HA1022 Principles of Financial Management Assignment Help
1. Explain the institutional framework of the Australian financial system;
2. Discuss the financial instruments available from their chosen company, their uses and apply the financial concepts to their chosen company;
3. Perform financial ratio calculations and analysis.
4. Assess the relationships between financial institutions that make up their chosen industry.
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The enterprises or the companies that work that process under food, beverages and tobacco, not only produces these three things but also produces other products such as that are needed in the daily routine. These type of products are called intermediate products. Food and beverage manufacturing industry is one of the significant contributions in Australia that includes all processed, packaged food, beverages and tobacco. The food industry operates to transform the livestock and agricultural products for both intermediate and final consumption (Valin, et al., 2014). These type of products are basically sold to the retailers or wholesalers as a distribution in order to sell it to the customers. However, the beverage industry producesa different type of alcoholic and non-alcoholic drinks, such as beers, Champaign etc. The tobacco industry operates as redrying and stemming of tobacco. It also produces tobacco products such as cigars and cigarettes. It is a huge industry with a lot of competitors; however, the competition takes place mainly on the base of the quality of the product.
In Australia, Food Standards has the responsibility of the oversight and regulation of the food, beverage and tobacco industry in both New Zealand and Australia (Magnusson & Reeve, 2015). It has a social website which also contains information for the consumers such as insight food labelling, recent recalls, and other complaints. In the Australian Government Health portfolio, Food Standards is a statutory authority which develops the food standards for both countries. However, there are other helpful government agencies in different sectors of a country that help regulate the behavior without any help of regulators.
Angel Seafood is a famous company that operates as a holding company (Angel Seafood, 2017). The main service of the company is to provide fishery products, such as fish, crabs, snails etc. The company owns the farms in which they produce green and organic oysters. Their main source of business is the production of oysters which are raised under the Angel's NASAA, assuring the quality. The company also deliver every type of oyster that is naturally-grown with the sweet taste of the ocean.
Angel seafood was a family business which rapidly developed from the traditional oyster to the innovative and organically certified company (Angel Seafood, 2017). Basically, the company is under the ownership of a single man named Zac Halman who is also the founder of the company. However, there isa number of shareholders of the company and many different investors. As it is a famous company, different business companies and entrepreneurs want to invest in Angel Seafood. According to the Warren Buffet, it is a company with a great competitive advantage that is able to run by owner-oriented people (Simply Wall St , 2019). The company has some insider ownership so it can be suggested that the management of the company can also be owner-oriented.
Moreover, the company is not owned by any kind of hedge funds. According to some analyst coverage, the company is not widely covered (Rowe, 2018). The main source of funds of the company is different shareholders who provide the basic funds for the company. Moreover, the lead fund manager of the company also keeps a complete detail of the total funds. The company also hasa bank facility within the limit of $250,000. The main borrowers of the funds are the ASI which can borrow up to $250,000. In the case of regulatory requirements, the company works within the Environment Protection Authority (EPA) which manages the code of ethics for the farming industry. The company mainly take loans from the National Australia Bank that is purposely repayable from the company's revenues.
The main financial instruments of the company are its assets, revenues, liabilities and equities (Angel Seafood Holding LTD, 2018). The financial statements of the company are built under different accounting policies with the help of all the results within the parents and incorporating all the assets and liabilities within the subsidiaries. The subsidiaries are known as the entities that are controlled by the parent (Gláserová, 2016). The company measures its liabilities and also the assets with the help of fair value. The fair value of both of these terms is evaluated on the basis of recurring and non-recurring values, which mainly depends on the applicable standard of the accounts. The company receives money by selling a single asset which is known as fair value. However, for the evaluation of the non-financial assets, the fair value process is used through the consideration of market participation and its ability to use those assets.
Other financial instruments of the company are leases, revenues, trade and other receivables. Leases are the fixed assets whose main function is to evaluate all kind of risks and the benefits of the ownership within the assets (Qiu, et al., 2015). Moreover, for the calculation of the revenues the company calculate its assets and liabilities at the fair value. The other cash received from the trade and through other interests are such as directly from the customers are evaluated along the ordinary course of business. The main financial instrument can be found by initial recognition and measurement. In conclusion, all types of financial instruments are measured using the fair value method, which also includes the transaction costs; however, the classification of the instruments is done with the help of loss and profit.
