Abacus Property Group: Financial Decisions and Expansion Analysis

This report provides a comprehensive analysis of Abacus Property Group's expansion plans, focusing on the financial and management accounting aspects. It begins by identifying and explaining the key decisions undertaken by the company for future growth, including the construction of a commercial mall and investments in residential areas. The report then discusses the advantages and disadvantages associated with these expansion options, considering both financial and non-financial factors. A significant portion of the report is dedicated to analyzing the financial data provided by Abacus Property Group, evaluating the impact of these figures on the company's decisions, and assessing the implications of enhancing technology. The analysis covers the EBIT, gross profit, and balance sheet items, including assets, liabilities, and shareholder investments, to provide a holistic view of the company's financial health and strategic direction. The report concludes with an assessment of the potential impact of these decisions on the company's future performance.

Financial and Management Accounting

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1. Identifying and explaining the decisions which are undertaken by Abacus Property Group
for the future growth and expansion.......................................................................................3
2. Discussing the advantages and disadvantages of option related to expansion .................4
3. Financial data provide by Abacus Property Group and decisions based on enhancing the
technology..............................................................................................................................6
CONCLUSION ..............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the recent times, business units lay high level of emphasis on undertaking the tools and
techniques of management accounting with the motive to take profitable decisions. Moreover,
techniques related to such field are highly effectual which in turn helps in presenting the suitable
relationship between cost and profit. The present report is based on Abacus Property Group that
falls into the category of leading unit in Real estate sector. In this, report will shed light on the
expansionary decision which is undertaken by Abacus for the future growth and development.
Besides this, it will also provide deeper insight about the benefits and drawbacks which are
associated with the decision pertaining to expansion. Report will also describe the extent to
which financial and non financial aspects have influence on the decision making of Abacus
pertaining to expansion.
TASK
1. Identifying and explaining the decisions which are undertaken by Abacus Property Group for
the future growth and expansion
Annual report of Abacus Property Group pertaining to the year of 2016, presents that in
2017 business unit will lay over the expansion of the operational activities. Hence, the firm is
planning to construct a commercial mall in 9000 square meter area which in context with making
the profitable earning as well as developing the employment opportunities for the society. Hence,
they are also planing to make the investments in the suburb Craigieburn to develop the
residential area which is 30km far from the urban are. Thus, these decisions are made by the
managers in concern with undertaking various assumptions that there is an increment of 12%
people moving at such location in last 2 years. Hence, the professional found it would be
beneficial for theme to take the profitable advantage from such investments.
Along with Investing in such real estate business the plans of Abacus Property Group to
build a commercial mall at such location will be fruitful as people who are residents at such
place they need not to travel much to satisfy their market needs. Hence, they would be able to
purchase the necessary products from such mall. On the other side, it can be said that the firm
will be able to fetch the beneficial attraction of stakeholders in the organization as such

investment will go to increase the turnover of the organization. Hence, such expansion will
create the business opportunities for the location. Thus, the construction of such shopping center
will invite various companies or investors to do business such as installing their shops or office
are in it. Hence, such expansion will improve the employment opportunity and the large numbers
of workers will be recruited by the professionals.
Apart from this Abacus Property Group is also planning tio provide the insurance
coverage to its shareholders which in context with risk free investment. Hence, it will be
beneficial for the brands or big MNCs to make the investments in the firm because it will
facilitate the good return. O the other side the firm ahs earned the fruitful increase in the cpital
gains for 400% in last 2 years so it will be beneficial for them to make investments as well as
expansion as they are having the adequate amount of capital revenue.
By doing assessment, it has been identified that such expansion plan is highly significant
which in turn makes contribution in the growth, productivity and profitability of Abacus Property
Group Moreover, through expanding business operations in developing countries Abacus would
become able to offer services to the large number of customers and thereby would become able
to generate higher returns. The rationale behind this, now people prefer to visit or experience the
services Commercial malls which lays emphasis on performing activities in inviting the large
numbers of shops, companies as well as refreshment zones. Hence, it can be assumed that the
firm is likely to have the 6-7% of returns in the future by leasing shops in their building.
2. Discussing the advantages and disadvantages of option related to expansion
There are several benefits and drawbacks which are associated with the decision making
of Abacus Property Group in relation to the expansion of business operations and functions in
such location. Hence, there will be some advantages or disadvantages of the organization which
are in consideration will impact of social and environmental issues:
Advantages
 By employing the expansion strategy, Abacus Property Group can increase its customer
base to the significant level. The rationale behind this, when business unit starts highly
efficient Commercial malls then it becomes able to influence more customer as well as

