Answer To: FNS60217 Advanced Diploma of Accounting FNS50217 Diploma of Accounting FNSACC607 Evaluate Business...
Jyoti answered on Mar 19 2021
Portfolio/Sandu Samaditha _Assessment Task 1.docx
UNIT FNSACC607
EVALUATE BUSINESS PERFORMANCE
ASSESSMENT TASK 1
PERFORMANCE TREND ASSESSMENT
Assessment Task 1
Part I
1.1 Nick Scali Furniture : Evaluate assets and liabilities from statement of financial position
Assets
Particulars
2014
2013
2012
Current Assets
Cash
3,59,03,000
2,64,41,000
2,06,91,000
Debtors/Receivables
1,64,000
63,97,000
8,08,000
Stock
1,90,13,000
1,45,69,000
1,36,49,000
Other Financial Assets
8,000
8,52,000
1,000
Others
92,000
2,86,000
6,02,000
Total Current Assets
5,51,80,000
4,85,45,000
3,57,51,000
Non-Current Assets
DTA (Deferred tax)
-
11,94,000
12,04,000
Fixed Assets
2,28,68,000
2,20,47,000
1,45,73,000
Intangibles
23,78,000
23,78,000
23,78,000
Total non- current assets
2,52,46,000
2,56,19,000
1,81,55,000
· Cash assets shows an increasing trend from 2012. Therefore, company is in position to manage its cash operations efficiently.
· Receivables had shown major increase in 2013 as compensation to be received from NSW Government was included therein. However, 2014 had again shown drastic decrease as the payment of compensation was received in July.
· Inventories show an increasing pattern since 2012.
· Year 2013 had high fluctuation in other financial assets. Foreign exchange forward contracts being hedging instruments were shown in cash flow hedges. In other financial assets, in 2013, realised net profit of $850,830 was included.
· The value of other assets was constantly decreasing from 2012 due to reduction in prepaid expenses every year and sundry receivables that were existing in 2012 were fully eliminated in 2013.
· Deferred tax assets came to negligible value in 2014 when it is compared with figures of the last two years.
· Property, Plant and equipment has increased slightly in 2014 and 2013.
· The value of intangible assets remained constant throughout all the three years.
Liabilities
Particulars
2014
2013
2012
Current Liabilities
Account Payable
2,74,07,000
2,34,65,000
2,06,60,000
Current taxes
23,67,000
38,04,000
16,36,000
Short term provisions
13,79,000
12,09,000
4,48,000
Total Current Liabilities
3,11,53,000
2,84,78,000
2,27,44,000
Non-Current Liabilities
Long term provisions
19,72,000
23,35,000
3,09,000
DTL (Deferred taxes)
4,09,000
2,55,000
-
Loan/Borrowing
67,62,000
67,62,000
35,00,000
Total Non-Current Liabilities
91,43,000
93,52,000
38,09,000
· The amounts stated under ‘payables and provisions’ have been showing an increasing trend since 2012 which means the company is purchasing more products.
· The amount of current tax liabilities was increased in 2013 but again slightly decreased in 2014.
· Deferred tax liability reflecting an increasing trend since 2013 because there was inclusion of DTL relating to hedging instruments in OCI (other comprehensive income). In 2012 there was no deferred tax liability.
· In 2013, the borrowings have increased by two times. However, since 2013 the amount of borrowings was stable which means that there was no further external borrowings.
Equity
Particulars
2014
2013
2012
Equity share capital
33,64,000
33,64,000
33,64,000
Reserves and surplus
-35,000
6,85,000
11,000
Profits
3,68,01,000
3,22,85,000
2,39,78,000
Total Equity Shareholders’ Funds
4,01,30,000
3,63,34,000
· Equity share capital remained the same throughout all three years under consideration. It means there is no further infusion of capital in the company.
· There was a high jump in the value of reserves in 2013 but the same trend was not seen in 2014 as there was decrease in cash flow hedge reserves. The negative value has been seen in the 2014 which is the worst year on being compared from 2012 and 2013.
· The value of retained profits is following an increasing pattern from 2012.