Another interesting method of measuring financial instruments is allocating the interest income over the relevant period (Borio, 2014).
Loans and other receivables of the company can be considered as the non-derivative assets which can be measured with the help of amortized cost. Similarly, financial liabilities are also measured at amortized cost that is simply known as financial guarantees. There are some of the financial assets that are carried through amortized cost due to the reduction of the carrying amount (Vernimmen, et al., 2014). This amount is then impaired with the help of credit losses. When the contractual rights of the company to the cash flows come to expiration, then the assets are used to derecognize. However, Angel Seafood Holdings does not engage with any off-balance sheet business. All the financial instruments of the company are mentioned and fully calculated on the balance sheet.
Financial Ratio Analysis
Three ratios have been identified for Angel Seafood Holdings Ltd, to analyze its financial position as compared to the previous year. Important ratios are taken that are applicable for the given company. These ratios include: current ratio refers to the liquidity situation of the company to pay its short-term obligations within a specific period of time. Other is the net profit margin which refers to the amount of net profit resulted from dividing the net income to the revenue excluding sales and other expenses. The next one is the debt ratio which refers to the comparison of the company's total debt to the total asset within a specific period of time.
Selected ratios have been calculated on the financial statement of the given company. The current ratio of the previous year for this company is calculated as 2.4 and for the current year. This ratio is calculated as 6.2 which is greater than the previous year. Calculation of the net profit margin ratio for the year is 1.17 and for the current year is 0.7 less than the previous year. Calculation of the debt ratio for the previous year is 0.35 and for the current year is 0.09 less than the previous year.
Calculations for the current ratios are showing the company's liquidity position to pay its short term debts against the current assets of the company. From the result, it is clear that the current ratio for 2018 is higher than the previous year. The too high current ratio shows that the company is not using its current assets or short-term financing. Current ratio with 2.4 is the desirable financial position for the company. Gross profit margin ratio depends on the industry or the company. The high-profit margin shows that the company is doing good things to generate the profit by reducing the cost for each dollar.in 2018, the company's net profit margin ratio was 0.7 less than the previous result which is 1.17; it indicates that company's performance is less than the previous year and they have reduced the profit due to high cost for each dollar. Result of the ratio is showing that the company is not having a strong financial position. Results of the debt ratio are showing that the debt ratio is less than the previous year. A lower percentage of debt ratio indicates that the company is using the less leverage and it indicates the strong position in equity. Higher debt ratio increases the risk for the company. Debt ratio at or below 36% shows that the company has a good financial position. In this calculation, the debt ratio of 2018 is 9% less than the previous year ratio which is 35 % which means that the company has a good financial position.
Angel Seafood Company is involved in the domestic business which is a vast scope and is the subject of global competition (Angel Seafood, 2017). There are many different competitors of the company, as it is the global business, so there are both domestic and international competitors (American Consumer News, 2019). There are some of the related companies the key competitors of the Angel Seafood:
- Feronia (FRN)
- Australian Dairy Nutritionals Group (AHF)
- Clean Seas Seafood (CSS)
- Equatorial Palm Oil (PAL)
- Murray Cod Australia (MCA)
- Sunora Foods (SNF)
- Hempco Food and Fiber (HEMP)
- Organto Foods (OGO)
- Input Capital (INP)
- Namoi Cotton (NAM)
- Dekeloil Public (DKL)
- GLG Life Tech (GLG)
The company feels proud due to its organic products and sustainable certifications. Moreover, there are different competitive advantages of the company which makes them different from other companies. The main basis of the competition in the industry is the quality of the products, as all of the companies are judged by their quality (Angel Seafood, 2017). The company produces its own certified organic oysters which are really high in quality and totally fresh. It is due to their oyster farms that have a lot of water and land-based facilities. The company also got some highly productive water leases in the best locations that enable the company to grow the world's class oysters. There isa total of four locations of the company where the farms are situated which given the company a competitive advantage over the other oyster producers that have access to the only one or two bays at a time.
