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Table of Contents

• Introduction
• Top down Analysis
• Bottom up analysis
• Justification and recommendation of the Paper
• References

Introduction

The overall report showcases the financial performance of the two retail companies of Australia. It has been observed through analysis that multiple aspects are there which could be considered at the time of analyzing this overall issue. In this case two organizations Blackmores Limited and Super retail group have been chosen for the analysis purpose. These retail organizations both have huge fame and popularity due to their quality service and functionalities. Retail industry is one of the booming industries of the world; overall economy of any nation is highly depended on this sector. Top down and bottom up analysis has been made for measuring the financial strength of the business process (ACT retail sector, 1999). Different types of financial variations also could be observed through this process. During the time of top down analysis; financial data has been gathered from various sources and impact of all those financial performance of the organization have been judged and their impact on the overall economic condition of the industry is analyzed. On the other hand Australian currency is taken under for measuring the existing valuation; moreover current interest rate also has been focused. GDP rate of the nation has been considered for the analysis purpose; through this process overall growth in the industry could be observed. Bottom up approach is also done by taking two organizations; after choosing those companies their current ration, inventory rate etc have been judged. Through this process overall financial performance of the business organization could be observed. This financial performance helps the management to increase its overall business profitability.

Top Down Analysis

It has been found that in Australia lots of sources is there which can change the economic condition of the nation. These natural resources help to boost up the overall demand of the commodity. It has been observed through analysis that mining sector is playing vital role in the case of nation’s economic booming. Various analytics have stated that market condition of Australia is suitable and efficient for mining sector. Retail industry is one of the prime business sectors for any nation. China, UK etc have developed their economic condition by the help of this sector. On the other hand retail sector of Australia has not been too good for making economic revolution. For this reason retail sector has been chosen in this case as it can change the conventional way of enhancing or enriching economic changes. Retail sector has lots of strength and efficiency to enhance the overall market performance and economic valuation of the business process. After having analysis it has been found that Agricultural sector of Australia has been increasing enormously. Due to these types of issues; Australian government has decided to boost up their retail sector selling by initiating different types of retail commodity domestically and globally (Balancing the till, 2002). After making lots of analysis; management of retail organizations have been able to enhance their retail strength by focusing on quality of goods; besides they have focused on the overall exportation of goods. For this reason presently Australia is considered as one of the popular and fruitful exporter of goods. This retail service is needed to be improved for getting good future success. Lots of volatility has been found in the case of Australian Agricultural sector, for this reason administrator of this nation wants to shift their business face towards the retail sector. For this reason retail organizations of Australia mainly focuses on the supply chain management of the commodity and goods so that this sector can create major impact on the economic condition of the nation.

After observing the overall retail market condition it could be said that Australian retail market has enough strength to compete with any other market of the world. It is full of all kinds of efficient and positive resources like manpower, suppliers and most importantly customers are highly enthusiastic about the services. Latest market analysis represents that perceptions of the customers have been changed day by day and this is good sign for the retail services. Income levels of customers have been increased in Australia from last five years; this has been an important reason behind the retail success in Australia. Various market analytics have also stated that overall economy of a nation must not be based on the retail services and applications. For this reason management of the retail incorporations need to focus on the sales volume of the business process. Through good sales generation a fruitful outcome in the business process could be obtained (Downing, 1973).

After making the analysis some valuable and essential truths have been evolved. By focusing on those aspects it could be observed that Australian retail market is very fluctuating by nature. Though it has several expectations in the market but still the sales drop could be found in the market platform. After doing assumptions and analysis; it has been observed that sales of the retail business have been dropped from last few years. This type of change has been done due to the perceptional change of the consumers over the retail products and goods. For this reason managements of the retail organizations focus on the consumer behavior for sorting out these types of problems. After having the financial details of these two organizations, it has been observed that sales of both companies have been decreased from approximately 35% to 30%. According to the business analytics, changes in the perceptions of the consumers are the vital reason behind this issue.

After studying the overall market report it could be observed that around 140000 retail organizations are there in Australia. These organizations provide 10.7 for vocational penny and 4.1 for the GDP. Multiple factors or aspects are there which can change the conventional process of retail organizations (Jackson, 1989).  These aspects are the size, perception of the consumers, competition in the market etc. Market of the retail sector has been crashed due to various issues like competition and continuous changes in the perceptions of the consumers. Analytics stated that lifestyles of the consumers have been increased and sometime they use global products for their purposes. For this reason domestic retail products have been decreased by number of sales and overall profitability.

