Financial Statement Analysis

This assignment focuses on the financial statement analysis of Brisbane Broncos, an Australian professional rugby league team. It includes industry analysis, competitive strategy analysis, performance analysis, accounting strategy evaluation, and recasting the financial statement.

Running head: FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
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1FINANCIAL STATEMENT ANALYSIS
Table of Contents
1. Introduction.........................................................................................................................2
2. Risk and Profit Potential of Brisbane Broncos......................................................................2
2.1 Industry Analysis.............................................................................................................2
2.2 Competitive Strategy Analysis.........................................................................................5
3.2 Performance Analysis......................................................................................................6
3.3 Notes of the Financial Statement.....................................................................................7
4. Accounting Strategy Evaluation............................................................................................8
5. Recasting the Financial Statement.........................................................................................8
Conclusion................................................................................................................................11
References................................................................................................................................12

2FINANCIAL STATEMENT ANALYSIS
1. Introduction
The aim of the assignment actually deals with the chosen assignment which is the Brisbane
Broncos which is actually a Australian professional rugby league. The team broncos actually
plays the Australian elite competition which is the National Rugby league premiership. This
is actually the most successful club in the history of competition over the past three decades.
The club is basically considered as the most successful club in the history of the rugby league
which actually won 62.5 % of the games which is played since its commencement in the year
1988 where on the other hand the second lies only to the Melbourne Storm with 65.2 % win
based on the games. The certain analysis is conducted regarding the industry, accounting
strategy and the financial statement of the company in that case. This will help to identify the
financial status of the business of the current club in the long run of business.
2. Risk and Profit Potential of Brisbane Broncos
2.1 Industry Analysis
Michael porters five force analysis have been conducted by the business of the
company which is Brisbane Broncos and the scenario have been depicted bellow:

3FINANCIAL STATEMENT ANALYSIS
Porter five forces model have been regarded as the strategic framework which is actually
needed to be implemented for the purpose to make strategic decision in order to analyze the
present business conditions of the company. Brisbane broncos limited porter five force model
is actually shown bellow:
Threats of New entrance:
The new entrance will definitely put an immediate impact and more pressure on the
company which is actually limited to the lower pricing strategy along with the that providing
the new proposition to the customers. Further the challenge faced by the company is limited
and effective strategies to safeguard the competitive edge of the company. There are certain
strategies which must be adopted by the Brisbane broncos in order to tackle the new entrance
by the improvisation of the new product and services, enhancing the economies of scale by
lowering the fixed cost and lastly concentrating in building huge capacity and further making
investments in the research and developments of the firm.
Bargaining power of the suppliers

4FINANCIAL STATEMENT ANALYSIS
Actually powerful suppliers in the market have effective or rather strong negotiation
power in order to extract higher process from the firm in the media field. Higher the
bargaining power, lower is the profitability of the Media. There are certain techniques which
must be adopted by the company in order to tackle the bargaining power of the supplier
which is by building the effective supply chain within the multiple supplier. Also by
experimenting the design of the product with the help of the different materials so that the
prices of raw material goes up then the company can actually shift from one to another.
Bargaining Power of the Buyers
There are actually a lot of demand form the buyers and to buy at a minimum possible
price offered by the buyer. This actually put a lot of pressure on the Brisbane Broncos which
actually have the limited profitability in the long run business. Brisbane broncos have some
of the significant strategies of the business in order to tackle the bargaining power of the
buyers through the process of building the large customers base. There is also needed
improvisation of the new products which will be reduced by defection of the existing
customers in the business of Brisbane Broncos.
Threats of Substitute products
When a new product actually meet the needs of the customers then the company
actually faces a lots of problems in that case. The threat of the substitute products is basically
high which actually offers a proposition value quite different from the present offering of the
company. Brisbane broncos actually tackles the threat of the substitute products and services

5FINANCIAL STATEMENT ANALYSIS
in the following manner by being service oriented rather than product oriented, understanding
the needs of the customers along with that enhancing the switching cost of the customers.
Rivalry among the existing competitors
There are always rivalry among the existing players in the industry and in that case
significant strategy needed to be implemented by the company in order to tackle the rivalry
among the existing competitors in the market. This is actually implemented by the process of
the creating sustainable differentiation, building scale to compete better and collaborating
with the potential competitors in order to enhance the market size.
2.2 Competitive Strategy Analysis
There are actually two types of cost leadership, which is utilized by the firm, which
are the differentiation and cost leadership strategies:
Differentiation:
The differentiation strategy of Brisbane broncos actually falls under the generic model
in order to build a competitive edge. In the differentiation strategy Brisbane broncos is
actually limited to the strategic objective by utilizing the strategy for the purpose of
differentiating the improvisation along with the growing health concerns of the consumers.
The combination of the differentiation and the cost leadership further helped Brisbane
Broncos to build a loyal and strong customer base. By the help of the generic strategy the
company can limited time to position the products offerings which is actually a bit stand out
compared to the other alternatives which are available in that case.
Cost Leadership Strategy
The company, which is the Brisbane Broncos in order to support the extensive
growth strategy, further uses the cost leadership strategy and further it is needed to minimize

