, liquidity and solvency position of the company.
There were various factors and considerations analysed for both the companies in terms of
their financial positions and the financial performance of the companies.
Background Research
The primary activity of the Kathmandu Holdings is in the form of transnational chain
of retail stores, selling various travel and adventure outdoor apparels and necessary
equipment via its retail stores. The operations of the company is diversified making the
company a leading operator in New-Zealand, Australia and UK. On the other hand Breville
Group Ltd operates as a manufacturer and maker of small appliances that are sold widely on a
global basis. The brand name Breville is quite famous in Australia for household appliances
manufactured for the purpose of carrying operating activities. The majority of the operations
of both the company is significantly based in Australia whereby they derive significant
revenue from these economy.
Macro-economic factors and business factors whereby the operations of the company
is based will be the key reason affecting the overall operations of the company. The key
difference between the above companies is there line of business line of operations whereby
they undertake several operations. Breville manufactures small household appliances and on
the other hand Kathmandu Holdings manufactures adventure gear bags and travel
accessories.
3FINANCIAL REPORTING ANALYSIS
Economy-wide Factors
The key economic wide factors that could potentially hurt the operations of the
company is the inflation rate and the unemployment rate that can potentially impact the
operations of both the companies (Lin et al., 2015).
Industry Specific Factors
The key industry specific factor that can potentially impact the operations of the
company is the change in government policy and the level of competition in the industry.
Change in the government policy and increased level of competition can directly impact the
operations and financial performance of the company (Uechi et al., 2015).
Company Specific Factors
Breville Group Ltd: The key company specific factors that could potentially affect
the operations of the company is the revenue growth rate and the efficient utilisation
of resources thereby reflecting cost minimisation (Rodrigues and Rodrigues 2018).
Kathmandu Holdings Ltd: The key risk factor for the company is the product
portfolio of the company and the high cost of sales for the company impacting the
margins of the company.
Financial Ratio Analysis
The financial ratios for both the companies were analysed for the purpose of analysing the
profitability, liquidity and solvency position for the companies. The ratios were analysed for
the company for a sum of three-years of trend period.
Lending Decisions
Business Memorandum
To: Brisbane Bank Head Office
Economy-wide Factors
The key economic wide factors that could potentially hurt the operations of the
company is the inflation rate and the unemployment rate that can potentially impact the
operations of both the companies (Lin et al., 2015).
Industry Specific Factors
The key industry specific factor that can potentially impact the operations of the
company is the change in government policy and the level of competition in the industry.
Change in the government policy and increased level of competition can directly impact the
operations and financial performance of the company (Uechi et al., 2015).
Company Specific Factors
Breville Group Ltd: The key company specific factors that could potentially affect
the operations of the company is the revenue growth rate and the efficient utilisation
of resources thereby reflecting cost minimisation (Rodrigues and Rodrigues 2018).
Kathmandu Holdings Ltd: The key risk factor for the company is the product
portfolio of the company and the high cost of sales for the company impacting the
margins of the company.
Financial Ratio Analysis
The financial ratios for both the companies were analysed for the purpose of analysing the
profitability, liquidity and solvency position for the companies. The ratios were analysed for
the company for a sum of three-years of trend period.
Lending Decisions
Business Memorandum
To: Brisbane Bank Head Office
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4FINANCIAL REPORTING ANALYSIS
From: Brisbane Bank Branch
Date: May 14, 2019
Subject: Loan Application from Breville Group Limited
It is hereby to inform you that we have received a Loan Application from the Breville Group
Limited for a sum of $113 million dollar from the Company, which is around 40% of the total
shareholder’s equity of the company. The tenure of the loan will be for a period of 10-years.
The offered loan will be in the form of Loan against Property of Company
(Annualreports.com 2017).
