Financial Analysis Of Speciality Fashion Group Limited

Performance

This study has been emphasized on various financial information of the company in terms of performance, profitability; stability etc. for this report, SPECIALITY FASHION GROUP LIMITED has been taken into the context. It has been explained in this report that how this company is managing and performing its financial activities and functions in year 2016 in comparison with 2015 and 2014 (Home, 2017). Analysis of Financial statement is a study that is used to analyze the various statements, activities etc of the company. For this study, various methods, tools and techniques have been used to identify the stability and performance of the firm so that a quick and better conclusion could be prepared by the firm as well as the shareholders and other stakeholders to direct the decisions. Normally, for this examination, balance sheet, profit and loss account and cash flow statements has been taken into the context.

Financial analysis is a study which is used by the analyst and the shareholders of the company to manage the financial activity of the company. Mainly, accounting and financial analysis study has been performed in the financial analysis. It explains about various position of the company such as stability, viability, profitability of a firm of a firm. This report is investigated by the analysts. Mainly, ratio analysis, horizontal analysis and Vertical analysis have been done in this study (Romney, Steinbart, Zhang and Xu, 2006). This examination is mainly done by the financial analyst and these reports are presented to the directors and the management of the company to make a decision about performance, viability and financial stability of the firm. Below techniques and methods have been taken into the context to analyze the performance, stability and viability of the SPECIALITY FASHION GROUP LIMITED:

Horizontal analysis is a method of analyzing the financial statement. This study of horizontal analysis express about various changes into the financial statement especially in a period. This investigation is useful for the company and the analyst to evaluate the trend condition and situation of SPECIALITY FAHSION GROUP LIMITED. In this analysis, normally 2 years or more than that are taken into context. For this analysis, earliest year is taken as a base year; further years data are analyzed according to the base year. Changes are normally expressed in the form of percentage. The below is the formula of horizontal analysis:

= (changes in the Dollar / Amount of the item in base year) *100

Stability

The study of Horizontal analysis has been presented in SPECIALITY FASHION GROUP LIMITED to analyze the company’s performance in caparison of previous year. According to this analysis, it has been found that numerous changes have occupied the place into performance of 2016’s financial figures of the firm according to the 2015’s data. It has been investigated that company’s total revenue is expressing an enhancement from 2015. In addition, the total cost of the company has also been improved. The total increment in the income of the company from 2015 is only 4.43% while the total cost of revenue has been improved by 11.89% of the company from last year and it has been analyzed that the numerous alternations have been done by the company in its figures and activities which could be seen in its income statement.

In addition, a study has been performed over the balance sheet of the SPECIALITY FASHION GROUP LIMITED. According to this study, it has been investigated that numerous changes have occupied the place into performance of 2016’s financial figures of the firm according to the 2015’s data of balance sheet. It has been investigated that company’s current assets is expressing an enhancement from 2015. In addition, the total assets of the company have also been improved (Horngren et al, 2005). The total increment in the total assets of the company from 2015 is only 2.31% while the total liabilities of the company have been improved by 9.27% and the equity has been has been lowered by 13.85% of the company from last year and it has been analyzed that the numerous alternations have been done by the company in its figures and activities which could be seen in its balance sheet of last 3 years.

In addition, a study has been performed over the cash flow statement of the SPECIALITY FASHION GROUP LIMITED. According to this study, it has been investigated that numerous changes have occupied the place into the cash management activities of the company from 2014 and 2015 in the year of 2016. It has been investigated that company’s operating cash flow statement is expressing an enhancement from 2015. In addition, the cash inflow from investing activities has been reduced by 23.08%. More, the cash flow from financing activities express about the stability in the cash outflow of the company. The total increment in the net cash inflow of the company from 2015 is -275% which depict that the performance of the cash inflow of the company has been lowered from last 2 years (Kaplan and Atkinson, 2015). The company is required to make the changes into its activities and performance to manage the cash inflow of the company and the performance of the company.