Multiple difficulties are there in the case of retail operations. Due to these difficulties retail organization have faced problems regarding the sales and profit margin. At this present moment most of the retail organizations focus on the internet retailing by which they could be able to reach to the maximum number of customers (Kriesler, 1997). Through this internet retailing an organization could be able to enhance its business functionalities and needs of the customers could be fulfilled through this process. Australian retail organizations could be able to enhance its business functionalities beyond the geographic region. After this process management could be able to enhance its profitability margin compared to previous years.

Though multiple online retail operations have been undertaken by the Australian retail incorporations, still it has been lacking due to some inefficiency in the case of online retail operation. According to the Australian retail commission; each organization needs to focus on 6 peaks. Among them 4 would be domestic retail functionality based and other two will be global functionality. After observing the overall financial details it has been found that total $8.4 billion amount is involved in the domestic retailing whereas $4.2 billion is involved in the global business process. Compared to other nations, this Australian amount is very less. In other nations huge amount of money is invested or involved in the case of retail operations.

Multiple aspects are there which must have to be followed by every retail operators. Different types of confinements must have to be focused which are;

According to the first policy overall retail strategy must have to be attractive and effective. Analytics have stated that an aggressive plan can change the overall focus of the business process. A min blowing must have to be there by which large number of customers can be attracted through the online mode.

Relationship at the workplace also plays significant role in the case of increasing efficiency in the business process. Best practice needs to be done for adopting multiple beneficial factors in the business process. This type of idea could be generated from the Australian survey book of 2012.

Tax rate has been playing a crucial role for the retailers for long period of time. For importing goods from other nations retailers need to deliver service tax of around $1000AUD which can hamper the overall flow of the process. Australian government and business division must have to focus on these issues so that this obstacle can be removed from the business premises. Government must have to decrease the interest rate so that business organizations can get advantage in the market premises. By the help of this process retail organizations can get a momentum of doing further business operations. Australian government must have to impost some new rules and regulations for the betterment of this process. By the help of this process Australian economy can be boosted up and retail organizations can relate with the universal principles and procedures (Regional variations in the structure of the wholesale and retail sector, 1987).

If this type of business expenses can be reduced then business organizations can flourish their business process by implementing new strategies and ideologies in the business process.  At this present moment interest of Australia is 1.5%.  If this percentage value can be transformed in US dollar then the worth value would be 1.34 AUD.  GDP rate of Australia in this present stage is 3.3%.

Bottom Up Analysis

Two retail companies have been chosen in this paper; financial analyses of these two organizations have been considered in this section for analyzing the overall matter.  Comparison has been made between Super Retail Group and Blackmores Limited. Both organizations are in sustainable condition in the market. Last three financial years have been considered for the analysis purpose. It has been observed that Super Retail group is the company that has been able to fulfill the basic demands and requirements of their customers. Super retail Group delivers different types of fitness products to the customers whereas Blackmores provides fish oil and vitamin products. Different financial aspects have been considered for the analysis purpose. These financial analyses are debt ratio, current ratio, liquidity ratio etc. These analyses have been made by taking data from the financial year of 2013 to 2015.

Profitability Ratio: Profitability ratio showcases the overall profit margin achieved by an organization in the financial year. Profitability ratio is mainly done through the help of gross profit and net profit. In this case data has collected from the year of 2013 to 2015.

Net Profit Margin :

Net Profit Margin = (Net Profit / Net Sales) * 100
	2013	2014	2015
Super Group	5.08	5.13	3.62
Blackmores	7.65	7.33	9.87

 

Through the above mentioned table and graph net profit margin analysis has been done of two Australian retail companies. Through the analysis it could be said that overall profitability margin of Blackmore is far better than Super Group. In the year of 2013 net profit margin of Super group was 5.08% where profit margin of Blackmore was 7.65% in that financial year. In the year of 2014 profit margin of Super Group was slightly increased and it went up to 5.13%, but profit margin of Blackmore was slacked to 7.33%. In the financial year 2015, Super Group faced huge profitability problems; in that year their net profit margin was 3.62%. In that year Blackmore made huge profit and increased the margin up to 9.87%.  Through this financial understandings it could be said that net profit margin of Blackmore was good compared to super group limited.

Gross Profit Margin :

Gross Profit Margin = (Gross Profit / Net Sales) * 100
	2013	2014	2015
Super Group	44.46	44.54	43.12
Blackmores	31.06	30.75	68.67

 

Through the above analysis of gross profit margin it could be said that Blackmores and Super Group limited have been giving tough challenge to each other regarding this matter. In the year of 2013 gross profit of super group was 44.46% whereas gross profit margin of Blackmores was 31.06%. In the financial year of 2014 Super Group could slightly increase their profit up to 44.54%. In that year Blackmores faced a slack in profit percentage and the value was 30.75%. In the year of 2015 super group has secured a percentage of 43.12% and in that occasion Blackmores has made huge profit and their profit percentage went up to 68.67%.  Through this analysis overall comparison of gross profit margin in between these two retail companies of Australia could be observed. After having this information, it could be said that gross profit margin of Blackmores is very fluctuating whereas Super Group has a stable figure, but still it must have to be said that Blackmores has positive profit growth compared to Super group.