The non-current assets of the company in the form of company property is as plan and
equipment that was reported at the book value amounting to $11.38 million dollars. On the
other hand said the company was having a high current assets including cash and receivables
amounting to $315 million. The operating capacity of the company in terms of the loan
repayment is sound enough with wide coverage of current assets and low long-term
liabilities. The loan application amount taken by the company will be further used for the
purpose of expansion of operating activity of company. The operating activities cash flows
for the company were found to be significant covering the majority part of the investment and
financing activities of the company. The debt to total asset ratio has been low at 36.40%
making the financial risk of the company to be at a sustained or low levels which is good
(Listcorp.com 2018).
As per the assessment the loan application should be rejected as the property kept in the form
of mortgage is not sufficient in the form of loan guarantee depending upon the loan
application submitted. However, there are certain limitation of ratios evaluated for the
company in the form of historical values imputation for the purpose of analysis that can be
considered while making the final decision.
From: Brisbane Bank Branch
Date: May 14, 2019
Subject: Loan Application from Breville Group Limited
It is hereby to inform you that we have received a Loan Application from the Breville Group
Limited for a sum of $113 million dollar from the Company, which is around 40% of the total
shareholder’s equity of the company. The tenure of the loan will be for a period of 10-years.
The offered loan will be in the form of Loan against Property of Company
(Annualreports.com 2017).
The non-current assets of the company in the form of company property is as plan and
equipment that was reported at the book value amounting to $11.38 million dollars. On the
other hand said the company was having a high current assets including cash and receivables
amounting to $315 million. The operating capacity of the company in terms of the loan
repayment is sound enough with wide coverage of current assets and low long-term
liabilities. The loan application amount taken by the company will be further used for the
purpose of expansion of operating activity of company. The operating activities cash flows
for the company were found to be significant covering the majority part of the investment and
financing activities of the company. The debt to total asset ratio has been low at 36.40%
making the financial risk of the company to be at a sustained or low levels which is good
(Listcorp.com 2018).
As per the assessment the loan application should be rejected as the property kept in the form
of mortgage is not sufficient in the form of loan guarantee depending upon the loan
application submitted. However, there are certain limitation of ratios evaluated for the
company in the form of historical values imputation for the purpose of analysis that can be
considered while making the final decision.
5FINANCIAL REPORTING ANALYSIS
Investment Decision
Business Memorandum
To: Capital Investment Limited
From: Investment Manager
Date: May 14, 2019
Subject: Investment Analysis Consideration.
This I to bring under your notice that an investment consideration could be done for one of
the two company’s evaluated based on the financial performance and position. The
profitability ratio for both the companies have been significantly rising for both the
companies but in terms of risks they differ. Investment in either of the project would be
solely based upon the
The profitability margin for the Kathmandu Holdings has been more consistent and high
where the company has reported around 60%. The liquidity position for the company was
also much consistent as observed in the trend period analysed for the company
(Kathmanduholdings.com 2017). In terms of valuation the P/E ratio for the Breville Company
was much higher around 26 times for the company and for the Kathmandu Holdings was
around 10 times. In terms of the debt assessed for the company it is essential that the overall
financial risk for the company stays low whereby the debt position stays at a very minimal
rate for the company. In terms of risk assessment the operations of the company is diversified
making the revenue base and the operations of the company to be much stable than Breville
Holdings Ltd (Kathmanduholdings.com 2017).
Investment Decision
Business Memorandum
To: Capital Investment Limited
From: Investment Manager
Date: May 14, 2019
Subject: Investment Analysis Consideration.
This I to bring under your notice that an investment consideration could be done for one of
the two company’s evaluated based on the financial performance and position. The
profitability ratio for both the companies have been significantly rising for both the
companies but in terms of risks they differ. Investment in either of the project would be
solely based upon the
The profitability margin for the Kathmandu Holdings has been more consistent and high
where the company has reported around 60%. The liquidity position for the company was
also much consistent as observed in the trend period analysed for the company
(Kathmanduholdings.com 2017). In terms of valuation the P/E ratio for the Breville Company
was much higher around 26 times for the company and for the Kathmandu Holdings was
around 10 times. In terms of the debt assessed for the company it is essential that the overall
financial risk for the company stays low whereby the debt position stays at a very minimal
rate for the company. In terms of risk assessment the operations of the company is diversified
making the revenue base and the operations of the company to be much stable than Breville
Holdings Ltd (Kathmanduholdings.com 2017).
