Accounting and Financial Management Goals and Entity

Question: Discuss about the Accounting and Financial Management for Goals and Entity. Answer: Introduction The following study evaluates Blackmores which is the latest leading health company based in Australia The company specializes in developing products and services that deals in vitamins, minerals , herbs as well as nutrients . This shall help consumers in availing medical aid to patients suffering from chronic conditions. The following report evaluates the financial conditions of the company as well as the key assets, liabilities as well as the equity of the company. This shall help the business activity in the development of the financial goals and the objectives of the business entity and make the necessary financial strategies. 1. Company Overview The Blackmores is the leading health company. It offers a range of vitamins, minerals as well as herbal and nutritional supplements for the company. As such, it has earned distinct brand reputation and name in the International market. According to Lasher (2013)., the brand has earned the title of the Most Trusted Brand in Australia . The essential aspects of the annual report of the company are the cash Flow, balance sheet and the income statement of the company. The annual reports of the company state the existing financial condition of the company. In the recent years, the brand has achieved considerable financial competencies of the organization. Leauby and Wentzel (2012) stated that the ratio analysis technique of the company has revealed that there is adequate working capital of the company to meet the daily operational expenses of the company. In addition, the inherent financial strength of the company is enough to meet the daily operational expenses of the organization. The Blackmores is listed in ASX 100 publicly listed companies. The brand operates in around 17 countries. . Francis et al. (2015) mentioned that the core components of the Blackmores Group Includes - BioCeuticals, Pure Animal Well being ( PAW) , the Blackmoress Institute as well as Blackmoress Asia . In addition, the Blackmoress Group shall also include Fusion Health and Bemore. The Blackmores group is one of the leading entities in Australia and has an impact on the operational strategies of the business entity. Ebert and Griffin (2015) has stated that the brand has developed more than 250 vitamins and minerals as well as herbal supplements in the country. The company was established in the year 1930 which influence the operational strategies of the business entity. In this regard, it can be stated that Blackmores has been the leading provider of medicines to the health institutes and hospitals in the domestic as well as the international market. Zadek et al. (2013) mentioned that t he brand has been conducting health camps on a regular basis to raise awareness about various health issues that has been hampering the physical condition of the masses. The Blackmores Company has been able to achieve distinct brand reputation and market reputation in the international market. 2. Financial Statement Analysis The annual position of the business entity shall refer to the inherent financial position of the business entity. In this regard, it can be said that the balance sheet of the organization shall refer to the assets and the liability of the organization. The monetary policies of the business entity shall be developed as per the necessary IASB/AASB framework. The recognition of reverence is one of the essential aspects of the operational aspects of the business entity. Budding et al. (2014) mentioned that as per the financial reports of 2015, the revenue and the expenses of the brand has been assessed as per the financial guideline. Another essential feature of the analysis has been the identification of the bad debts as well as the provision of bad debt. In this regard, it can be stated that the business entity has responded appropriately to determine the amount of bad debts in the organization and the necessary changes has been made to the debtors level in the organization. As such, t his has assisted the business entity to correctly assess the amount of expenditures made in the sales level of the organization. The brand has invested considerably in the social responsibility activities in Australia. As such, these expenditures has to be considerably be accounted to assess the financial condition of the business enterprise. Francis et al. (2015) mentioned that expenditures related to the CSR activities have to be assessed accordingly, to prevent any financial irregularities in the organization. Corporate Social Responsibility expenses shall have to be assessed accordingly in the case of business enterprises operates in multiple countries. Blackmores operates in multiple countries. As such, it is subjected to different taxation laws and business operations in many countries. The brand has to adjust to different taxations and trading laws in many countries to successfully establish the taxation procedures in many countries. The development of the taxation procedures in many countries shall assist the business entity in the development of the organizational taxes in the business entity. Besides this Ahmed et al.(2013) mentioned that Blackmores has developed health camps in many countries to treat patients and that shall have an impact on the operational policies of the entity. Blackmores has taken pertinent measures to develop the accounting statements pertaining to such endeavors. As such, this shall have an impact on the operational strategies of the business entity and help the business enterprise in the development of the financial strategies of the business entity. To facilitate the survivability in an intensively competitive market, Blackmores has taken certain credit management policies in the organization. As such, it is necessary for the business entity to develop when one of the parties in the contract shall not adhere to the contractual obligations to the contract. Henderson et al. (2015) mentioned that the Blackmores group executes financial transaction with parties that shall have a positive financial history. As such , the independent rating agencies has been used to determine the existing financial condition of business entities and the credit worthiness of the suppliers. Thus, this is essential for the business entity to prevent defaulting of the loans. To achieve business sustainability, the brand has to ensure that the level of bad debts in the organization shall have an impact on the sales revenue of the organization. Types of Ratios Formulae Value ( All figures in AUD Million ) Ratio Liquidity Ratio: Current Ratio (Current assets/ Current Liabilities) 64.02 1.633579995 39.19 Net Working Capital Ratio (Current Assets - Current Liabilities)/ Total assets 24.83 0.2483 100 Solvency Ratios: Debt to Assets Ratio (Debt/ Total Assets) 15 0.15 100 Debt to Equity (Debt/ Total Equity) 15 0.15 100 Efficiency Ratio: Asset Turnover Ratio (Sales/ Total Assets) 47 0.4716 100 Fixed Asset Ratio (Sales/ Total fixed asset) 47 0.447619048 105 Profitability Ratio: Return on Equity (ROE) (Net income/ Shareholders' Equity) 47 1.037527594 45.3 Profit Margin ratio (Net Income/ Revenue) 47 0.099576271 472 As per the above ratios, the current ratio and the net working capital ratio of the organization indicates the proper financial health of the business entity. As such, the current ratio of the organization reflects the adequate