The paper "Accounting Decision for Billabong International Limited" is a good example of a finance and accounting case study. Please find the financial statement ratios and calculations in the context of the company’ s profitability, efficiency, liquidity, gearing (leverage) and investment performance for the years 2008 and 2009. The changes between the two years are compared, discussed, and explained to serve as a relevant and valid guide for any decision-making activities. In terms of the overall assessment, existing and potential equity investors (shareholders) will profitably benefit through dividend distribution as a consequence of investing additional scarce money resources into the company, Billabong International Limited. • Demonstrated skill in identifying and calculating relevant ratios and other indicators: Profitability. Gross Profit Ratio 2009 2008 millions millions Gross Profit = 893,998.00 746,379.00 Net Sales 1,674,434.00 1,354,419.00 Answer = 0.53 0.55 The above computation clearly shows that the company generated a gross profit of $746,379.00 that the company did financially well during the year 2008.
On the other hand, the company only generated $893,998 gross profit for the year 2009. Based on the net sales of $1,674,434, the corresponding 53 percent gross profit ratio is a slight drop from the prior year’ s 55 percent gross profit ratio.
In terms of this ratio alone, the company did better in the prior year, 2008, as compared to the current year, 2009 (Gowthorpe 2005;118). Net Profit Ratio 2009 2008 millions millions Net Profit = 152,839.00 17,146,000.00 Net Sales 1,674,434.00 1,354,419.00 Answer = 0.09 12.66 The above computation clearly shows that the company generated a net profit of $152,839.00 for the year 2008 alone. This is 12.66 percent of the net sales of $1,354,419.00. This ratio shows that the company did financially well during the year 2008. Based on the 2009 net sales of $1,674,434.00, the company only generated $152,839 net profit for the year 2009.
The corresponding nine percent net profit ratio is a material decline from the prior year’ s 12.66 percent net profit ratio. In terms of this ratio alone, the company did better in the prior year, 2008, as compared to the current year, 2009 (Brigham 2001;86).
Brigham, E. Fundamentals of Financial Management. Sydney: Harcourt Press, 2001.
Drury, C. Management Accounting For Business. Sydney: Thompson Press, 2005.
Gowthorpe, C. Business Accounting and Finance for Non Specialists. Sydney: Thompson Press, 2005.
Hansen, D. Management Accounting. Sydney: Thomson Press, 2006.
Helfert, E. Techniques of Financial Analysis. Sydney: Irwin Press, 1997.
Stickley, C. Financial Accounting. Sydney: Dryden Press, 1997.
Stolowy, H. Financial Accounting and Reporting. Sydney: Thompson Press, 2006.
Weygandt, J. Managerial Accounting. Sydney: Wiley & Sons, 2005.