6FINANCIAL REPORTING ANALYSIS
On the basis of financial performance and financial position it is recommended that the
Capital Investment should go for a private placement offer with the Kathmandu Holdings
Ltd.
On the basis of financial performance and financial position it is recommended that the
Capital Investment should go for a private placement offer with the Kathmandu Holdings
Ltd.
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7FINANCIAL REPORTING ANALYSIS
References
Annualreports.com. (2017). Breville Annual Report. [online] Available at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BRG_2017.pdf
[Accessed 14 May 2019].
Kathmanduholdings.com. (2017). Kathmandu Holdings Annual Report. [online] Available at:
https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-Annual-
Report-2017_online.pdf [Accessed 14 May 2019].
Kathmanduholdings.com. (2018). Annual Report 2018. [online] Available at:
https://www.kathmanduholdings.com/wp-content/uploads/2018/10/KMD-AR-2018-online-
final.pdf [Accessed 14 May 2019].
Lin, C.C., Chiu, A.A., Huang, S.Y. and Yen, D.C., 2015. Detecting the financial statement
fraud: The analysis of the differences between data mining techniques and experts’
judgments. Knowledge-Based Systems, 89, pp.459-470.
Listcorp.com. (2018). Annual Report 2018 - Breville Group (ASX:BRG). [online] Available
at: https://www.listcorp.com/asx/brg/breville/news/annual-report-2018-1986688.html
[Accessed 14 May 2019].
Rodrigues, L. and Rodrigues, L., 2018. Economic-financial performance of the Brazilian
sugarcane energy industry: An empirical evaluation using financial ratio, cluster and
discriminant analysis. Biomass and bioenergy, 108, pp.289-296.
Uechi, L., Akutsu, T., Stanley, H.E., Marcus, A.J. and Kenett, D.Y., 2015. Sector dominance
ratio analysis of financial markets. Physica A: Statistical Mechanics and its
Applications, 421, pp.488-509.
References
Annualreports.com. (2017). Breville Annual Report. [online] Available at:
http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BRG_2017.pdf
[Accessed 14 May 2019].
Kathmanduholdings.com. (2017). Kathmandu Holdings Annual Report. [online] Available at:
https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-Annual-
Report-2017_online.pdf [Accessed 14 May 2019].
Kathmanduholdings.com. (2018). Annual Report 2018. [online] Available at:
https://www.kathmanduholdings.com/wp-content/uploads/2018/10/KMD-AR-2018-online-
final.pdf [Accessed 14 May 2019].
Lin, C.C., Chiu, A.A., Huang, S.Y. and Yen, D.C., 2015. Detecting the financial statement
fraud: The analysis of the differences between data mining techniques and experts’
judgments. Knowledge-Based Systems, 89, pp.459-470.
Listcorp.com. (2018). Annual Report 2018 - Breville Group (ASX:BRG). [online] Available
at: https://www.listcorp.com/asx/brg/breville/news/annual-report-2018-1986688.html
[Accessed 14 May 2019].
Rodrigues, L. and Rodrigues, L., 2018. Economic-financial performance of the Brazilian
sugarcane energy industry: An empirical evaluation using financial ratio, cluster and
discriminant analysis. Biomass and bioenergy, 108, pp.289-296.
Uechi, L., Akutsu, T., Stanley, H.E., Marcus, A.J. and Kenett, D.Y., 2015. Sector dominance
ratio analysis of financial markets. Physica A: Statistical Mechanics and its
Applications, 421, pp.488-509.
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