financial position of the business entity. In this regard, it can be said that the current ratio of more than 1 shall reflects the adequate financial position of the business entity. In addition, the solvency ratio of the organization indicates the presence of debts in proportion to the assets present in the organization. The ratio analysis techniques indicate that there is a substantial presence of debts in the organization. The fixed assets ratio of the business entity shall indicate towards the presence of funds in the organization. According to Badolato et al. (2014)., the presence of assets in the business organization at the end of the year is a pertinent indicator towards the sales amount in the organization . As such, this shall lead the business entity towards organizational growth and prosperity in the International market. The profits margin ratio of the company shall indicate towards the level of profit achieved in the existing year. In the current ratio, the profit margin ratio can be called substantial in the existing market condition. Thus, the financial situation of the company has improved when compared to the year 2013. Bandy (2014) mentioned that recently Blackmores has achieved considerable sales revenue in Australia with the establishment of newer markets. The profitability ratio of the company shall refer to the adequate financial position of the business enterprise. Webster (2016) mentioned that that the ratio analysis technique of Blackmores reveals the solvency ratios as well as the efficiency ratios, which are pertinent indicators towards the growing financial sustainability of the business entity. The solvency ratio of the company shall have an impact on the operational strategies of the business entity. According to Mongiello and Harris (2012), the return on equity of the company shall reveal the amount of return in the investments made in a particular accounting period. The return on equity ratio of the company of 1.037527594 shall have a positive impact on the operational as well as the financial policies adopted by a business enterprise. 3. Limitations of Ratio Analysis Inflation - The ratios computed does not exhibit the financial condition of the business entity due to inflation. As such, these factors shall have an impact on the operational strategies of the business entity. Thus, increase in the prices of the goods shall hamper the ratio analysis techniques in the organization. Comparison Ratio Analysis does not facilitate comparison between two different companies operating in different products and service lines. As such, the ratios thus computed shall not reflect the total financial condition of the business entity. Nuryanah and Islam (2015) mentioned that the ratio analysis system in the organization should have an impact on the operational strategies of the organization. Identifying the discrepancies The discrepancies in the financial statements in the business entity shall have to identify to take proper measures to aid the business organization in its recovery path. Thus, the ratio analysis techniques used is not adequate to identify the discrepancies in the operational processes of the business entity. According to Ward (2012), the ratio analysis techniques can only help the user to analyze the financial condition of the business entity and not useful in recognizing the flaws in the existing financial condition of the business entity. Accounting policies It can be said that different companies possess different kinds of accounting policies to record the financial transactions of the business entity. Thus this has an adverse impact on the ratio analysis technique applied for the business organization. Weygandt et al. (2015) mentioned that there is no uniformity in the ratio analysis techniques followed in business organizations. As such, the ratio analysis techniques followed in reputed business organizations has not been consistent in delivering authentic financial results for business enterprises. In this regard, it can be said that the accounting policies varies due to the nature and the type of business s entity the firm is currently operating. 4. Perspectives of the potential investor The annual report of Blackmores contains a detailed financial report about the existing financial condition of the business entity. As such, it shall help an investor to gather latest information about the financial condition of the business entity. The current assets as well as the liabilities of the business entity are stated in a detailed manner. Besides this, the financial information about the shares and other financial stocks sold by the company have been explained in a detailed manner. In this regard, it can be said that the annual report of the company does not state the detailed operational policies of the business entity and its partnership with other reputed brands in the market. In addition, the amount of money spent in the sales promotional expenses or in developing consumer awareness about the merits of Blackmores health products. In addition, the market shares of Blackmores in the domestic and the international market. This is a drawback of the annual report of Blackmo res in the global market. As a potential investor, one is required to know the existing market share of Blackmores in the domestic as well as the International market. This would help the investor to determine the level of investment that would be appropriate for Blackmores in determining the financial investment for the business entity. The dependence on the historical cost of the organization shall have an impact on the operational policies of the organization. As such, these assets are recorded at the original cost at which they are acquired. Thus, they are not stated at the existing market value of the organization. According to Ward (2012), this would not give a clear view of the investors in the organization. This would hamper the decision making process of the investors. Apart from these factors, the amount of money owed to the creditors is not stated clearly. This is a very pertinent issue within the annual report of the company. As such, the brand has to respond appropriately to offer such information in the year ended annual reports of the company. In addition, the brand has to take the measures in developing the goals of the enterprise. The amount of debt that the company owes is an important indicator towards the decision making process of the user. Conclusion Blackmoress has been one of the leading companies based in Australia that deals in healthcare products. The ratio analysis of the company reveals that the company is in a better position financially when compared with the past years. The ratio analysis technique is limited when comparing the financial position of the brand with the other companies operating in the different product and service line. The annual report of the company consists of certain discrepancies and may not offer the full view of the financial position of the business entity to a potential investor. However, the brand is in a path of growth and is expected to acquire a larger market share in the domestic as well as the international market. References Ahmed, A. S., Neel, M., Wang, D. (2013). Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting Research, 30(4), 1344-1372. Badolato, P. G., Donelson, D. C., Ege, M. (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58(2), 208-230. Bandy, G. 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