Accounting for Decision Making
As a rule, investment activity in all forms and types carries risks. In this case, the comprehensive financial and economic analysis of the enterprise plays the main role, as well as the characteristics of its social and environmental performance. The analyses activity of the company EBOS Group Limited over the past five years is represented in the paper.Economic analysis helps enhance the effectiveness of organizations. It provides the most rational and efficient use of fixed assets, materials, labor and financial resources, eliminates unnecessary costs and losses, and, therefore, implements economy mode. The results of the economic analysis are used to establish reasonable plan assignments. The set of analytical tools provides the calculation of such indicators, as profitability, liquidity, leverage and others. Also it is necessary to consider the technological, legal and political risks. Thus, decision making is impossible without a comprehensive, in-depth economic analysis of the organization.Keywords: decision making, profitability, liquidity, leverage, cash flow, investment activity, risk.
Accounting for Decision Making
Nowadays EBOS Group is the largest marketer, wholesaler, and distributor of different pharmaceutical and medical products in Australia. Also it is the leader on the market of animal care products. The analysis of the company is summarized below. Economic Performance. Interpretation of Financial Statement Trends.The revenue of the company has increased more than 4 times over the past five years. It is noted, that around two-thirds of revenue relates to the market of Australia and the rest – of New Zealand. The biggest growth was observed in 2014. Then the turnover has grown more than three times. It should be noted that net profit growth exceeds the growth of the sales, which indicates an increase in efficiency of company activity. In 2013 the company has significantly increased inventories. But their amount has stabilized within the 8.5 percent of sales in the following years (EBOS Group. Annual Report 2012, p.32). The key financial indicators that should be considered when investing in a company are profitability, liquidity, leverage and changes in the cash flows. Until 2013 the company has characterized by a trend decline in net profit margins. This trend is typical for the index the Return on Shareholders' Funds ratio.
The Return on Shareholders' Funds is historically been used by investors as a measure of the profit for period which is available to the owner’s shares in a business. Investors and the business look at the relative size of the Return on Shareholders' Funds. The higher level of the Return on Shareholders' Funds indicates the more profitable company for its shareholders. In other words, during 2011-2014 the company has lost its position among some shareholders. Decreasing the indicator of ROSF has impacted on the dividends amounts that have been paid. The next indicator has an interesting dynamic. There was a rise and fall. The compound annual growth rate of efficiency was negative and amounted to -1.26 percent in 2011-2014. In the last 2015 year this figure has grown …