build and sustain competitive edge over others. Such expansion strategy will also aid in
the sales revenue and profit margin of this real estate unit.
 In addition to this, Abacus Property Group will get high economies of scale by exploring
the business operations and functions in commercial mall. Moreover, when real estate
unit operates at large level then it gets more benefits in monetary terms. Thus, such
benefit also contributes in the profitability aspect through reducing the cost level
(Advantages & Disadvantages of Expanding Your Business, 2017). Along with this,
reducing cost level also assists firm in decreasing the cost level on per customer basis and
improves potential of profit margin by adding more customers.
 The Abacus Property Group will be able to generate the favorable amount of profitability
in consideration with expanding the business in making investment in the Suburb
Criagieburn and in commercial mall. It will help the firm in gathering the large amount of
revenue as well as improves the capital structure. Hence, such investment will attract the
big brands, expected return on such investment is said to be assumed at 6-7%.
 It will enhance the operational efficiency as well as functioning area of the business.
Improves the brand image worldwide which helps in gathering the large numbers of
Investors or stakeholders. Helps the society in generating the employment opportunities
as well as also increase the economic standard of the locality.
Disadvantages
 Expansion decision imposes high level of financial challenges in front of the company
(Heibutzki, 2017). Moreover, expansion decision demands for huge investment and
thereby closely influences the liquidity position of firm. There will be requirements of
high rate of capital investments as well as includes the high risks.
 Cost of operational activities will be increased and the firm will be going to face the
major investments issues such as not adequate returns from leased property as well as low
consumer interest in purchasing the high rated products from such big brands.
 There will be requirements of large numbers of workforce to perform in each units as
well as expenses over them will also increase such as salary, allowance etc.

Issues that are impacting the Decision making for Abacus Property Group:
There has been various issues that will affect the expansion of the business for Abacus
Property Group in long run. Hence, such influences can be made by the several factors such as
Financial, Non- financial factors. Thus, factors will affect the revenue gathering of the firm in
context with various issues such as:
 Financial statement of organization as well as their disclosure will help the
investors to fetch the actual position of the firm but if the operational performance
of the entity was not good in the respective years that they may to face the
obstacle in gathering the proper funding form investors (Brandau and et.al.,
2017).
 Disclosure of the accounts must consist of the various ratio analysis as well as
which must have linked with the previous year's data set so it would be profitable
for the investors to make comparison.
 The economic factors which influences the operational activity of the organization
in context with changes in the tax rates, exchange rates as well as governmental
policies and procedures.
 The internal environment of the firm in context with having influence of various
MNC's as well as big brands which will affect the in attracting the large numbers
of consumers. Hence, it will be profitable for them in increasing the turnover.
 In accordance with the revenue generated by the organization in last 2 years it can
be said that, 400% of increment in net profit will be positive sign for the industry
to make the investments and plan the construction in such locations.
3. Financial data provide by Abacus Property Group and decisions based on enhancing the
technology
By considering the financial statements of the Abacus Property Group which indicates
that the firm has acquired the profitable gains in the successful operating years. Hence, as per the
EBIT of the firm in 2016 it was 223m and in 2017 it is 339m. Thus, such data set indicates that
there will be large amount if operating expenses incurred in the premises. Hence, The Gross

