Financial Analysis of Superdry: Finance in Management and Leadership

This report provides a comprehensive financial analysis of Superdry, a UK-based clothing company. It begins with an executive summary outlining the importance of financial information for stakeholders and its role in decision-making. The report identifies key stakeholders like customers, employees, investors, and suppliers, detailing their respective interests in Superdry's financial performance. It explains the communication methods used to disseminate financial information, including meetings, conferences, and formal reports. The report then delves into the different types of financial data crucial for managerial decisions, such as cash flow statements and income statements, with specific examples from Superdry's 2017 and 2018 financial data. Furthermore, the report critically evaluates and compares Superdry's financial statements, highlighting the application of accounting concepts like business entity, money measurement, accrual, consistency, and going concern. It also discusses the accounting frameworks, including GAAP, IFRS, and IAS, used in preparing the financial statements, and concludes with an evaluation and comparison of the financial position of the company.

Finance In Management
And Leadership

EXECUTIVE SUMMARY
Finance in management and leadership ensures proper utilisation of resources and
provides a framework for decision making that assist in achievement of organisation's objectives
and goals. This report summarises importance of financial information for stakeholders and way
in which company can communicate its financial information to users, different types of
financial data and information required for decision making in respect of Superdry, UK's
clothing company. It also describes comparison of financial statements of company by
considering framework and concept applied. Financial data and information required in
Superdry organisation for taking important decisions. Managers use these reports to take
important decisions for the benefits of company. These data show clear picture of the current
organisations growth and its financial position. Financial management help organisation to find
out actual position and areas where an organisation should focus upon to increase in growth and
stay in the competition. Following are the different types of financial data required by mangers to
make important decisions:
Cash Flow Statement: Company requires cash flow statements to check the out flow and in flow
of funds. Cash flow statement show the actual usage of cash in an organisation. This data is
required by the company

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. Users (stakeholders) interested in receiving financial information of Superdry:....................1
2. Communication of financial information with all organisational stakeholders:......................2
3. Different types of financial data and information required for decision making....................3
4. Critical evaluation and comparison of financial statements along with accounting concept
and framework:............................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Finance refers to management of funds and combines functions such as borrowing,
lending, investing, budgeting etc. Management and leadership are vital aspect of an organisation
and both are interlinked with finance and related activities (Renz, 2016). This report describes
users of financial information and extent of interest, circulation of financial information to
stakeholders and information required for decision making in the context of Superdry. It is an
UK based company engaged in selling clothings under its own name label. This report also
provides a critical evaluation and comparison of financial statements while discussing
appropriate accounting concepts and framework used in producing them.
TASK
1. Users (stakeholders) interested in receiving financial information of Superdry:
Stakeholders are individuals who influence and influenced by actions of organisation,
objectives and different policies. Stakeholders' support is necessary for organisation to attain
objectives and goals. Some of the major stakeholders are investors, employees, directors,
creditors etc. All these stakeholders have their own interest in organisation. For example
organisation's customers always demands fair practices and good quality products but customers
are not have same kind of interest as organisation's employees holds. Stakeholders are classified
as internal stakeholders and external stakeholders as per nature and extent of concern or interest
in organisation (Boyd, 2017). Internal stakeholders are individuals working in organisation or
having direct relation with organisation. Where as external stakeholders are those individual who
do not have direct relationship with company. In this context Superdry has following
stakeholders who are interested in receiving financial information of company:
Customers: Customers are real stakeholders of company as they are get affected by brand
value and quality of products, company is selling. Superdry is clothing brand and selling its
products by its name label so customer are interested in receiving financial information to
analyse the brand value and popularity of company in market.
Employees: Employees are direct stakeholders of company and holds their stake in
company in form of salary and employment safety. They have direct impact of growth and
performance of company. In Superdry there are thousands of employees operating company's
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stores and offices, they require financial information to evaluate growth of company, in order to
make assurance about their employment safety concerns.
Investors: Investors are real stakeholders of company as they bear risks by investing
funds and money in company and always having concern about return from funds invested. In
Superdry investors make investment by purchasing company's securities and, they require
financial information to assess the viability of such investment made by them in company.
Government: Government is a kind of external stakeholder and holds their stake in form
of taxes and duties. Government collects taxes on income earned by companies. Government
requires various information and details from Superdry in form of various return to assess the
actual amount of tax payable by them (Chisholm-Burns, Vaillancourt and Shepherd, 2012).
Suppliers and vendors: Suppliers and vendors provides goods and services. Generally in
corporate world they provides goods or services on credit. They can affect supply of product or
services. Superdry has suppliers and they require company's financial information to analyse
company's liquidity and profitability positions, to know whether company is able to make
payments against supplies.