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the cost of the business by the implementation of the existing infrastructure in order to launch
the new products in that case (Pilbeam, 2018). The company actually uses the same kind of
business line for the purpose of extending the product lines of the business, development and
further implementation of the new strategies which is adopted by the company in the long
run. Further the research and development team of the company is effective ion such a
manner that it produces the effective business prospects of the firm.
3.1 Nature of the financial Statement
The financial statement of the company actually consists of the elements which are
the profit and loss statement, balance sheet, cash flow statement of the company along with
the changes in the equity of the company (Makanji & Jenis, 2017). The financial statement of
Brisbane Broncos is actually complied with the IFRS which is known as the International
Financial Reporting Standards which is actually issued by the International Accounting
Standard Board (O'Hare, 2016). The financial instruments of the company is evaluated based
on the impact on the AASB 9 and in case of the leases, the rule which is actually followed by
the company which is the AASB 16.
3.2 Performance Analysis
The performance of the company can be analyzed from the financial statement of the
Brisbane Broncos for three years which are the 2015, 2016 and 2017. The significant changes
which are highlighted from the annual report of the Brisbane Broncos (Horst, 2018). The
financial statement, which is actually considered by the company, is based on the
consolidated financial statement of the firm (Morrell, 2018). By analyzing the annual report

7FINANCIAL STATEMENT ANALYSIS
of Brisbane broncos for the three years it can be said that the net revenue from the income
statement of the company has increased from the year 2015 to 2016 from $40438364 to $
42292939. Compared to the net revenue from the year 2016, it has significantly increased by
quite a large margin which is $ 46491485.
By analyzing the balance sheet of the company it can be said that from the financial
year 2015 to 2016, the total assets of the company has significantly increased from the
amount $ 39558541 to $ 43126536. The total assets of the company from the year 2016 to
2017 has significantly increased to the amount of $ 50698751. This means that the financial
performance of the company in terms of generating revenue and assets of the company is
significantly increasing (Gitman, Juchau & Flanagan, 2015). On the other hand, by analyzing
the cash flow statement of the company from the annual report it can be said that the cash
flow from the financing activity has significantly reduced by the amount of $ 1014694 to $
514694 from the year 2016 to 2017. However, on the other the cash flow from the operational
activity of the company has 2016 to 2017 from the amount of $ 2821358 to $ 6964886.
3.3 Notes of the Financial Statement
Note 1 - Cash and Cash equivalents
The cash and cash equivalents of the company is basically based on the short term
deposits and cash at bank which is actually convertible into cash. The cash and cash
equivalents of the company actually consists of the net of outstanding bank overdraft along
with the interest bearing loans and borrowings in the current liabilities (Cochrane, 2017).
Note 2 – Trade and other receivables

8FINANCIAL STATEMENT ANALYSIS
The trade receivables of the Brisbane Broncos generally have the 30-90 days polices
are further recognized at the original invoices an amount which is less than the allowances for
any kind of uncollectable accounts (Minnis & Sutherland, 2017).
Note 3 – Inventories
The inventories of the company is actually valued at lower of the cost and net
realizable value. The cost on the other hand reflects the weighted average cost of each items
actually existed in the company (Härdle, Chen & Overbeck, 2017).
Note 4 – Property, plant and equipment
The plant and equipment of the company is basically valued at the cost less
depreciation and any accumulated impairment losses. The cost actually includes the replacing
parts which are basically eligible for the purpose of capitalization when the cost of the
replacing parts are incurred.
4. Accounting Strategy Evaluation
The current financial performance of the Brisbane Broncos is satisfactory as each and
every year the financial performance is gradually improving. The upper level management of
the organization is quite effective and the reason behind that is based on the current salary of
the managers and the directors of the company which is actually quite motivating for them
(Arcand, Berkes & Panizza, 2015). This further reflected in the financial statement of the
company for the current years of massive success. The managers in that case are further
successful in maximize the business profit which will automatically attract the potential
shareholders of the firm. The principles, which is actually followed by the company, is
basically the AASB accounting standards.

9FINANCIAL STATEMENT ANALYSIS
5. Recasting the Financial Statement
The recast of the financial statement for Brisbane Broncos has been performed based
on the three years which are the 2015, 2016 and 2017. The detailed picture regarding the
trend of the performance analysis of the company is duly performed by the business
(Fracassi, 2016). The information actually provides the details regarding the financial
performance of the company for the three years. Based on the performance of the company,
the shareholders in that case makes the potential decisions regarding the investment in the
business of the company (Li et al., 2018). Finally, the recasting of the financial statement of
Brisbane broncos have been depicted bellow:

10FINANCIAL STATEMENT ANALYSIS

11FINANCIAL STATEMENT ANALYSIS

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Conclusion
From the above discussion, it can be concluded that as per the evaluation of the
financial statement of Brisbane Broncos for the three years 2015, 2016 and 2017 where the
information’s are further obtained from the annual reports of the company. It can be said that
the current financial prospects of the company is effective and accordingly it is quite a
responsibility for the upper level management of the company to maintain such performance
so that the reputation of the company can be increased in the future. The evaluation of the
company is made based on the marketing strategy and the current financial performance of
the company. Based on the long run objective it is clear that the upper level management of
the company is quite effective in achieving the potential business in the future.

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References
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63(8), 2420-2438.
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Higher Education AU.
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(Vol. 2). Springer.
Horst, U. (2018). Introduction to Mathematical Finance.
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aggregation. Review of Quantitative Finance and Accounting, 50(3), 673-694.
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Pilbeam, K. (2018). Finance & financial markets. Macmillan International Higher Education.

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Sheets, N. C. B. (2018). Non-Consolidated Financial Statements. Policy, 2017.
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