profit gained by the firm in the year 2016 is 144 and in 2017 it is 71 in millions which is due to
the low revenue gathered by the firm in the current year. Hence, it can be suggested to the
managerial professionals of the firm that they should make changes in the functional activities as
well as promotional methods which will help in creating the brand image (Cohen,
Krishnamoorthy and Wright, 2017).
However, by considering the balance sheet of Abacus Property Group there has been
changes seen in the fixed assets of the organization. Thus, in 2016 the real estate property of the
industry was at 5m whie in 2017 it increased to 113m which indicates that the firm has made
various investment as well as has acquired the more properties. Hence, the accumulated
depreciation in 2016 is nil and in 2017 it is 28m over such assets. Thus, there has not been any
change in the Intangible assets of the company. Thus, the brand image is constant as well as they
have not increased any good attraction in consumers. However, the total assets of the firm in
2016 is 2450m and in 2017 it is 2437m.
In accordance with such changes and reduction in the profitability, revenue gathering as
well as the equity capital of the Abacus Property Group it can be said that in the 2016 the firm
has better operational performances as well as which affects it in attracting the large numbers of
investors. Hence, in order to retain the attraction of such shareholders there is need to make
effective decisions by the organization (Otley, 2016). They should implement the changes in the
operational activities as analyzing the requirement of the consumer and invite various brands to
acquire the place in the commercial mall. Hence, as per the increment in the net profit of the firm
it can be said that they will be able to make the investment in the \such properties as it will help
them in having profitable returns from the leased property as well as turnover from the mall they
are about to construct.
Hence, on the basis of Liabilities of Abacus Property Group it can be said that the firm is
able to pay the debts on time. Thus, the short term liabilities of the firm in 2016 is 171m while in
2017 it is nil which indicates that currently the firm is not able to meet its short term debts.
However, the long term liabilities of the firm in consideration with the year 2016 it is 631m and
in 2017 it is 539m these are also reduced but not in that respect as per reductions in the short
term liabilities. There has been increment in the share holders investment ts in the firm such as in
2016 it is 1516m and in 2017 it is 1766m. Hence, it can be said that the firm is able fetch the

maximum attraction of investors. As well as better dividend policies which are benefiting such
shareholders (Abacus Property Group, 2017).
However, in order to increase the revenue there is need to make changes in the dividend
policies of Abacus Property Group such as bring the innovative changes in investments decisions
of the organization such as they are planning to construct the commercial mall which will be near
to the invested property suburbs that will be beneficial for them in attracting the large numbers of
stakeholders. Hence, it will help the firm in increasing the capital gathering such as rise in the
numbers of brands or various companies to make investments in the mall.
CONCLUSION
On the basis of above report there has been discussion based business expansion of
Abacus Property Group as well as various decisions planing were made by the professional in
increasing the capital or expanding the business. Hence, there are various advantage and
disadvantage of the firm in by considering the construction of mall as well as investing in the
Suburb real estate. Hence, there are various financial non financial factors which influence the
decision making of the organization. Further, it can be said after analysis the financial position
and income statement of the firm which indicates that the growth in net profit helps them in
making the profitable investments in such business operations as well as they are able to retain
the large numbers of shareholders.

REFERENCES
Books and Journals
Brandau, M. and et.al., 2017. Separation–integration–and now…? A historical perspective on the
relationship between German management accounting and financial accounting.
Accounting History. 22(1). pp.67-91.
Cohen, J., Krishnamoorthy, G. and Wright, A., 2017. Enterprise risk management and the
financial reporting process: The experiences of audit committee members, CFOs, and
external auditors. Contemporary Accounting Research. 34(2). pp.1178-1209.
Cooper, D. J., Ezzamel, M. and Qu, S. Q., 2017. Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014.
Management accounting research. 31. pp.45-62.
Online
Heibutzki, R., 2017. The Disadvantages of Expanding a Business. [Online]. Available through:
<http://smallbusiness.chron.com/disadvantages-expanding-business-22611.html>.
[Accessed on 26th October 2017].
Advantages & Disadvantages of Expanding Your Business. 2017. [Online]. Available through:
<http://smallbusiness.chron.com/advantages-disadvantages-expanding-business-
21684.html>. [Accessed on 26th October 2017].
Abacus Property Group. 2017. [Online]. [Available through]
:<http://financials.morningstar.com/balance-sheet/bs.html?
t=ABP&region=aus&culture=en-US>. [Accessed on 27th October. 2017].