Discuss about the Accounting for Business Decisions for Premium Branding.
Tasfoods Limited is producer of premium brand with food of good quality and innovative products and provenance. TasFoods Limited was earlier known as ONCARD International Limited. Tasfoods Limited will be making food with high value. Primary growth and improvement of the product of the company will be on the products supplied in Tasmania. Tasfoods Limited is situated is a very good isolated place in terms of destinations. The company is mainly focusing on the hospitality, retail, lifestyle and financing sector (Mouritse and Kreiner 2016). The company is concentrating on producing dairy products and premium cream products. Tasfoods Limited has headquarter in Tasmania as well as an senior management team is connected to agricultural and food industries of Tasmania. The company will be making number of benefits in the brands. The company will be giving loyalty, rewards and solution to the payment of the country. The company will be operating on the business of meander valley diary. Janelle O’Reilly was made company secretary as well as general counsel. Tasfoods Limited is going forward to take acquisition with the CFO. Tasfoods Limited made announcement of the audited financial statement of the company at the year end June 2016 (TasFoods Ltd 2016). The company is aiming in the making more expansion with diversifying is more and more product and services. Present head office of the company is in Launceston, Australia.
Analysis of the balance sheet of TasFoods limited:
The forecasting of the financial position of the company is well predicted by using the balance sheet. Al the liabilities, assets and the equities of the entity are summarized in the balance sheet and this is done at the given point of time. One of the components financial statements of the entity is the balance sheet and the same is stated at the end of the reporting period (Chambers 2014). The nature of the business and the activities in which it is involved depends upon the set of line of the items. The equity accounts and the liabilities should always be equal to the total amount of assets. The equity account of the company comprised of the shareholders equity, retained earnings and various reserves. Assets are the items which are owned by the business and it is used to generate the profits and there are fixed and the current assets. On the other hand, liabilities are the amounts which the company is owing to other parties such as creditors, provisions and bank loans and is liable to pay (Talbot 2015).
The financial strength of the company is evaluated suing the balance sheet and it is relevant to determine the financial position of the company. The trends of the business line and the future outcome can be analyzed using the balance sheet and the balance sheet of a particular entity is unique in itself. The solvency position and the productivity of the company can be determined using the balance sheet. The working capital of the company and the leverage capacity of the company can be easily determined by using the balance sheet. The reputation of the company and the efficacy of the management can also be evaluated using the balance sheet. The financial strength of the company can further be evaluated sing the various tools. Some of the fundamental information available to the company and required by the shareholders is provided by the balance sheet (Ujah and Brus 2014).
The annual report for the year ended 21st July 2016 has been considered for the purpose of analysis. The value of the noncurrent assets of the Tasfood limited has increased in the current year. The percentage of the noncurrent assets increased in the year 2016 by 3946.543%. The value of noncurrent in the current year has increased and the reason attributable to the increment is that in the previous year, the company does not have any amount goodwill and the value for goodwill in 2016 stands at $ 1879400. The total current assets of the comprised of cash and cash equivalents, current assets and the financial assets, trade and other receivables. The total value of current assets decreased in the year 2016 by 92.119%. This is because in this year, the company does not have any financial assets and the other current assets have also been disposed off. The company does not have any assets and has not made any investments made in the financial assets. The total current liability of the company has witnessed decrease in the current year and the decreased percentage is 8.69%. The company does not have any long outstanding debt and has zero noncurrent liabilities. The company does not have any tax liability in the current year. The provisions for the expenses of the hotel are zero in the year 2016 and this has reduced the total current liabilities. The value of the total stock holder equity has also reduced in the year 2016 by 90.323%. The retained earnings of the company is negative in the current year that is it suffered accumulated loss in the current year as compared to the previous year and the amounts stands at $ 1651129. The company does not have any non controlling interest in the current year that is 2016 (Lee et al. 2013).
The accounts expressing the monetary interest of the ownership in to the business are included in the accounts containing the shareholders equity. The stockholders equity has the credit balances in the balance sheet and is located in the balance sheet immediately after the liability accounts. Such accounts stands in opposition to the assets account.
One of the major components in the balance sheet of the company is the section of the stockholder equity. It is represented by the difference between the amounts of assets and liabilities. It is the amount of capital that is received from the investors of the company that is the stake in the stockholders equity that is held in the book of company by the investors (Crosson and Needles 2013). The amount of the stockholders equity represents the interest of the stockholders in the company. The stock holders’ equity comprised of the retained earnings and the paid up capital. Paid up capital is the amount of money that is raise form the sale of the stock through the investors. That is it contains the contribution of the owner of business after they have bought the shares and also includes the amount of capital which is invested by the company (Disatnik et al. 2014). The proportion of profits, retained and the distributed earning is reflected in the stockholders equity. The equity of the stockholders earn dividend on the amount of shares they have purchased. If the company has been running for long time and has huge amount of retained earnings then it implies that the shareholders are not getting dividend as a part of the profit and the profit earned is reinvested in the business. This is indicative of the fact that the company’ profitability position is good and has net worth of high level.
