Business Analysis - Case Study
Case of Brickworks Company Limited: A Managerial Accounting Analysis
1. Introduction
This task is designed to provide students with an opportunity to demonstrate their understanding of the concepts and techniques in management accounting, through the application of relevant material(s) covered in the subject and its prerequisite subject, to a real world case study. It involves the analysis of data and information relating to Brickworks Company limited from a management accounting point of view. Students are required to prepare a report in an academically acceptable form which comments on various aspects of the company.
2. Graduate Qualities Assessed
- Informed
- Innovative and Flexible
- Connected
3. Subject learning outcome assessed
- Differentiate and apply different management accounting information and cost systems.
- Apply basic contemporary management accounting techniques for planning, controlling and decision making.
- Evaluate financial information relevant to management decision making.
- Communicate findings and/or recommendations to relevant audiences.
- Apply accounting information systems such as Excel to assist in business decision making.
The report should be 3,000 words maximum. This excludes the title page, executive summary, table of contents, charts, diagrams, tables, list of references and appendices.
Report Details
This assignment analyses Brickworks Company limited using a variety of sources including; company annual reports, company website, internet, newspapers and articles. The analysis utilises various management accounting processes, techniques and methods that you learned in ACCY918 subject and its prerequisite subject ACCY901. The report should address the following requirements:
A. Provide a brief summary of the company. Include details such as the industry sector, primary activities, and recent performance. The importance of this section is to effectively introduce the company, the nature of its business, identify the company's profit drivers and key risks, etc. This should be written in paragraph format.
B. Identify and comment on the Vision, Mission and key strategies of the company
C. Provide a financial statement analysis of Brickworks Company limited for 2017 using ratios and comment on the following aspects of the company
I. Liquidity
II. Efficiency
III. Leverage
IV. Profitability
V. Market value
VI. Overall financial performance and financial status.
D. Identify five measures that the company has taken to promote sustainability.
E. Prepare an analysis and summary of the major financial and non-financial strengths and weaknesses of the firm. Financial strengths and weaknesses are generally based on significant observations of your analysis (financial statements and ratios). Non-financial strengths and weaknesses are based more on anecdotal and specific evidence from research, etc. Based on your analysis in this section, indicate the company's strategies for solving its problems and its outlook for the future.
F. Use the figures in the consolidated income statement of the company annual report and prepare the followings: (1) summarised absorption costing income statement showing operating profit of the company (Hint: You may need to ignore some revenue and expense items presented in the current consolidated income statement to arrive at operating profit); (2) a contribution margin income statement for 2017. You may need to use appropriate cost classification methods and assumptions for this purpose. You may also consider cost of sales and selling expenses as mixed costs. Use an excel spreadsheet to prepare this statement and present it as a table in the case study report.
G. Using the contribution margin income statement you prepared in requirement (F) above and making realistic and logical assumptions about the trends, prepare a budgeted income statement for Brickworks Company limited for 2018 on an Excel Spreadsheet.
Your report should only show the budgeted income statement resulted from this analysis.
When preparing the excel file for this purpose, use a separate sheet on the excel file to record the input (unit prices, rates, assumptions, etc used for calculations) and another sheet to show the output (budgeted income statement). Detailed operational budgets such as sales budget, production budget, etc. are not required. Input and output sheets should be linked by formulas. In other words, the excel file should be readily available for sensitivity analysis ("what if analysis") i.e. if the manager change the input data or an assumption/s in the input file, he/she should be able to see the impact of the changes on the output sheet immediately. While only a summary of the results in the output sheet should be presented in the body of the report, the printout of all the sheets of the excel files (used for G and F) should be submitted as appendices. The soft copy of the excel file should also be submitted through the link on the Moodle site. Please make sure to use as many formulas (cost functions) as possible to obtain required estimates and to clearly state the assumptions you make for calculating your estimated figures for the 2018.
H. Managers regard relevance, accuracy, and timeliness as important characteristics of information. However, much of accounting information provided to managers does not rank highly on these criteria, because some management accountants are tied to financial models of reporting. To regain their role as primary information provides, management accountants need to become more directly involved in the operation of data collection and reporting systems, and move closer to the managers they are serving (McKinnon & Bruns 1992). In light of the above statement, provide 5 examples of information that management accountants can provide to managers of Brickworks Company limited to assist them in managing company resources (example, customer profitability analysis to identify the most important customers of Brickworks Company limited ).
I. Refer to the 2017 annual report of Brickworks Company limited and answer the following questions.
I. Can you identify cost objects in the annual report? If so, what are they?
II. Can you identify a product cost in the annual report? If so, what is it? and how much is it?
III. Identify three period costs, and explain why they are period costs.
IV. Would Brickworks Company limited be able to make use of cost-volume-profit analysis within its business operations? Explain.
V. Examine the segment information contained in the annual report and comment on the results.
VI. After examining the annual report, conclude whether there is a budgetary system in operation in Brickworks Company limited.
VII. What would be the key element driving a budgetary system for Brickworks Company limited? What budgets might the company prepare?
Download Brickworks Limited 2017 Annual Report