Strategic and Sustainable Accounting

This assessment analyzes the financial performance and cost structure of Adelaide Brighton ltd, a leading business in the construction materials industry. It explores strategic plans and objectives, and how a balanced scorecard can help in implementing them.

Running head: STRATEGIC AND SUSTAINABLE ACCOUNTING
Strategic and Sustainable Accounting
Name of the Student:
Name of the University:
Author’s Note

1
STRATEGIC AND SUSTAINABLE ACCOUNTING
Table of Contents
Introduction...............................................................................................................................2
Literature Review......................................................................................................................3
Regulatory Framework..........................................................................................................5
Costing Information of the business......................................................................................5
Chances of Reducing the Costs.............................................................................................7
Application of Balanced Scorecard...........................................................................................8
Conclusion.................................................................................................................................9
Reference.................................................................................................................................10

2
STRATEGIC AND SUSTAINABLE ACCOUNTING
Introduction
The main purpose of the assessment is to analyze the financial statements of Adelaide
Brighton ltd which is engaged in the business of manufacturing of materials which are used in
the construction projects in Australia. The assessment would be analyzing the financial
performance of the business and would also be assessing the cost structure of the business. The
assessment would further go into details regarding the strategic plans and objectives of the
business and how the management can achieve the same in the business. The analysis would be
including how a balanced scorecard can help the business in planning and effectively
implementing the strategic objectives of the business.
The business of Adelaide Brighton ltd is considered to be one of the leading businesses
which engages in production of construction materials. The company is located in Adelaide and
mainly operates in the region of South Australia (Adbri.com.au., 2019). The business operates in
industrial manufacture industry and the level of competition in the industry is high even though
the business of Adelaide Brighton ltd has made a niche in the market by offering good quality of
products and also a variety of products.
Literature Review
In every business, there are certain issues which the management of the company is
planning to achieve in the long term. In order to achieve such objective strategic policies are
formulated by the management of the company. The business which is considered for this
assessment is Adelaide Brighton ltd which is engaged in the business of providing different types
of construction materials. The analysis of the financial reports of the business effectively shows
that the business has formulated appropriate strategies for the purpose of improving the
efficiency of the business (Palepu, Healy & Peek, 2013). As per the annual reports of the

3
STRATEGIC AND SUSTAINABLE ACCOUNTING
business, the management of the company has set plans for the business on the basis of short
term, medium term and long-term objectives of the business. The company considers the NPAT
as the indicators of success of the business and on the basis of the same formulate strategies
which can help the management of the company to enhance the revenue which is generated by
the business.
Figure 1: Chart showing Shareholder’s Return of the Business
Source: (Adbri.com.au., 2019).
The above figure effectively shows the growth in the business of Adelaide Brighton ltd
which shows that the business has been appropriately performing over the last few years. The
performance of the business is appropriately demonstrated in the chart above. As per the policies
which is established by the management of the company, the performance of the business are
closely associated with the rewards system which is introduced by the management of the
company during the period (Xu et al., 2014).

4
STRATEGIC AND SUSTAINABLE ACCOUNTING
The annual report of the business shows that there has been improvement in the net
profits of the business which is mainly due to the increase in sales which is achieved by the
management of the company (Easton & Sommers, 2018). This shows that the management of the
company is focusing on enhancing the profitability of the business appropriately.
The employee of the business needs to be kept motivated so that the business is able to
develop and perform well in the business. The employees need to perform efficiently for the
purpose of attaining the long-term objectives of the business (Kaplan & Atkinson, 2015). The
management of the Adelaide Brighton ltd has introduced a reward system which effectively
motivates the employees of the business and ensures that the performance of the business is
enhanced.
The emphasis on the rewards and recognition system in the business is because it has
been noticed in many cases that the employee of the business enhances his performance in order
to get the reward and recognition from the business (Hilton & Platt, 2013). Tis drives the
employees of the business to outperform himself and contribute effectively to the goals and
objectives of the business. In addition to this, it has been noticed that in many cases appropriate
award and recognition system allows the employees to be innovative in their approaches and also
contributes to employee satisfaction in the workplace.

