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B2040 Business And Accounting

tag 0 Download 0 Pages / 0 Words tag 21-06-2022
  • Course Code: B2040
  • University: Monash University
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  • Country: Australia

Answer:

Part 1

Introduction to Vita Group Limited annual report and financial statements 

Question 1

Vita Group Limited is one of the retailers that operate under the brands of Telstra and Fone Zone (Vita Group Limited. 2017). Vita Group Limited is public limited company that is listed in Australian Stock Exchange and operates in industries such as telecommunications, technology accessories as well as Information Communication Technology and Athleisure. Vita Group Limited had began its operation in the year 1995 when co-founder and CEO made the daring move to open first mobile phone retail outlet in Australia named as Fone Zone. Fone Zone was one of the first licensed dealers of Telstra that was founded with the knowledge that customers will get access to best possible products as well as services that combines with an unbeatable in-store experience. Vita Group Limited aims at delivering exceptional as well as personalized experience and products for solving current and future needs of customers (Baker & Burlaud, 2015). Vita Group operates in diversification activities in areas such as communication, electronics and information technology products and service sector. The Group worked with world-class strategic partners such as Telstra and Apple where the company adopted rapid transformation into multi-faceted company by providing broad range of products serving both retail and Business to Business markets. Vita Group gained noteworthy global telecommunications, experienced in sales, management as well as operates globally in UK and Australia (Weygandt, Kimmel & Kieso, 2014).

Question 2 

Discussion on Corporate Governance 

From the annual report of Vita Group Limited, the Corporate Governance Statement is organized under the headings in the Australian Stock Exchange Corporate Governance Council’s Corporate Governance Principles as well as Recommendations with 2010 Amendments dated 30th of June 2010. The Corporate Governance Statement follows supporting documents and posted in the websites of Vita Group Limited (Weil, Schipper & Francis, 2013).

Principle 1- Laying solid foundations for management and oversight

  • Appointment of Non-Executive Directors
  • Appointment and Evaluation of Senior Managers (Vita Group Limited. 2017)

Principle 2- Structure the Board to add value

  • Independence of Directors
  • Independent Professional Advice
  • Director’s interests (Vita Group Limited. 2017)
  • Remuneration and Nomination Committee
  • Board Performance
  • Induction and Education (Vita Group Limited. 2017)

Principle 3- Ethical and responsible decision-making

  • Code of Business Practice and Ethics
  • Trading in Company Securities by Directors, Officers and Employees
  • Diversity at Vita Group (Vita Group Limited. 2017)

Principle 4- Integrity in Financial Reporting

  • Audit, Compliance and Risk Committee
  • Auditor Appointment
  • Auditor Independence (Vita Group Limited. 2017)

Principle 5- Timely and balanced disclosure

Principle 6- Rights of shareholders

  • Communications strategy

Principle 7- Risk Management

  • Certification of Risk Management Controls (Vita Group Limited. 2017)

Principle 8- Remuneration

Question 3

Information included in the corporate governance report of Vita Group Limited

Vita Group Limited is in full conformity with ASX Principles and Recommendations. The Board Charter is reviewed on annual basis (Anderson et al., 2015). It is responsibility of the Board members to approve and monitor strategies as well as budgets and plans. They need to approve policies as well as code of conduct. They need to review as well as monitor scheme of risk administration, authoritarian observance and internal manage activities. The Board needs approval and monitors progress of acquisitions as well as disposals for any of the significant asset and business function. Vita Group Limited is delegated to management that include operations, financial operations, information technology, human resources, customer service, marketing, capital management activities as well as relationship with analysts, investors and media (Wagenhofer, 2015).