In every company, the employee's growth and quality matter a lot (Jiang, et al., 2016). The team of the company is highly skilled and knowledgeable and have an acute understanding of the cultivation of the products and the environmental factors (Angel Seafood Holding LTD, 2018). Dynamic team culture is very important in every organization which ensures the productivity of the company. The team culture of the Angel is fully integrated across all locations. However, there is a competition risk to the company as the industry of the company is involved in a high-level competition at both global and domestic level. In this case, the company also has no control over the activities of its competitors. The different activities of the competitor company can affect the Angel positively or negatively on the company's financial performance. So, the following competitors may have an opportunity of a threat to the company in case if they increase the supply of oysters or increase the competition from alternative fish species and food resources.
Financial Market Analysis
Angel Seafood Holding Company has a strong market due to its competitive advantage. Moreover, there are different financial players in the market that are playing different roles for the productivity of the company (Angel Seafood Holding LTD, 2018). The company also continue to establish its relationships with the other farmers in the area in order to purchase on growers. However, the company's success is based on a better relationship with the third parties. The borrowers, investors and other regulators of the company are in a mutually beneficial relationship because the company has a board of directors, which try to maintain a relationship between these three elements. The company have a lot of certificates granted by the government which ensures that they grow the oysters in a safe and healthy condition (Angel Seafood Holding LTD, 2018). Moreover, the Government administers also have a quality assurance program which monitors the water quality and the areas in which the oysters are grown. The company also has a statutory legislative and regulatory requirements including Environment Protection Authority that complies with the company and maintain the code of ethics for the environmental management in the farming industry.
Initially, the company needed the regulatory approvals for an initial public offering. The company's board directors ensure compliance with the regulatory objectives (Angel Seafood Holding LTD, 2018). For this purpose, they are promoting the ethical practices within the company and making some responsible decisions. The company has also proposed an ethical code of conduct that has provided a framework for the decisions and actions related to employment according to ethical conduct. The aim of the company is to not proceed through any unethical or illegal business practice and succeed through the fair and honest competition. The company is fully responsible to the investors with its continuous disclosure obligations.
The company has settled its rules and regulations for the compliance to the law, that's where there has been reported no such type of unethical behavior from the company (Angel Seafood Holding LTD, 2018). The company is fully motivated to work within the ethical codes so that it should face any kind of risk. According to the auditing report of the company, which was conducted under the observation of the Australian Auditing Standards, the company is fulfilling its ethical codes and regulatory actions. Moreover, the AAS is an independent group that acts under the corporation's act of 2001. Other than the following act, the board of ethical standards is also involved which settles the ethical codes for the professional accountants. The main responsibility for the audit was to find out any fraud or error matters of the company and assuring of the report within the guarantee of the Australian Auditing Standards. However, in future, there is a risk for the company of the government intervention, but in present or past, no such events have been found in the history of the company. It is because the main focus of the company is to succeed in the world of competition at a global level without creating any problem.
Findings, Conclusion and Recommendations
Angel Seafood Holding Company is an agriculture company that operates in the country and as well as at international level. The company has four farms of the oyster at the best competitive location. Moreover, the company operates in the industry of food, beverage and tobacco, which is also a widespread industry. The company has a strong competitive advantage as there are many factors that help the company to be different and succeed in terms of quality. The company also has a lot of competitors, which are a threat to the Angel but still, they are working hard to maintain the policies and the company's productivity. The company's regulatory factors show compliance with the Environment Protection Authority which ensures the ethical practices and other codes of conduct within the company. The company has gained a lot of quality certificates from the South Australian Government, as they have ensured that Angel produces the most natural oysters with a safe procedure.
According to the ratio analysis of the company, it has been indicated that the high-profit margin of the company is 0.7 which is less than the previous years which means that the profit of the company has been decreased from the previous years. The recommendations for the company will be to enhance its profit in the upcoming years, so that the competitors may not be able to overcome the Angel Seafood Company, and it should be able to restrain its competitive advantage without losing it.
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