2. Communication of financial information with all organisational stakeholders:
In corporates financial information includes financial statement, income statements, cash
flow statement and other financial news or information related to company. Using these
information various internal or external stakeholders take vital decisions and such decisions of
stakeholders affects organisation performance and growth. So in corporates such information is
communicated to stakeholders in formal manner. Effectively communication of financial
information to all internal and external stakeholder is necessary for organisation to take financial
decisions. Financial information are used by stakeholders to different-different purpose but
communication of such information helps to develop trust in these stakeholders. Communication
of financial information also act as a golden chance to attract new customers and investors which
leads to enhancement of brand value (Frich, 2015).
In Superdry in order to communicate the financial information like balance sheet, income
statement or profit and loss account, statement of cash flow etc., company conducts meetings,
conferences, send written or formal letters, email etc. Communication of financial information is
some times is necessary due to law and regulations such company is required to file tax returns
and annual accounts to regulatory authorities. Beside this company organise annual general
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meetings, interim general meetings and extraordinary general meetings to circulate and
communicate annual performance and results of company. For communication with suppliers
company conducts meetings on quarterly and monthly basis. However sometimes to
communicates with its large number of small suppliers company hold seminars and conference.
Any communication of financial information with employees company send emails or hold
meetings. Communication with customers is difficult and costly but necessary so company
adopts adversing methods to communicate financial information relevant for them (Elloker,
2012).
3. Different types of financial data and information required for decision making
Financial data and information required in Superdry organisation for taking important
decisions. Managers use these reports to take important decisions for the benefits of company.
These data show clear picture of the current organisations growth and its financial position.
Financial management help organisation to find out actual position and areas where an
organisation should focus upon to increase in growth and stay in the competition. Following are
the different types of financial data required by mangers to make important decisions:
 Cash Flow Statement: Company requires cash flow statements to check the out flow
and in flow of funds (Hoch and Dulebohn, 2013). Cash flow statement show the actual
usage of cash in an organisation. This data is required by the company to control its cash
expenses and increase the circulation of cash in company. Superdry use its cashflow
statement to measure its inflows and outflows and make new and better strategies.
 Statements of Income: Statements of income is required by the company to see its
revenue and expenses incurred to earn those revenue (Austin and et.al., 2013). Superdry
also uses its statements of income to check its efficiency and formulate new strategies to
increase its growth and revenue and also control its unnecessary expenses.
Income Statements (Profit and Loss account): As per income statement of Superdry it
is evaluated that company is enjoying profitability position in year 2018. Company's net profit is
increased to £ 76.3 million in year 2018 which was £ 68.7 million in year 2017 exhibits overall
increase of 11.06%. Company has reported overall revenue of £ 872 million in 2018 which was £
752 million in year 2017 which represent that gross sales of company is increased by 15.96%.
Cash Flow statement: As per cash flow statement of Superdry, company's overall cash
obtained through operating activities are increased from £62.3 million to £80.1 million which
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points towards increased efficiency of company to generate cash from its operating activities.
Due to purchase of capital assets company's cash flow from investing activities is negative and
increased as compared to past year (Middlehurst, 2013). However overall cash flow of company
from all activities is positive in both year and increased to £ 75.8 million.
4. Critical evaluation and comparison of financial statements along with accounting concept and
framework:
Accounting concepts: Accounting concepts is core and essential rules, assumptions and
principles that act as a groundwork for entering financial transaction and preparing financial
statements (Rickards, 2012). Accounting concepts are applied and followed by business
organisation across the world which helps to create uniformity in financial information
worldwide. It also helps to maintain consistency in accounting records. Following are the major
accounting concepts that are used by Superdry to formulate financial statements:
Business entity concept: This concept state that business is considered as separate legal
entity. The capital or money invested by business owner of Superdry is considered as the liability
of respective company to pay back its owner.
Money measurement concept: Herein, Superdry only those transaction are recorded
which can be measured in term of money. There are other factors also which affect the business
like honesty and sincerity that affect the business but can not be recorded as they cannot be
measured in form of money.
Accrual Concept: Superdry by following this concept recognise revenue or income
when earned and received but expenses or liabilities are recorded as they occur. This concept
provides actual result of company by considering probable expenses and liabilities.
Consistency Concept: It ensures that accounting methods applied or adopted by
Superdry should be followed consistently from one period to other period which lead to
reliability of information while doing comparison of data of two or more year.
Going Concern concept: As per this concept Superdy prepare their financial statement
on the basis of assumption that company will operate for foreseeable future.
Accounting Framework: Accounting framework is systematic collection of criteria that
is applied to assess, identify, disclose and provide information stated in financial statements.
