ACU Busn104 assessment 2 2021 academic year PDF

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ACU BUSN104 assessment 2 report 2021
decent draft to give an idea of what the assessment should look like.
submitted in 2021...

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AVVINA INC REPORT 2021-2029 BUSN104 – MONEY MATTERS

Vishal Sharma S00298008 | BIOMED/BUSADMIN

Executive summary Report contains and addresses financial decisions executed by AVVINA INC over the course of 8 financial years (2021-2029), that have led to the growth and overall expansion of the organisation. Shareholder value, assets and equity were all measured to determine whether or not the financial strategies implied were effective or not. An Annual increase of company profitability, cash flow and equity were all stated in the financial reports results, emphasising the positive effect of forecasting and efficient inventory management. Ratios indicate that AVVINA inc is overall an industry leader due to its higher than average industry benchmarks. The report forecast that AVVINA inc will continue to gain market share and shareholder value if it maintains consumer satisfaction. Corporate social responsibility is essential to build and maintain a positive relationship between the corporation and society, long-term sustainability of the environment is one strategy to do so. Future decisions such as increasing shareholder dividends, new product development, limiting repayments and using the company’s cash to reinvest further into the business is advised. AVVINA inc report is limited due to the financial statements only showing results on annual growth and not monthly, this can affect the knowledge whether or not a product is seasonal, report also does not consider economic conditions and worldly factors.

Financial decisions and their impacts The income statements display an increasing trend for AVVINA inc’s profitability, which is positive predictions for future long-term financial security of the corporation. Key performance index’s and goal were put into place, to act as a benchmark for the corporation to reach by the end of each financial year. KPI’s serve as a strategy to forecast, predict and measure if financial decisions implemented within the last financial year were successfully executed and helped the business reach these goals or not. Consequently, if the strategies reached these KPI’s and were seen as successful the same formula would be recycled into the next financial year. 2022FY At the end the first financial year (2021) shareholder value increased by 30.5% compared to the previous year, which was comparatively 95c higher per share, compared to the competitor. Profit after taxes was almost $100000 higher than the competitor. This is due to an $1320000 increment in advertisement expenditure, this investment raised AVVINA’s market exposure to consumers resulting in the corporation being the industry leader and owning majority of the market share for mountain bikes.

2023FY Due to its previous success, for the second financial year the formula for increasing advertisement expenditure was recycled. The marketing cost for the Mud demon was $3 million. The retail price was also increased, this is due to the market report stating that consumers have a medium price sensitivity. Raising the market price for the Mud demon but keeping it between the market range resulted in increased profit margin. Shareholder value increased to $16.46 which was a 10% gain from the previous year. Although this maybe an indication of a successful financial year, profit did not increase to meet KPI’s. This is due to and overly optimistic prediction of sales, resulting in over 8000 units not being sold. 2024FY Satisfied with the market share, advertising expenditure was not increased. Product price was increased to $800, which was still within average market range. Once again, the forecasted sales was overly optimistic and were unrealistic. Leaving 22000 units of stock to sit as inventory. Resulting in a miniscule share holder increment of 1.2% compared to the previous financial year. 2025FY At the end of the last financial year cash flow was made limited. Ability to spend cash on development of the brand and product was restricted. Noticing this expenditure were cut. Satisfied with the market share advantage which AVVINA had compared to its competitors the budget was reduced by $450000. Inventory was correctly managed, limited number of new products were produced and all pre-existing units were sold. Resulting in a cash increase of almost $4.5 million. 2026FY With this new increment of cash flow, a new product was launched by AVVINA, this was an ideal opportunity due to their being no pre-existing competitors within the new market. The new cash flow was spent on developing and market the new road bike. $1 million was spent on increasing the efficiency in the production of the Mud demon, reducing it production cost increasing profit margins and reaching KPI’s. Forecasting inventory supply more accurately resulted in a 49.6% increase in shareholder value. 2027FY Due to the Roadster’s success and growth in cash flow a third product was launched. Product was launched into a pre-existing market with only one competitor. There was a loss sale of 2328 tricycles units in the new market, due to underestimating and forecasting low. Learning from the roadster where the business produced too many in the first year of production due to over forecasting. Specs were increased for the roadster making it more desired and appealing to the consumer, based on market research and consumer wants. A road bike with the spec level of 70 is desired by consumers. 2028FY

A spec level of 69.76 was obtained, price of production was also reduced for all three bicycle models. Maintained market share was able to occur because of the constant marketing expenditure. Furth more effective inventory management due to more accurate forecasting resulted in an increase in shareholder value by 36.6% compared to the previous financial year, company cash also grew. 2029FY With our now large sum of cash, long term debt which was outstanding was paid. Formula for forecasting was again applied and marketing for the successful children’s bike was increased.

Sustainability Corporate social reasonability is the role an organisation within society. CSR controls the perception of the business in society. CSR involves the business in practising in ethically correct behaviour, leading to the sustainability and longevity of the environment due to the business using renewable resources. Laws are in place by the Australian government, that bound certain CSR by laws. This includes laws such as the environment protection act of 1981, prohibiting illegal dumping. Another law is the minimum pay standard, which is put in place, so organisations do not take advantage of workers. If corporations break these laws, they face punishment such as large fines, risk of shutting down their business and jail time. The triple bottom line is a strategy corporation follow to ensure that they are maintaining appropriate CSR. The effect on the environment, economy and population must all be considered. If businesses do not partake in CSR society will perceive them an unethical, resulting in a loss of sales. An example of this would be when the media exposed Nike for using child labour, immediately celebrities and athletes who were sponsored by the brand detached themselves. This resulted in a major drop on sales, Nike then consequently closed down and investigated the sweat shops. Nike no longer uses children to produce their product. Avvina inc followed CSR by decreasing the number of units that were produced for inventory, decreasing obsolesce. In return providing environmental sustainability by not overusing raw materials. Forecasting was used by the organisation to accurately predict the number of units that should be produced. Wastage in the operations process was also limited by AVVINA, over $3 million was spent to increase the efficiency of production so that materials are not wasted and instead can be transformed into the intended products. Serving as an advantage to the business due to them producing more product and the environment due to no additional unnecessary wastage being dumped. Maintaining adequate CSR also increases the number of shareholders in the business due to the company’s image and reputation as being seen as high. Also attracting more investors. Factory wastage was halved since the first year, 2029 there was only 12% of underlying waste. AVVINA is aiming to make this figure 0.

Conclusion In conclusion AVVINA inc is in the regrowth cycle of the business it is forecasted to further expand market share and growing in profitability as a corporation. Strategies used to increase efficiency, and production are effectively working. If CSR is maintained it shall be beneficial for the corporation’s image and attract investors. Adding to the successful prediction. Effective management of AVVINA inc was put into place from 2021-2029 resulting in the profitability of the business, growth in market share and consumer awareness.

references Investopedia. 2021. Triple Bottom Line (TBL) Definition. [online] Available at: [Accessed 4 May 2021]. Legislation.gov.au. 2021. Environment Protection (Sea Dumping) Act 1981. [online] Available at: [Accessed 4 May 2021].

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Harvard Business Review. 2021. The Truth About CSR. [online] Available at: [Accessed 4 May 2021]....