Vita Group Limited has accepted a formal declaration of Delegated Authorities that set out monetary as well as other limits that is entrusted to administration and matters presented after support from the Board (Vita Group Limited. 2017). The Group is accountable for overseeing the business as well as completion by administration of risk supervision systems and understanding the effectiveness of the systems. Vita Group Limited has established a Continuous Disclosure Policy for timely disclosure of material information that relates with the company. This policy takes into account internal reporting procedures that ensure any material price sensitive information as reported by the COO and CFO (Vita Group Limited. 2017). All the policies as well as procedures need to be reviewed on regular basis that ensure that Vita Group Limited complies with its compulsion at law under Australian Stock Exchange Listing Rules. The Secretary is accountable for communications with the Australian Stock Exchange that include accountability as it ensures fulfillment with the permanent revelation requirements as mentioned in ASX Listing rules as well as looking at information as it concerns shareholders and other interested parties (Reimers, 2013).

Question 4

Composition and total remuneration of the highest paid board members 

Name

Short-term employee benefits

 

Post Employment benefits

Long-term benefits

Total

 

 

Cash salary and Fees ($)

Termination Payments ($)

Non-Monetary Benefits ($)

Cash Bonus ($)

Superannuation

Cash bonus ($)

Long Service Leave ($)

 

Dick Simpson

 

 

 

 

 

 

 

 

 

 

2015

2016

 

 

 

 

2015

2016

 

 

2015

2016

169,223

191,058

-

-

 

 

16,076

14,825

-

-

185,299

205,883

 

 

 

 

 

 

 

 

 

 

 

 

Neil Osborne

 

 

 

 

 

 

 

 

 

 

2015

2016

 

 

 

 

2015

2016

 

 

2015

2016

84,611

94,011

-

-

 

 

8,038

8,931

-

-

92,649

102,942

 

 

 

 

 

 

 

 

 

 

 

 

Paul Wilson

 

 

 

 

 

 

 

 

 

 

2015

2016

 

 

 

 

 

 

 

 

2015

2016

92,650

102,942

-

-

 

 

-

-

 

 

92,650

102,942

 

 

 

 

 

 

 

 

 

 

 

 

Robyn Watts

 

 

 

 

 

 

 

 

 

 

2015

2016

 

 

 

 

2015

2016

 

 

2015

2016

84,611

94,011

-

-

 

 

8,038

8,931

-

-

92,649

102,942

 Question 5

Controlled entities of Vita Group Limited 

Part 2 

Financial Statements

Question 1

The net assets of Vita Group Limited for the current year (2016) arrive at 158,033,000 (Vita Group Limited. 2017). To that, net assets for the year 2014 were 102,632,000 and 129,376,000 in the year 2015. There was constant increase in net assets for three consecutive years 2014, 2015 and 2016. Increase in net assets means that the company has the capability to generate revenue in the near future. Net asset is one of the most fundamental measurements in accounting and finance (Vita Group Limited. 2017). It is understood that Vita Group Limited acquires high profits as it is more preferable as compared to low profits. Vita Group Limited can use higher profits for purchase of new equipment as well as eliminate debt and even make payments to the shareholders on time. Vita Group Limited need to meet certain profits each year for maintaining their loan covenants with their lenders (Reeve et al., 2014).

Question 2

The total equity of Vita Group Limited for the year 2016 arrives at 67,986,000. In the year 2014, total equity arrives at 30,740,000 and 48,992,000.00 for the year 2015 (Vita Group Limited. 2017). There is constant increase in equity from 2014 to 2016 and this means that Vita Group Limited can easily issue equity shares and pay the dividend on time. Total equity is high for the company and it is typically favorable condition. In addition, higher speculation levels by the shareholders indicate possible shareholders where the business is worth investing where investors show interest in financing the company (Vita Group Limited. 2017). Higher equity indicates possible creditors that the business is more sustainable as well as less risky for lending future loans. Vita Group Limited has higher equity that means the company should have less financing as well as debt service costs as compared to other companies who have lower ratios (Rajan, Datar & Horngren, 2015).

Question 3 

The total current assets of Vita group for the financial year 2016 stood at $ 72844 compared to $ 59479 in year 2015. Component of total current assets of the Vita group involves cash and cash equivalent, term deposits, inventories, trade and other receivables (Vita Group Limited. 2017). Value of total current assets for the financial year 2014 stood at $ 44254. From the given figure, there exists a vast difference in the value of total current assets. There has been continuous increase in the value of current assets year-on-year. The balances of trade receivables are not past due and they are expected to be reviewed when they are due. Increase in total value of current assets is because of significant increase in cash and cash equivalent. There was a term deposit worth $ 5025 in year 2016 that was not there in previous years. Total current assets value of Vita limited has also increased due to increase in amount of trade and other receivables (Anderson et al., 2014). Inventories contributed to increase in total current assets value in year 2015 as the amount stood at $ 14567 as against $ 11900. However, there was less increase in inventories value in current year (Potter, 2014).

