Financial Accounting Report and Analysis of A2 Milk Company

This financial accounting report analyzes the performance of A2 Milk Company from 2009 to 2011, utilizing both horizontal and vertical analysis techniques. The report examines key financial metrics, including revenue, cost of goods sold, gross profit, selling and general expenses, and operating income. It highlights trends such as the increase in revenue and selling expenses, while also noting the impact of restructuring charges and income tax expenses. The analysis reveals that the company's overall performance is positive, with recommendations focusing on expense management to further enhance profitability. The report provides a detailed breakdown of the financial statements, offering insights into the company's financial health and areas for improvement, based on the provided data and analysis.

Running Head: FINANCIAL ACCOUNTING 1
FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING 2
Particulars
Horizontal
Analysis
Vertical
Analysis
200
9
201
0
201
1 2010 2011
200
9
201
0
201
1
Revenue
450
15
496
94
502
72 10% 12%
100
%
100
%
100
%
Cost of goods sold
340
17
375
34
376
11 8% 8%
76
%
76
%
75
%
Restructuring charges
Gross profit
109
98
121
60
126
37 3% 4%
24
%
24
%
25
%
Selling general and administrative
898
4
987
3
103
25 2% 3%
20
%
20
%
21
%
Restructuring charges 78 52 198 0% 0% 0% 0% 0%
Goodwill and trade name impairment 66 0% 0% 0% 0% 0%
Operating Income
187
0
223
5
211
4 1% 1% 4% 4% 4%
other income
Investment Income and other 35 54 51 0% 0% 0% 0% 0%
Investment impairment
-
111 0% 0% 0% 0% 0%
Interest expense -94 -94 -87 0% 0% 0% 0% 0%
Earnings before income tax expense
and equity
in income of affiliates
170
0
219
5
207
8 1% 1% 4% 4% 4%
Income tax expense 674 802 714 0% 0% 1% 2% 1%
Equity in income of Affiliates 7 1 2 0% 0% 0% 0% 0%
Non earnings including non-
controlling interests
103
3
139
4
136
6 1% 1% 2% 3% 3%
Net earnings attributable to non-
controlling interests -30 -77 -89 0% 0% 0% 0% 0%
Net earnings attributable to Best Buy
Co. Inc.
100
3
131
7
127
7 1% 1% 2% 3% 3%
From the above analysis it can be said that under the case of the vertical scenario the
revenue has increased by 10% in the year 2010 and to 12% in the year 2011, whereas the cost of
goods remained static. The gross profit reflected an increase of 1% on overall basis from 2010 to
2011. The selling and the general expenses has also shown an upward graph of 2% in the
financial year 2010 and thereafter an acceleration of 3% in the coming year, that is 2011. The
investment in the other income earlier increased from $35 to $54 but thereafter steeped down to

FINANCIAL ACCOUNTING 3
$51. Under the case of the vertical analysis the net profit showed an increase of 3% in the year
2010 and remained static, by covering the same margin of 3% for the year 2011 as well. The part
of the income tax was on the increasing front from $674 to $802 and thereafter the company
took the necessary steps to lower down the income tax expenses, so that the overall performance
of the company gets lift up and the investors of the A2 Milk Company gets the greater share. The
restructuring charges are also of great concern to the company as they are rising by 0.27% and
after that by 0.17%. The company needs to limit the restructuring charges to avoid the future
leverage. The overall performance of the A2 Milk Company is outstanding and the company just
needs to focus on curtailing the expenses (Zhou, O'Loughlin & White, 2019).

FINANCIAL ACCOUNTING 4
References
Zhou, Z., O'Loughlin, C. D., & White, D. J. (2019). An effective stress analysis for predicting
the evolution of SCR-seabed stiffness accounting for consolidation. Géotechnique, 1-46.