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Market Research Essay, Research Paper

Part A 1. Directors AJ lane, WJ Locke, JF Kelly, JR Cadwaallader, DG Lane, HA Lynch, IA Pollard, RC Milne 2. Total Sales = $475,264,000 (1997) (Before Abnormal items) 3. Sales revenue for the consolidated entity, for the year ended 30 June 1996, was $449745000. 4. Equity method used when company has significance influence but not control of investee company OPSM use consolidation method which means it has control over other investee. 5. Total interest expenses for the consolidated entity for the year was $3819000. The total interest paid in cash by the consolidated entity during the year was $4113000. During the year ended 30 June 1997, The company also paid off some interest payable incurred in previous year. This is why the figure for the interest expenses in the year is different from the figure for the interest paid in cash in the year. 6. Contigent liabilities are liabilities, which are contigent on particular event occurring that has not yet happened. They do not meet the criteria for the recognition of liabilities so they are not on the balance sheet, however they are disclosed on the notes. 7. The total sales revenue of the Protectors Safety Supply group for the year ended 30 June 1997 was $158900000. 8. Cash items in balance sheet only include CAB plus on hand plus bank deposits, whereas, for the CFS, cash includes CAB plus on hand plus bank deposits, net of bank overdrafts.i.e. from balance sheet. CAB plus on hand 6454 Bank deposits 13701 20155 Less: bank overdrafts 1053 Balance of statement of cash flows 19102 9. Profit after tax (after abnormal items) for 1994 is $21434000. 10. The consolidated entity received $1106000 how the sale of non-current assets during the year. 11. The number of members holding ordinary shares in the company was 13298. 12. Because they use cost method. 13 Number of ordinary shares = 143373876. 14 Work wear and safety system 15 Price water house plus the partner R.Ward. 16 The consolidated operating profit before income tax for the year ended 30 June 1996 and 30 June 1997 is 34629000 and 43526000. Part B Executive Summary OPSM Protector Limited is a consolidated entity consisting of three operating groups, OPSM, Protector Safety Supply and Protector Technologies. The purpose of this report is to provide an evaluation of the trend in performance of OPSM Protectors Limited as a consolidated entity in 1996 to 1997, though the analysis of the company’s 1997 Annual Report, especially its financial statements. Financial ratios have been employed in this report as the predominant measure of the company’s performance, and each will be discussed in turn. A table of financial ratios with its calculations and definitions can be found in the appendix to this report. Limitations to this analysis will also be discussed. The basic finding concerning OPSM performance from 1996 are as follows:+ With regard to financial stability, risk in this area is quite low as OPSM is not heavily in debt financing and can cover its interest payment very well.+ The company is reasonably liquid, evident by the current ratio 1.74.+ Record profit after tax and abnormals up 30% to %28.8 million.+ Record sales revenue up 6% to $475.3 million.+ Dividend up 11% to 15 cents per share fully franked.+ Cash flow up 150% to $41.8 million.+ Debt to equity ratio down from 20% to 9.6%.+ Change process continued, with increased productivity and customer focus.+ Business of Dunlop Industrial Footwear acquired. Liquidity The current ratio is a stock measure of whether the company has enough short term assets to cover its short term debts and thus remain solvent. As a rule of thumb that the current ratio should be at least be 1.5:1. OPSM operator current ratio does not look too bad. In 1996 it was 1.70 and in 1997 it was 1.70 and in 1997 it was 1.74. This indicates that throughout the period, current assets were sufficient to cover current liabilities. Financial Stability The trend of the equity ratio shows that the percentage of asset provided by shareholders is inclining (increase by 2.5%). However the company is slightly in equity relative to its debit. The ratio of 0.82 indicates the company rely on equity were then on debit and that its relative rely on equity rather than debit is slightly decreasing during 1997(debit is increased by 10.1% and equity increased by 7.6%). Increase in reliance on debit to finance asset was shown in debit to equity ratio which is slightly increased from 44.5% to 45.1%. This is result of a smaller increase in total asset relation to its liability. Since there is an increase in receivable, it is offset by a decrease in cash (see common size balance sheet). Cash Flow There is great increase in net cash flows from operating activities by $30866000, this is because of the great decrease in income taxes. However, the company’s net cash flows from investing activities decreases by $1157000, because the company purchased businesses and they spent $10755000 for that. Similarly, the company’s net cash flows from financing activities decreases by $16601000. The reason is the decrease in repayment of borrowing. Therefore, due to the great increase in net cash flows from operating activities, eventhough the amount of net cash flows from investing activities and financing activities decrease, the cash at the end of the year increased by $7220000. Limitations A major limitation which arises from this analysis is that the figures for the two years given in the statements does not allow us to compare it with previous years’ figures and in turn limits us from drawing a meaningful trend. We are only able to compare changes between the two years (1996&1997) and provide reasons behind those changes : however we cannot look accurately into the future depending on just the one annual report. We need to know the Director’s plans for the company in the future, its current circumstances. We cannot compare OPSM’s performance with

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