200821: Financial Reports for Decision Making - Investigation of Annual Report - ASX - Assessment Answer

Financial Management Assignment

Assignment Task

Part A requirements: Part A requires investigation of relevant management discussion for Blackmores Ltd for the financial year ending 30 June 2016.

This involves answering the following questions in your own words (i.e. do not simply “cut and paste” information from the Annual Report). Remember we are applying critical thinking concepts, so you need to be able to explain and justify your choices. Make sure all answers are fully referenced using the Harvard referencing system and that you include a reference list at the end of your assignment. Guidelines for using the Harvard referencing system can be found at:

https://library.westernsydney.edu.au/uws_library/guides/referencing-citation

Question 1: Last month, your overseas visitors purchased a large volume of popular Blackmore health products to take home with them. This raised your interest in the Blackmores business, what category of business is Blackmores?

Use both qualitative (i.e. non-financial) evidence from the “CEO’s Year in Review’’ appearing in the Annual Report (Blackmores Ltd, 2016, p.8-12 only) and quantitative (i.e. financial) information from the Consolidated Financial Statements (Blackmores Ltd, 2016, p.64-67 only) to support and explain the reason for you choice of category.

Question 2: Read the “Chairman’s Introduction” (Blackmores Ltd, 2016, p.6-7 only). Discuss two significant points mentioned that would be important to an existing investor. One discussion point should be positive for the existing investor and one point should be matter of concern for existing investors. Provide evidence to support your choice.

Thus, company has matching concepts for success. Their product leadership is on the basis of strategy f differentiation, whereas operational effectiveness and Asia growth are their focused areas. And in addition to this being customer centric brings out their overall cost leadership intentions of company Blackmores.

As per annual report of company in 2016, oversees visitors has shown interest in health supplements of Blackmores and this gave an impact of increase in revenue generation more than 50%. Company Blackmores has almost double of net profits generated through double of revenue, whereas current ratio has been effected and came down from 1.77 to 1.50. As per (Investopedia.com, 2003) thumb for current ratio is 2:1. But as per Director’s opinion given in Annual report, Auditors have agreed that there are reasonable grounds and company shall be in position to pay its debts when claimed.

Solution 2

Blackmores’s chairman introduction about overall prospect and performance of company give significant concerns majorly for existing investors. Apart from impressive vision of company for next three spans about aiming to be international traders, there are two more positive signals given to investors of company. One is strengthening the people who are working with them by sharing profit through incentive schemes with employees. It was explained in (Shore, Coyle-Shapiro, and Tetrick, 2012), that it is best way to get things done in an organisation for success. Second is dedicated work on constraint of supply. Any system with constraints is normal, whereas there must be sufficient resources to cover constraints and normal fluctuations stated in (Fredendall and Hill, 2016).

Investors see growth when organisation is moving towards successful principles, and it is mentioned by (Hay and Castilla) that SWOT analysis is a powerful management tool. Hard work of many years becomes overnight international success.

For new prevailing ideas to deal with constraints of supply through new staff, additional facilities, new supplier partnerships and improved infrastructure which can a scientific revolution also noted in investors eye. Here, company is using strengths of employees for meeting constraints faced by company Blackmore which is sharing long standing profits parallel with employees as stated in annual report of company Blackmores.

This shows how company is distributing ownership to each qualified efficient person working towards growth of company by acting as ambassadors of company’s brand. (Fredendall and Hill, 2016) also stated concept of Drum-Buffer-Rope (DBR), which explains that how constraints behave ironically as drumbeat of the system. It’s added that, constraints never stop working. Company Black more’s Chief Executive Officer, Christine Holgate is working continues for constraints and attaining recognitions to lead company through her passion.

Hence, Investors shows in trusted in company not for artificial entity but through real brands who are working on ground.