Liquidity Ratio :

Liquidity ratio is also an integral part of the financial statement. By the help of this ratio overall liquid cash strength in a financial year of a company could be measured. In this case current ratio of these two organizations Blackmores and Super Group have been considered for measuring the liquidity ratio.

Current Ratio :

Current Ratio = (Current Assets / Current Liabilities) * 100
	2013	2014	2015
Super Group	1.65	1.75	1.72
Blackmores	2.75	2.26	1.63

 

As discussed earlier current ratio is the process of measuring liquid cash strength of an organization. Current ratio can be calculated through the current asset and current liabilities of the business organizations. In this case current asset and liabilities of Blackmores and Super Group limited have been taken under consideration. Through the current ratio overall stability in the financial performance could be judged. According to the business reports a business organization must possess 1.5 times current ratio so that it can sustain in the market properly. If current ratio of these selected organizations have been taken then it can be said that Super group is stable compared to Blackmores Limited as current ratio of Blackmores is very fluctuating. In the year of 2013 current ratio of Super Group was 1.65times whereas current ratio Blackmore was very high and it was 2.75times of current ratio. In the financial year 2014 the current ratio of Super group was 1.75 times and current ratio of Blackmores fell up to 2.26 times. In the year of 2015, Super Group secured 1.72 times of current ratio whereas Blackmores again reduced that value up to 1.63 times. Through this overall discussion it could be said that Super Group is far more secured and stable compared to Blackmores Limited.

Solvency Ratio :

Solvency ratio is the integral quotient of the financial analysis. By the help of this solvency ratio overall relationship between debt and equity can be measured. By the help of this ratio analysis an organization could be able to execute all of its financial leverages properly. In this case debt equity ratios of both selected organizations have been analyzed for getting any suitable outcome of the business process.

Debt-equity Ratio :

Debt Equity = (Total Debt / Total Equity + Total Debt) * 100
	2013	2014	2015
Super Group	0.48	0.53	0.51
Blackmores	0.89	0.7	0.33

 

The above mentioned table and chart showcases the debt-equity ratio of these two retail companies of Australia like Super group limited and Blackmores Limited. This ratio has been calculated from 2013 to 2015. Three financial years have been considered for doing this overall analysis. In the year of 2013 the ratio of Super group was 48% and ratio of Blackmores was 89%. On the basis of that it could be said that Blackmores is staying more risky zone compared to Super group. Blackmores had high dept in the year of 2013 whereas Super Group has less risky dept. In the financial year of dept ratio of super group was 53% and in this year also Blackmores was in a crucial zone and their dept was 70%. In the financial year 2015, Blackmores could be able to reduce their dept and came to a stable zone with a debt of 33% and in this year of debt ratio of Super group was 51%. On the basis of last financial year analysis Blackmores is staying comfortable zone compared to super Group.

Efficiency Ratio :

Efficiency ratio helps to measure the overall financial efficiency of a business organization. For doing efficiency ratio inventory turnover of the selected two retail companies have been considered. For doing this inventory turnover of Super Group and Blackmores Limited have been chosen under consideration.

Inventory Turnover :

Debt Equity = (Total Debt / Total Equity + Total Debt) * 100
	2013	2014	2015
Super Group	2.58	2.49	2.56
Blackmores	6.28	6.11	3.82

 

Through the above mentioned table and chart overall inventory turnover of these selected companies have been observed. In this case data has been collected of both Super group limited and Blackmores Limited. These two retail companies have been running their services for a long period of time. After observing the overall inventory turnover it could be said that Blackmores is in higher position compared to Super Group on the basis of inventory. If analytically judge this overall thing then it could be said that Super group has a stable turnover rate whereas Blackmores has a fluctuating inventory turnover rate or efficiency rate.

Justification and Recommendation of the Paper

After having the overall financial details of the organizations it could be said that Australian retail market has good hope and future. For analyzing the overall matter Super Group and Blackmores limited have been taken under consideration (Kriesler, 1997). After observing their financial data it could be said that Australian retail market is one of the booming sectors and business organizations must have to put their focus on this sector. In this case Super Group and Blackmores both have a good position in the market. Though they faced lots of financial fluctuations but still they are in a stable position.

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