Viability

Vertical analysis is a method of analyzing the financial statement. This study of vertical analysis express about various changes into the financial statement especially in a period. This investigation is useful for the company and the analyst to evaluate the trend condition and situation of SPECIALITY FAHSION GROUP LIMITED. In this analysis, normally a year’s figures are compared with the total assets, total revenue etc. For this analysis, data are analyzed according to the base activity and figures of the company. Changes are normally expressed in the form of percentage. The below is the formula of horizontal analysis:

= (changes in the Dollar of a particular activity / changes in the dollar of base activity) *100 (Du and Girma, 2009)

Further, the study of vertical analysis over the balance sheet and cash flow statement has been presented in SPECIALITY FASHION GROUP LIMITED to analyze the company’s performance in caparison of total assets and total liabilities in income statement and total cash flow in cash flow statement. According to this analysis, it has been found that numerous changes have occupied the place into performance of 2016’s financial figures. The current assets of the company are 53.39%, 53.24% and 51.79% from last 3 years. The balance sheet study depict that few positive changes have taken place into the performance of the company (Gitman and Zutter, 2012). Cash flow statement also depict that the performance of the company have been enhanced  

At the end, for investing over the performance, viability and stability of the organization, ratio analysis has been conducted. It has been analyzed through this  paper that what is the position of the company in context of liquidity, profitability, efficiency and capital structure. The study of ratio analysis and calculations are given below:

The liquidity ratio defines the liquid position of the company. SPECIALITY FASHION GROUP LIMITED’s liquid study depict about the company’s ability to repay all the short term debt of the company. According to the liquid ratio various changes have been done by the company into its current assets and current liabilities to sustain the company’s liquid position (Deegan, 2013). Moreover, it has been investigated that the quick ratio is not at all effectual and the management are suggested to make some changes into it. the study of gross profit margin depict about the competency and the receivable turnover ratio is 137.5 in 2016 of the company. At the end, the total working capital has been deducted of the firm from last year.

Horizontal Analysis

The profitability ratio defines the profit position of the company, SPECIALITY FASHION GROUP LIMITED’s profitability study depict about the company’s total profit in context of sales, assets etc. According to the profitability ratio various changes have been done by the company into its total profit due to various internal and external factors. Moreover, it has been investigated that the profitability position of the company has became way better than its last year’s performance (Bierman and Smidt, 2012). The profitability ratios of the company are as follows:

(Morningstar, 2017)

Gearing ratio:

The gearing ratio defines the capital position of the company, SPECIALITY FASHION GROUP LIMITED’s capital structure study depict about the company’s total capital which are debt and equity (Shapiro, 2005). According to the gearing ratio, various changes have been done by the company into its capital structure according to the various internal and external factors. Moreover, it has been investigated that the gearing position of the company has became way better than its last year’s performance. The profitability ratios of the company are as follows:

(Annual report, 2017)

Conclusion:

Thus according to this report, it has been analyzed that the general position of the firm has been lowered from 2014 and 2015 in 2016 because of various internal and external aspects. It is highly recommended to the company’s directors and managers to do some changes into company’s financial position to sustain and administer the funds, profitability, position, viability and stability into the company’s financial statements. Thus it could be said that various changes are needed in the operations and activities of the company to be done to manage and sustain the company’s performance.

References:

Annual report. 2017. Speciality fashion group limited. Retrieved from https://www.specialtyfashiongroup.com.au/index.php/investor-centre/annual-reports as on 9th Oct.

Bierman Jr, H. and Smidt, S., 2012. The capital budgeting decision: economic analysis of investment projects. Routledge.

Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.

Du, J. and Girma, S., 2009. Source of finance, growth and firm size: evidence from China (No. 2009.03). Research paper/UNU-WIDER.

Gitman, L.J. and Zutter, C.J., 2012. Principles of managerial finance. Prentice Hall.

Home. 2017. Speciality fashion group limited. Retrieved from https://www.specialtyfashiongroup.com.au/ as on 9th Oct.

Horngren, C.T., Sundem, G.L., Stratton, W.O., Burgstahler, D. and Schatzberg, J., 2005. Introduction to management accounting. Upper Saddle River, New Jersey: Prentice Hall.

Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

Morningstar, 2017. Speciality fashion group limited. Retrieved from https://financials.morningstar.com/income- statement/is.html?t=SFH&region=AUS&culture=en_US as on 9th Oct

Romney, M.B., Steinbart, P.J., Zhang, R. and Xu, G., 2006. Accounting information systems. Pearson Education.

Shapiro, A.C., 2005. Capital budgeting and investment analysis. Prentice Hall.

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