1.2 Cash flow Analysis
Particulars
2014
2013
2012
Cash flow from operational activities
Receipts from customer
16,62,98,000
13,57,62,000
12,37,26,000
Payments to Suppliers
(13,91,04,000)
(11,23,38,000)
(10,84,02,000)
Interest income
1,124000
9,92,000
9,77,000
Income taxes
(59,02,000)
(47,13,000 )
(34,48,000)
Cash inflows from operational activities
2,24,16,000
1,97,03,000
1,28,53,000
Cash flow from investments
Purchase of Fixed Assets
(29,33,000)
(92,68,000 )
(22,03,000 )
Cash flow from activities relating to finances
Dividend payout
(97,20,000 )
(76,95,000 )
(72,90,000 )
Amounts received through borrowings
-
32,62,000
-
Interest costs
(3,01,000)
(2,52,000)
(2,21,000)
Cash flow from financing activities
(1,00,21,000)
(4,685000)
-(75,11,000)
Total increase in cash flows
94,62,000
57,50,000
31,39,000
Add: Balances at beginning
2,64,41,000
2,06,91,000
17,552 000
Balances at year end
35,903 000
26,441 000
2,06,91,000
· Receipts from customer has shown an increasing trend since 2012 which means that the company is able to collect its cash from their debtors. Further, sales has also increased from 2012.
· Payments to suppliers have also showing an increasing trend since 2012 which means the company is purchasing their products on credit basis and payments are made on timely basis.
· Interest received is increasing since 2012 which means that surplus funds are invested wisely.
· Income tax paid has following increasing pattern from 2012 which means the income of the company has increased and so the tax amount is also increasing.
· In 2013, the company has purchased more property, plant and equipment when being compared with years 2012 and 2014.
· Payment of dividends on ordinary shares is increasing since 2012 showing surplus and good profit trend.
· In 2012 and 2014 there were no borrowings whereas, in 2013, the company has taken borrowings for smooth functioning of the business.
· The value of interest paid is showing an increasing pattern since 2012.
· Increase in cash flow in 2014 was because of growth in earnings before interest depreciation and taxes growth.
1.3 Analysis of Cost, Sales and Stocks
Analysis of Costs and Sales
Particulars
2014
2013
2012
Revenue from sale of goods
1,41,442,000
1,27,431,000
1,09,391,000
COGS (Cost of goods sold)
-56,019,000
-49,925,000
-42,883,000
GP (Gross profit)
85,423,000
77,506,000
66,508,000
· The sales of the company have following an increasing pattern from 2012.
· As the sale is increasing year by year therefore, cost of goods sold had also increased.
Accumulated Stock (Inventories)
Particulars
2014
2013
2012
Final products
15,255,000
11,811,000
11,361,000
Inventory in transit
3,758,000
2,758,000
2,288,000
Total Inventories
19,013,000
14,569,000
13,649,000
· Inventories are value at lower of the following:
· Cost (weighted average cost method) or
· net realisable value
whichever is less.
· There is an increasing trend in inventories since 2012. More goods are being produced resulting in more sales.
1.4 Analysis of debtors and creditors values
Amount($ 000)
Amount($ 000)
Amount($ 000)
Particulars
2014
2013
2012
Receivables
164
6,397
808
Payables
27,407
23,465
20,660
· Trade debtors are without interest and have credit of up to 30 days terms whereas sundry debtors have repayment terms between 30-60 days. Receivables had shown major increase in 2013 because of compensation to be received from NSW Government. However, in 2014, it had again decreased drastically as the payment of compensation was received in July.
· Alike trade debtors and sundry debtors, trade creditors are also without interest and are normally settled on 30 days credit period whereas others have an average settlement period of 30-60 days. Payables had shown an increasing trend since 2012 which means the company is purchasing more products.
· The company is following industry credit terms’ period and settle its credits on time which have impact positive cash flows and operational activities. In trade debtors, impairment is likely to follow basis likelihood of collections.
1.5 Analysis of Directors’ Report
Nick Scali Limited (Nick) is a furniture retailer company based in Australia. It has 39 stores with two brands namely, Nick Scali brand and Sofas2Go. During the period 2012 to 2014, principal activities of the company were the sourcing and retailing of household furniture and related
Accessories.
Critical factors of the company are sales growth and increase in market share via network of stores with more reach to the customers. Further to maintain margins, the company needs to manage style, quality and cost of the furniture.
The company believe that there is still a room for store expansion and opening distribution centres. After 30th June, 2014, Nick had acquired a property at Caringbah (NSW) and plans to redevelop...