The components of the total stockholder equity include the contributed equity, retained earnings, reserves and the interest of parent entity. The value of the contributed equity has decreased by the amount $ 31897655. The value of reserves has increased in the current year and the retained earnings are negative that is the company has incurred loss that is accumulated. The company does not have any non controlling interest in the year 2016. The value of the total stock holder equity has also reduced in the year 2016 by 90.323%. The number of outstanding shares of the company has reduced in the current year by 82.874%. The company did not pay any dividend in the year 2014. The company paid a special dividend in the year 2015 and the dividend per share of the company was $0.09. The dividend paid was not franked. The total amount of dividend paid to the shareholders was $ 15711560 (Vogel 2014).
The first financial statements in the annual report of the reporting entities are the income statements of the company. The income statement of the entity depicts the revenue generated by the company and the expenses and the profit over a period of time. The information provided by the income statements to the investors of the company is basically about the revenue generation or whether the company is making money or not due to its operation. The other name for the income statements is the profit and loss statements, statements of operations or the earning statement of the company. The performance of the company is measured in terms of expense and the revenue as depicted in the income statement. The net income of the company is depicted in the income statements (Rob and Heyler 2016).
The revenue is the income generated from the sale of the items of the company and the profitability of the company would be increased by increasing sales. The revenue needs to be continued in the year in and out so as to contribute to the profitability of the company. The expenses comprised of many parts such as selling and administrative expenses and the cost of goods sold. One of the direct factors which contribute to the revenue of the business is cost of goods sold (Edwards 2013). The income statements reveal to the management and the investors about its loss and profit in the particular period of time. There are various process involved in forming the income statements of the company. The single step approach sums up the total of all revenues and the all the expenses is deducted from the totaled revenue. Under the approach of multi step, there are several steps involved in the running and arriving of the net income of the company (Weil et al. 2013).
The income statement of the Tasfoods comprised of the income generated from the continuing operations and other comprehensive income. The total income of the company in the year 2015 has increase by 126.154%. The percentage of the cost of goods sold has decreased by 30.37%. The total expenses of the company have also reduced in the current year by 16.23%. The company incurred operating loss in the previous year that is in the year of 2014 and in the current financial year, the company gained from its operations. In the prior year, the company did not earn on shares. However, the earning per share in the current year is $ 0.09.
The statement depicts the inflow and outflow of cash arising from the various activities of the business. The fundamental of the company is critically understood by the cash flow statements. The ability and the payment of the operational activities of the business is analyzed form the cash flow statements. The potential investors seeking the investment in the company judge the performance of the company using the statements of cash flow and whether it is able to generate the cash (Kaplan and Atkinson 2015). Operating, financing and the investing activities are the three sections of the cash flow statements from where the income is generated. The current operating expenses of the business and the changes accompanying the balance sheet of the company are recorded in the balance sheet. One of the analytical tools for evaluating the viability of the company regarding the short term payments such as amount of debt is provided by the cash flow statements. The paying capacity and the payroll of the companies also depicted using the statement of cash flow (Horngren et al. 2014).
The cash flow statement is prepared using the two methods that is the direct and indirect method. The direct method is easily understood and prepared. The indirect method is a universal method and it is made necessary to produce the supplement report as per ‘FAS 95’.
The cash flow statements of the Tasfoods limited comprised of the cash flow generated from the financing, operating and investing activities. The components of the cash flow from operating activities include the receipt from customers, interest received, taxes paid and the payment made to the supplier and employees. The cash was used in the operating activities and the amount has increased in the recent year that is 2015-2016. The amount used in such activities increased by 55.216%. The investing activities comprised of loan made to the other entities and the various payments made for the purchase of the financial assets and the payment made for the intangibles assets purchase (Bazley et al. 2013). There are also proceeds from the financial assets disposal. The company invested cash in the business combination. The company settled a legitimate claim. The invested activities provided cash in the previous year but in the current year the cash of the business is used in the investing activities. Therefore, the company has used the cash in the current year investing activities and the percentage is 100.701%. The amount used in the business $ 21906035. The financial activities of the company comprised of the issue of the shares and its associated costs and proceeds, paying dividend, and the payment made for buying back of the shares (Richard and David 2016). The cash used in the financing activities of the business has increased by 4044.396%. The net increase in usage of cash from the overall activities of the business has decreased by 262.221%. The amount of cash and cash equivalent at the end of the financial year is $ 2798864.
Conclusion:
The analysis of the financial report of the company has been done correctly. The very action of the company has been achieved and it is done by extracting the data and it is based on the annual reports of the company. The Tasfood limited is a growing market and possess the capacity to supply and grow the export and the domestic market. However, the company needs to be expanded and should develop the new product lines which are not currently supplied, though majority of the customers of Australia are served by the company. The company needs to reduce the loss resulting from the continuing operations. The company needs to reduce the accumulated losses resulted in the current year. The cash flow statement of the company is not in proper position as all the activities are making use of the company’s cash. It needs to increase the net cash held at the end of the financial year. The evaluation of the company has been done suing the financial statements of the company.
The company has its cash flow statement in a not suitable as the company has not been able to receive the income from the various activities. The company needs to make investment in the intangibles assets as it has increased the amount of noncurrent assets. The company needs to place in the funding arrangement and the tax sharing. The company should try to reduce the investment assets to be held as cash. The company needs to prepare the budgets and project the cash flow for the intangibles assets.
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