5
STRATEGIC AND SUSTAINABLE ACCOUNTING
Regulatory Framework
The management of the company needs to adhere to all rules and regulations which are
applicable on the business in Australia. The management of the company needs to ensure that the
financial statements are complying with the accounting standards which are relevant to the
business. The business also needs to comply with the provisions which are stated in Corporation
Act 2001. Inn addition to this, the management of the company also needs to adhere to the
corporate social responsibilities of the business and make contributions towards the society.
Costing Information of the business
The information regarding the costs which is incurred by the business can be effectively
assessed by applying budgetary process for identifying and classifying the costs of the business.
The budget would be including all the major costs of the business and would also be setting the
targets of the business appropriately (Rieckhof, Bergmann & Guenther, 2015). In addition to
this, the management of the company would also be responsible for estimating the costs of the
business effectively. The budgetary control process can help the management to effectively plan
for the future as well as controlling the activities of the business in an effective manner (Jones et
al., 2013). In addition to this, the costing information can be available from the reports which are
submitted by different departments of the business so that an appropriate estimation of the total
costs of the business can be obtained from the analysis The key financial ratios which effectively
shows the performance of the business in the area of profitability and solvency is appropriately
shown below in details:
ADELAIDE BRIGHTON LTD
Liquidity Ratios
Particulars 2016($m) 2017($m) 2018($m)
Current Assets 390.10 474.80 500.60

6
STRATEGIC AND SUSTAINABLE ACCOUNTING
Current Liabilities 168.00 208.20 179.30
Current Ratio 2.32 2.28 2.79
Particulars 2016($m) 2017($m) 2018($m)
Total Current Assets 390.10 474.80 500.60
Quick Assets 229.90 300.50 324.20
Current Liabilities 168.00 208.20 179.30
Quick Ratios 1.37 1.44 1.81
Particulars 2016($m) 2017($m) 2018($m)
Current Assets 390.10 474.80 500.60
Less: Current Liabilities 168.00 208.20 179.30
Net Working Capital 222 267 321
Profitability Ratios
Particulars 2016($m) 2017($m) 2018($m)
Gross Profit 314.90 305.90 304.10
Sales 1,396.20 1,559.60 1,630.60
Gross Profit Margins 22.55 19.61 18.65
Net Profit 186.2 182.80 185.20
Sales 1,396.20 1,559.60 1,630.60
Net Profit Margin 13.34 11.72 11.36
Net Income 186.20 182.80 185.20
Shareholders Equity 1,220.10 1,245.80 1,245.60
Return on Equity 15.26 14.67 14.87
The key financial ratios of the business show that the management of the company has
slightly diminished in terms of profitability of the business in comparison to previous year
analysis of the business (Busco & Quattrone, 2015). The net profit of the business is shown to
have fallen slightly which is mainly due to the rise in the costs of the business. In addition to this,
liquidity position of the business is shown to have improved which shows that the management

7
STRATEGIC AND SUSTAINABLE ACCOUNTING
of the company has more capital in their hands which is a positive sign for the business. The
management of the company is trying to enhance the profitability of the by investing in new
projects for enhancing the operations of the business. The analysis of the liquidity ratios of the
business further shows that the management of the company has appropriate capital in their
hands to meet current obligations of the business.
Chances of Reducing the Costs
One of the main objectives of the business is to lower the costs of the business so that the
management would be able to enhance the profitability of the business. In order to achieve such
an objective, the management has introduced budgeting system in the business. The budgeting
system would effectively set targets for the costs and ensure that the employees of the business
follow the targets which are set by the management of the company. Any variance in the targets
would be investigated so that the cause of hike in the costs of the business can be investigated
and corrective actions can be taken by the management of the company. In addition to this, the
management of the company has also increase its emphasis on reducing the unproductive costs
of the business and ensure that there is no wastage of resources of the business.
The management needs to set an appropriate internal control system so that the activities
of the business are supported and steps can be taken by the management to appropriately follow
low cost model with a view of reducing the total costs of the business. In order to achieve such
an objective in the business, the management of the company needs to have proper supervision in
the business and ensure all activities of the business are as per the plan which is formulated by
the management of the company.