Financial statement of organisation should be prepared as accounting framework because such
financial statement provides true and fair view of financial informations. Most common and
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widely accepted accounting framework is GAAP, IAS and IFRS. GAAP s are generally accepted
accounting principles which provide general guidelines about preparation and presentation of
financial statements. IFRS are intentional financial reporting standards which are internationally
accepted accounting standards that provide a set of standards that are required to be followed by
entities to frame financial statements (Javadi, Rezaee and Salehzadeh, 2013). GAAP is mostly
applied by companies in United States, whereas IFRS are used by business organisation all over
the world. Superdry follows GAAP and IFRS while preparing financial statements. For example
company fulfils disclosure requirement as per IFRS-1. Such Conceptual Framework provides a
basis for application of fundamental concepts for the purpose of financial reporting that provide
guidance to board of directors. It assist to give assurance that Standards applied are consistently
and conceptually right. Beside this IAS( international accounting standards) are also followed by
company. IAS are now replaced with IFRS but some standards are not replaced yet so company
follows such old IAS. The overall objective of these frameworks is to make uniformity and
equalities in accounting across the world.
Evaluation and comparison of financial statements of Superdry:
Following is a critical evaluation and comparison of financial statements such as balance
sheet, income statement and cash flow of Superdry for the year 2018 and 2017, as follows:
Statement of financial position (Balance Sheet): Superdry's balance sheet is prepared as per
GAAP, IFRS and IAS. Company has reported net assets or shareholder's fund of £408.5 million
and £372.5 million in year 2018 and 2017 respectively. Which indicates that company's net asset
is increased by 9.66%. In year 2018 company has reported non current assets of £236.6 million,
and total current assets of £378.1 million which in year 2017 was 212.7 million and 340.1
million respectively. That is indication that company is overall assets are increased and
company's ability to generate assets is enhanced. However company's long term debt has been
increased by £10.6 million. It is also notable that company's current liabilities is increased to
£148 million in year 2018 which was 132.1 in year 2017.
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BUSINESS MODEL
Business Model used by Superdry
(Source: Annual Report, 2014)
The above image shows a business model of superdry they operate through two channels
retail and wholesale. To carry out its retail business it has their own stores and e-commerce
website. For wholesale they use franchised stores, key accounts, licensed markets and
independent retailers.
This model of business has helped superdry to achieve its market stability and grow its
revenue. This approach has helped in achieving a strong revenue growth with primarily diluted
margin which provided a result of structural mix and long term investment in order to protect its
selling price from raising inflation and reduce their inventory to drive its operational efficiency
in future.
CONCLUSION
From the above report it has been articulated that in order to achieve targeted objectives
and goals managerial personnel in organisation should apply their finance skills in management
and leadership. Financial information are reported by companies through their financial
statements and annual report that provide assistance to various stakeholders in order to take
signifiant investment decisions. Evaluation and comparison of such financial information and
data helps to asses actual performance of organisation and ensures compliance of accounting
concepts.
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REFERENCES
Books and Journals:
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Boyd, B., et.al., 2017. Hybrid organizations: New business models for environmental leadership.
Routledge.
Chisholm-Burns, M. A., Vaillancourt, A. M. and Shepherd, M., 2012. Pharmacy management,
leadership, marketing, and finance. Jones & Bartlett Publishers.
Elloker, S., et.al., 2012. Crises, routines and innovations: the complexities and possibilities of
sub-district management: leadership and governance. South African health review.
2012(2012/2013). pp.161-173.
Javadi, M. H. M., Rezaee, M. S. and Salehzadeh, R., 2013. Investigating the relationship
between self-leadership strategies and job satisfaction. International Journal of
Academic Research in Accounting, Finance and Management Sciences. 3(3). pp.284-
289.
Middlehurst, R., 2013. Changing Internal Governance: Are Leadership Roles and Management
Structures in United Kingdom Universities Fit for the Future?. Higher Education
Quarterly. 67(3). pp.275-294.
Frich, J. C., et.al., 2015. Leadership development programs for physicians: a systematic review.
Journal of general internal medicine. 30(5). pp.656-674.
Hoch, J. E. and Dulebohn, J. H., 2013. Shared leadership in enterprise resource planning and
human resource management system implementation. Human Resource Management
Review. 23(1). pp.114-125.
Austin, C., et.al., 2013. Application of Project Management in Higher Education. Journal of
Economic Development, Management, IT, Finance & Marketing. 5(2).
Rickards, T., 2012. Dilemmas of leadership. Routledge.
Online
Business Model of superdry group, Annual report, 2014. [Online]. Available through:
<http://annualreport2014.supergroup.co.uk/strategic-report/strategic-report>.
Annual report of Superdry, 2018. [Online]. Available through:
<https://corporate.superdry.com/media/2479/superdry-ar2018-indexed-linked3.pdf>.
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