Question 4 

The items that are listed in non-current liabilities of Vita limited includes trade and other receivables, provisions, interest bearing loans and other borrowings (Hoskin, Fizzell & Cherry, 2014). For the past three years, the items under non-current liabilities include the items mentioned herein. It can be depicted from the figures provided in the annual report of organization that there is considerable decline in the value of non-current liabilities from $ 22205 in year 2014 to $ 11996 in year 2015 and further declined to $ 8610 in year 2016 respectively. Reduction in non-current liabilities of the group is attributable to the fact that there have been reduced provisions, interest bearing liabilities and trade and other payables. Low amount of non-current liabilities is due to persistent fall in the value of items listed under total non-current liabilities (Baker & Burlaud, 2015). It can be seen from the annual report that there are no new items in the non-current liabilities.

Question 5

The net profit of Vito group for the financial year 2016 is recorded at $ 35371 as compared to $ 25402 in year 2015. Net loss for the financial year 2014 stood at $ 4642 (Grahame, 2014). When comparing the net profit for the three consecutive years, it is witnessed from the figure that financial year 2014 generated net loss to business. However, there was increase in profit of business to $ 25402 that further increased to $ 35271. Increase in profit for the year 2015 was attributable to falling finance cost, advertising and marketing expenses and there was no expense relating to the impairment of Next Byte business. Substantial increase in the profit is due to increase in profit before income tax. However, there has been increase in income tax expenses. Vito Group also due to increase in amount of revenue generates increase in profit for the year. It is mainly due to increase in sales of goods and services and increase in fees and commission revenue.

Question 6

From the figure depicted in the annual report of Vita Group, it can be seen that total revenue generated in current year is more as compared to previous year (Graham, Harvey & Puri, 2015). Total amount of revenue generated for financial year 2016 stood at $ 645112 and $ 541509 for the financial year 2015. Figure of total revenue value for financial year 2014 stood at $ 450054. Total revenue in the current year is more than total revenue the previous years. Year 2016 delivered an increase in revenue of 8% resulting from continuing operations (Bettner, 2014). There has been increase in revenue from retail channels of the group by 5%. Slow growth in sales of device is offset by increase in growth of income generated from fees. Revenue generated from enterprise channel experienced 16% growth (Bevis, 2013). Revenue generated from sprout increased by 28% that resulted from their party customer base expansion and internal distribution channel growth. Organization has significant opportunity for improving productivity and growth in revenue. Sustained growth of Vita group was primarily driven by higher revenue growth from enterprise and SMB channel (Reeve et al., 2013).  

Question 7

Items included under the operating activities involves receipt from customers, payment made to suppliers and employees, finance cost, interest received and the payment made in tax, of income tax (Bebbington, Unerman & O'Dwyer, 2014). Net cash flows from operating activities in current year that is financial year 2016 stood at $ 49097 as compared to $ 34295 in financial year 2015. For the financial year 2014, net cash flow from operating activities is recorded at $ 17625 (vitagroup.com.au, 2017). The largest outflow item in the operating activities was payment made to suppliers and employees followed by payment of income tax by Vito Limited. The largest inflow item of the operating activities section is receipt from customers that included the valuation of GST. Receipt from customers is the largest inflow item that has offset all the outflow items and generated net cash flows from continuing operations (Bettner, 2014). Total amount of interest received by group did not increased significantly. Operating cash flow of the group for the current financial year stood at $ 49.1 million and generated $ 35.3 million in previous year (Butterfield, 2016).

