Organisational Performance of the Allocated Company

1- Write a report on  organisational performance of the allocated company in 3000 words  with reference to APA.

Solution

Executive summary:

The purpose of the report is to establish the level of the performance recorded by the company with the help of the financial statements and the competitive analysis. It is found that the company has been able to increase its net profits during the period of one year and improve the return on assets of the company for the corresponding period. The competitors of the company have performed better than the company for the same period.

Introduction:

The present report will undertake the analysis of the financial performance and the financial position of the company by doing several analyses involving the financial statements of the company that comprises of the income statement, balance sheet and the cash flow statement of the company. In addition to that, ratio analysis of the company will be carried out to determine the performance recorded by it in several aspects of the operations that are being carried out by the company for carrying out its business (Gyulai and Sz?cs 2017). A competitive analysis will be done to determine the relative performance of the company corresponding to the other participants carrying out their operations in the same industry.

From the above table it is possible to determine the various trends that have emerged over the period of one year in respect of the financial performance as recorded by the entity. The comparison that is being done between the results recorded by the company in the accounting period with that of the immediately preceding recording period will enable the stakeholders of the company to draw conclusion regarding the various performance indicators of the company and validate their results in respect of investing in it any further (Evans and Mathur 2014). Some of the significant conclusions that can be drawn after the conclusion of the analysis are as follows:

• a)    The revenue of the company has grown by 24%. The revenue of the company amounted to 30912 and 38285 in the year 2016 and 2017 respectively. This means that the company has been able to attract new customers and increase its commercial footprint in the country significantly over the last one year.
• b)    The other income of the company grew by 66%. The other income of the company amounted to 444 and 736 million in the year 2016 and 2107 respectively. The company has been able to substantially increase the revenue that is being generated in its favour from other sources than its core business substantially over the period of one year.
• c)    The expenses of the company excluding the net finance cost have improved as the same recorded a decline of 22% for the period between 2016 and 2017. The reduction of the costs of the company along with the increase in the revenue of the company has boosted the profits of the company substantially and is an indicator that the company will be able to create significant value for its stakeholders in the future.
• d)    The profit and loss earned by the company amounted to (6235) and 11753 million in the year 2016 and 2017 respectively. The increase in the profits of the company over the period of one year was around 289%. The profit earned by the company took a gigantic leap due to the substantial increase in the profits of the company and the reduction in the costs of the company (Afonsoet al. 2018). The combined effect of these two elements of the financial statements prepared by the company. The increase in the profitability of the company affirms the ability of the firm to create value for the stakeholders of the company.
• e)    The financial expenses of the company have increased substantially over the period of one year. The financial expenses of the company amounted to 1161 and 1574 million dollars respectively for the year 2016 and 2017. The increase in the finance cost can be attributed to the rise in the interest bearing securities that had been issued by the company (Bokanet al. 2015). The finance expense of the company rose by 36%. The increasing finance expenditure to be incurred by the company can prove to be detrimental to the finance interest of the company.
• f)    The profit after tax of the company amounted to (7259) and 10322 respectively for the year 2016 and 2017. It is seen that the company was able to register an increase in the profit after tax earned by it over the period of one year. The increase in the profit after tax of the company amounted to 242%.  The significant growth in the net profit of the company can be attributed to the increase in the revenue that has been generated by the company from its core operations and the reduction for expenses related to the carrying out of the business activities of the company (Amelec and Carmen 2015).
• g)    As the company was earning losses in the previous, it was eligible to avail significant amount of tax benefits. However, due to the increase in the profitability of the company and registering of a positive amount of net profit by the company for the period, the company will have to pay significant amount of taxes for this period. The expenditure of the company in respect of the taxation increased from (1052) in the year 2016 to 4100 in the year 2017.

Competitive analysis of the company:

It is necessary to conduct the competitive analysis of the company with other companies that are conducting business activities within the same industry. The competitive analysis helps the company and the stakeholders of the company to determine the relative performance recorded by the company corresponding to the performance recorded by other companies in the same industry (Vogel 2014). Based on the results received the stakeholders of the company can take economic decisions regarding the viability of investing in the shares of the company and the management of the company can identify the opportunities that the company is having  regarding the possibility of achieving a higher profitability within the industry by improving its performance.

For conducting the competitive analysis, the company that has been chosen is Rio Tinto Ltd. For comparing the profitability of the two companies, the net profit of the two companies will be compared. Based on the results obtained from the analysis conclusions will be drawn for the performance of the company.
It can be seen that the net profit that has been recorded by both the companies for the period of 2017 amounted to Sum 6222 and Sum 8851 respectively. There is huge gap in the net profit that has been earned by the BHP limited for the period 2017 and the profit that has been earned by Rio Tinto Ltd. for the corresponding period. The reason for the difference in the net profit earned by both the companies can be attributed to several factors like the revenue that is being generated by both the companies. The revenue that is being generated by Rio Tinto for the year 2017 amounted to $40030m whereas the revenue generated by BHP Ltd. for the corresponding period amounted to $38585m. It can be observed that the revenue that is generated by both the companies has significant difference between them.

Conclusion:

After concluding the detailed analysis of the financial statements of the company, it can be concluded that the company has been able to generate increased amount of profits in respect of its shareholders. It is observed that the various measures of the company like the return on assets generated by the company have improved over the period of one year. The increased performance levels as recorded by the company will enable the company to create value for its shareholders in the end. The competitor of the company that is Rio Tinto has recorded significantly better performance than the company for the same period.

Reference

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