8
STRATEGIC AND SUSTAINABLE ACCOUNTING
Application of Balanced Scorecard
Balanced scorecard is a strategic management tool which is used by the business for
strategic management of the business and with an objective to enhance the performance of the
business during the period (Hoque, 2014). The balanced scorecard approach would allow the
management of the company to take appropriate decisions regarding different perspective and
appropriately set strategies so that the activities of the business can be supported by the business
(Perkins, Grey & Remmers, 2014). The balanced scorecard approach can help the management
to set appropriate targets which would help the business in performance management of the
business.
In other words, a balanced scorecard is a performance metric used in strategic
management to identify and improve various internal functions of a business and their resulting
external outcomes (Sainaghi, Phillips & Corti, 2013). This helps the management to take
strategic decisions which can result in desired outcome for the business in future (Reefke &
Trocchi, 2013).

9
STRATEGIC AND SUSTAINABLE ACCOUNTING
Figure 2: Image showing Balanced Scorecard
Source: ()
The balanced scorecard approach appropriately follows the four perspectives of the business
which are financial perspective, business perspective, customer perspective and learning and
growth perspective (Tjader et al., 2014). These are considered for the purpose of estimating the
internal areas of performance which needs to be considered by the management for taking vital
decisions of the business.
Conclusion
The above analysis which is conducted on the business of Adelaide Brighton ltd shows
that the business is effectively performing in the operations of the business. The financial
performance of the business is shown to be appropriate for the business however the

10
STRATEGIC AND SUSTAINABLE ACCOUNTING
management needs to take appropriate steps for reducing the costs of the business which have an
effect on the profitability of the business. The above discussion shows that the management of
the company can adopt budgeting techniques for the purpose of controlling the costs of the
business. In addition to this, the discussion above also shows that the management of the
company has the option of implementing balanced scorecard approach in the business for the
purpose of appropriate performance management of the business and also for long term planning
for the business.
Reference
Adbri.com.au. (2019). Retrieved 6 May 2019, from
https://adbri.com.au/-/adbri/lib/pdfs/2016/asx%20announcements/ASX%20-
%202018%20Annual%20Report%20to%20Shareholders%20100419.pdf
Busco, C., & Quattrone, P. (2015). Exploring how the balanced scorecard engages and unfolds:
articulating the visual power of accounting inscriptions. Contemporary Accounting
Research, 32(3), 1236-1262.
Easton, M., & Sommers, Z. (2018). Financial Statement Analysis & Valuation, 5e.
Hilton, R. W., & Platt, D. E. (2013). Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.

11
STRATEGIC AND SUSTAINABLE ACCOUNTING
Hoque, Z. (2014). 20 years of studies on the balanced scorecard: trends, accomplishments, gaps
and opportunities for future research. The British accounting review, 46(1), 33-59.
Jones, R., Lande, E., Lüder, K., & Portal, M. (2013). A comparison of budgeting and accounting
reforms in the national governments of France, Germany, the UK and the US. Financial
Accountability & Management, 29(4), 419-441.
Kaplan, R. S., & Atkinson, A. A. (2015). Advanced management accounting. PHI Learning.
Palepu, K. G., Healy, P. M., & Peek, E. (2013). Business analysis and valuation: IFRS edition.
Cengage learning.
Perkins, M., Grey, A., & Remmers, H. (2014). What do we really mean by “Balanced
Scorecard”?. International Journal of Productivity and Performance Management, 63(2),
148-169.
Reefke, H., & Trocchi, M. (2013). Balanced scorecard for sustainable supply chains: design and
development guidelines. International Journal of Productivity and Performance
Management, 62(8), 805-826.
Rieckhof, R., Bergmann, A., & Guenther, E. (2015). Interrelating material flow cost accounting
with management control systems to introduce resource efficiency into strategy. Journal
of Cleaner Production, 108, 1262-1278.
Sainaghi, R., Phillips, P., & Corti, V. (2013). Measuring hotel performance: Using a balanced
scorecard perspectives’ approach. International Journal of Hospitality Management, 34,
150-159.

12
STRATEGIC AND SUSTAINABLE ACCOUNTING
Tjader, Y., May, J. H., Shang, J., Vargas, L. G., & Gao, N. (2014). Firm-level outsourcing
decision making: A balanced scorecard-based analytic network process
model. International Journal of Production Economics, 147, 614-623.
Xu, W., Xiao, Z., Dang, X., Yang, D., & Yang, X. (2014). Financial ratio selection for business
failure prediction using soft set theory. Knowledge-Based Systems, 63, 59-67.