Question 8

Items involved in cash from investing activities includes purchase of plant and equipment, purchase of software, purchase of acquisitions and proceeds generated from plant, property and equipment (Deegan, 2013). Net cash used in investing activities of Vito group for the financial year 2014 stood at $ 19668 as compared to $ 15974 in year 2015. Cash used in investing activities increased further to $ 31324 in year 2016. Organization has increased investment made in plant and equipment. Investment made by organization in purchasing software declined to $ 278 in year 2015 compared to $ 1476. Furthermore, there was increase in investment by purchasing software to $ 3272 (vitagroup.com.au, 2017). There was no investment made in store sale and funds invested in the financial year 2015. Considerable amount of investment was made in store sale and funds invested in financial year 2016 and the amount stood at $ 770 and $ 4975 respectively. The new investing cash flow is the store sales and additional amount of funds invested in investing activities. Largest cash outflow from investing activities is payment made for acquisitions followed by purchase of plant and equipment (Christensen et al., 2013). Additional items that formed cash outflow and inflow in financial year 2016 involves sale of store and funds invested. The essential part of cash management of the group is net of outstanding bank overdraft that is payable on demand (Collier, 2015).

Question 9

A significant cash flow is generated by the operating platform and the cash flow at the end of financial year 2016 stood at $ 19419 as compared to 15616 in year 2015 (Christensen, Cottrell & Baker, 2013). Cash flow for the financial year 2014 stood at $ 6808. From the figure, it can be seen that there is a significant increase in cash flow or cash and cash equivalent from the financial year 2014 to financial year 2015 and 2016 respectively. The cash-generating unit of Vita Group as defined as computing and telecommuting business that is at the lowest levels where the ascertaining of cash flow can be done by distributing future cash flow (Collier, 2015)

Reference List

Anderson, D. R., Sweeney, D. J., Williams, T. A., Camm, J. D., & Cochran, J. J. (2015). An introduction to management science: quantitative approaches to decision making. Cengage learning.

Baker, C. R., & Burlaud, A. (2015). The historical evolution from accounting theory to conceptual framework in financial standards setting. The CPA Journal, 85(8), 54.

Bebbington, J., Unerman, J., & O'Dwyer, B. (Eds.). (2014). Sustainability accounting and accountability. Routledge.

Bettner, M. (2014). Using Accounting and Financial Information: Analyzing, Forecasting & Decision-Making. Business Expert Press.

Bevis, H. W. (2013). Corporate Financial Accounting in a Competitive Economy (RLE Accounting). Routledge.

Butterfield, E. (2016). Managerial Decision-making and Management Accounting Information.

Christensen, T., Cottrell, D., & Baker, R. (2013). Advanced Financial Accounting. McGraw-Hill.

Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.

Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.

Graham, J. R., Harvey, C. R., & Puri, M. (2015). Capital allocation and delegation of decision-making authority within firms. Journal of Financial Economics, 115(3), 449-470.

Grahame, S. (2014). Fundamental of Financial Accounting. Financial Management, 14719185, 50-51.

Hoskin, R. E., Fizzell, M. R., & Cherry, D. C. (2014). Financial Accounting: a user perspective. Wiley Global Education.

Potter, B. (2014). Accounting for Decision Making: ACCT90004. McGraw-Hill Education for the University of Melbourne.

Rajan, M., Datar, S. M., & Horngren, C. T. (2015). Cost Accounting. Pearson Higher Ed.

Reeve, J. M., Warren, C. S., Duchac, J. E., & Wang, W. (2014). Principles of financial accounting with conceptual emphasis on IFRS. Cengage Learning Asia Pte Limited.

Reimers, J. L. (2013). Financial Accounting: Pearson New International Edition: A Business Process Approach. Pearson Higher Ed.

Vita Group Limited. (2017). Vitagroup.com.au. Retrieved 11 September 2017, from http://www.vitagroup.com.au/script/cus/financial-reports.asp

Wagenhofer, A. (2015). Usefulness and implications for financial accounting. The Routledge Companion to Financial Accounting Theory, 341.

Weil, R. L., Schipper, K., & Francis, J. (2013). Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.

Weygandt, J., Kimmel, P., & Kieso, D. (2014). Financial Accounting: tools for business decision making, Hoboken.

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