BUS5IAF - Introduction to Accounting & Finance
Added on 2019-10-30
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Running head: INTRODUCTION TO ACCOUNTING AND FINANCEIntroduction to Accounting and FinanceName of the Student:Name of the University:Author’s Note:Course ID:
1INTRODUCTION TO ACCOUNTING AND FINANCETable of Contents1. Introduction:................................................................................................................................41.1 Name of CEO:.......................................................................................................................41.2 Home office:..........................................................................................................................41.3 Ending date of the latest financial year:................................................................................41.4 Principal products or services:...............................................................................................41.5 Main geographic area of activity:..........................................................................................41.6 Independent auditor and its view about the financial statements:.........................................41.7 Recent stock price and dividend per share:...........................................................................52. Industry situation and organisational plans:................................................................................52.1 Industry and its outlook:........................................................................................................52.2 Future plans of the organisation:...........................................................................................53. Financial statement analysis:.......................................................................................................63.1 Statement of financial performance:......................................................................................63.1.1 Gross profit, income from operations and net income for the past five years along withincrease or decrease in amounts:.............................................................................................63.1.2 Trend analysis technique:...............................................................................................73.1.3 Significant accounting policies:......................................................................................73.1.4 Trends and items different from the industry norms:.....................................................7
2INTRODUCTION TO ACCOUNTING AND FINANCE3.2 Statement of financial position:.............................................................................................73.2.1 Validity of accounting equation for the past three years:...............................................73.2.2 Trend analysis technique:...............................................................................................83.2.3 Significant accounting policies:......................................................................................83.2.4 Trends and items different from the industry norms:.....................................................83.3 Statement of cash flows:........................................................................................................83.3.1 Comparison of operating cash flows with net income:..................................................83.3.2 Expansion through investing activities:..........................................................................93.3.3 Most important source of financing:...............................................................................93.3.4 Increase or decrease in cash over the past years:............................................................93.4 Ratio analysis:......................................................................................................................103.4.1 Liquidity ratios:............................................................................................................103.4.2 Profitability ratios:........................................................................................................103.4.3 Long-term solvency ratios:...........................................................................................103.4.4 Cash flow adequacy:.....................................................................................................113.4.5 Market strength ratios:..................................................................................................114. Conclusion:................................................................................................................................114.1 Summary of findings and recommendations:......................................................................114.2 Performance of the organisation based on analysis:............................................................124.3 Rationale for the decision:...................................................................................................12
3INTRODUCTION TO ACCOUNTING AND FINANCEReferences:....................................................................................................................................13Appendices:...................................................................................................................................15
4INTRODUCTION TO ACCOUNTING AND FINANCE1. Introduction:The organisation that has been selected here to fit the purpose of this assignment isApollo Tourism and Leisure Limited (ATL). 1.1 Name of CEO:From the annual report of the organisation, Luke Trouchet is the CEO and ManagingDirector after the person has worked as Sales and Marketing Manager in the organisation for fiveyears. 1.2 Home office:The home office of ATL is located at 698 Nudgee Road, Northgate QLD 4013 inQueensland, Victoria. 1.3 Ending date of the latest financial year:The ending date of the latest financial year for ATL is 30th June 2017. 1.4 Principal products or services:The principal products or services of ATL include manufacturing, sales, rental anddistribution of a group of RVs like campervans, motor homes and caravans. 1.5 Main geographic area of activity:The major areas of operations of ATL comprise of Australia, New Zealand and USA. 1.6 Independent auditor and its view about the financial statements:The independent auditor of ATL has been identified as KPMG and according to its view;the financial reports of the organisation comply with the Corporations Act 2001, as they provide
5INTRODUCTION TO ACCOUNTING AND FINANCEa fair and true depiction of the overall financial position and performance of the organisation. Inaddition, the consolidated financial statements are prepared in accordance with the InternationalFinancial Reporting Standards (IFRS) and Corporations Regulations 2001. 1.7 Recent stock price and dividend per share:The most recent stock price of ATL is obtained as $1.39 as on 30th September 2017. Thedividend per share of the organisation has been obtained as $0.02 as on 30th June 2017. 2. Industry situation and organisational plans:2.1 Industry and its outlook:It has been observed that tourism and leisure sector of Australia has experienced asignificant growth in 2017 despite the moderations associated with the global economicconditions. Some of the major insights into the industry are depicted as follows:The global visitors in Australia have increased to 8.5 million with a percent increase of8.9% in 2016 (Deloitte Australia 2017).The growth in trips related to the domestic front has minimised since February 2017coupled with corporate travel uptick inadequate in countering the growth stalling in travelof domestic leisure.The international economic conditions have become favourably oriented for the industry.There has been modest performance of the hotel sector of Australia in the initial half of2017, as the room occupancies have averaged 68% on the back of 0.3% growth.
6INTRODUCTION TO ACCOUNTING AND FINANCE2.2 Future plans of the organisation:ATL has continued to invest considerable cost and time in its systems of informationtechnology for delivering cost savings and enhanced efficiencies. These systems are proprietaryin nature and the third party suppliers maintain them, while the other systems are operated underlicence. However, there is significant threat of cyber attacks or delay in internet orcommunication facilities, it might have negative effect on the short-term financial position andlong-term effect on supplier and client satisfaction. In order to deal with such issues, theorganisation has put adequate safeguards and control in place for ensuring future progress andgrowth in the market. 3. Financial statement analysis:3.1 Statement of financial performance:3.1.1 Gross profit, income from operations and net income for the past five years alongwith increase or decrease in amounts:Particulars201520162017Increase or decrease in 2016Increase or decrease in 2017Gross profit697496522Income from operations12.212.915.30.72.47Net income2.884.838.651.953.82
7INTRODUCTION TO ACCOUNTING AND FINANCEFrom the above table, it could be stated that the gross profit of ATL has increased overthe three-year period and the trend is inherent in case of operating income and net income aswell. This is because of the increased number of both domestic and global visitors in the nation. 3.1.2 Trend analysis technique:The trend analysis technique of ATL has been presented in the form of a table (Refer toAppendices, Appendix 4). From the table, it has been found that the revenue margin of theorganisation has increased heavily in 2017 along with the cost of sales. However, the grossincome has increased in tandem as well. Even though there is increase in overall operatingexpenses over the years, the net income of the organisation has increased possibly due to therising demand and effective quality of services (Benson, Faff and Smith 2014). 3.1.3 Significant accounting policies:The most significant accounting policies of ATL comprise of consolidation, in which thecontrol is accomplished at the time of exposure to variable returns from its association with theinvestee and it has the ability to influence those returns through the investee power (Asx.com.au2017). 3.1.4 Trends and items different from the industry norms:Based on the above table, it could be identified that the organisation has presented theitems in accordance with the industrial norms and all the relevant disclosures have been madeaccordingly.
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