Essay Sample on Billabong International Limited

Abstract

Billabong International Limited is a company that sells clothing on retail and produces accessories such as backpacks, snowboard, watches and skateboard products under various brand-names. Rena Merchant and Gordon founded the company in 1973 and first traded on the securities exchange of Australia in 2000. It is an Australian company with a name derived from the word bi laban, a Wiradjuri word that means a creek which runs during the rainy season only. Billabong Company owns brands such as Element, Von Zipper, Kustom, Xcel, RVCA, Honolua Surf Company, Sector 9, Palmers Surf, Tigerlily.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Introduction

Because of the exceptionally aggressive nature of this industry, Billabong has set up measures to guarantee that it stays one of the most prominent attire and wear accessories maker on the planet. Right off the bat, it has ventured up its online nearness to catch the consideration of more individuals and to make their items progressively open to potential clients. Since the world is currently in an innovative progression arrange, more individuals approach the web. This subsequently expands the market for such merchandise and empowers more individuals to have the capacity to get to the products at their very own solace without heading out long separation to the retail locations. Billabong has in this manner expanded its publicizing on the web and made it simpler for individuals to buy their favored items and have them conveyed to them.

Besides, modification a more significant amount of the assistants to give an individual taste to the clients is likewise another procedure that Billabong has utilized to advance beyond their opponents. This implies once a client has made a booking, at that point, they will have a wide assortment of decisions to suit the requests and needs of the client. This will empower more individuals to discover precisely what they require at the organization with all the necessary adjustments made to guarantee that every client gets just what they need.

The organization's image must be maintained all an opportunity to guarantee that clients stay faithful to it and keep obtaining their items. The wheat talks a great deal to any potential brand subsequently the organization needs to endeavor to guarantee that the brand they depict is inventive, high caliber and increases the value of the items that they are putting forth. This will draw in more clients and guarantee that the organization accomplishes its destinations.

Because of changing client needs and requests, an organization needs to evaluate the market and discover methods for getting more clients utilizing the brand. Enhancing the organization empowers it to deliver increasingly unique merchandise subsequently increment its income and giving it an aggressive edge. Finding the correct items that can be incorporated into the organization will empower it to develop fundamentally and eventually lead to its prosperity

Having a similar issue for a large stretch will at last influence an organization to lose its clients since every day, diverse organizations crop up with revived forms of items that are additionally speaking to clients. An organization needs to guarantee that it routinely delivers new things that are of more esteem. This will empower the organization to keep up its clients and even draw in progressively after some time. Inquiring about and discovering what clients need is the new pattern in this industry and it will empower it to know precisely what individuals need and how it very well may probably satisfy those requirements.

Billabong Financial Report

The company experienced a decline in profitability since 2008 up to 2012 where two years later in 2014 after the use of corporate turnaround strategy, the company returned to profitability with a net profit of $25.7 million after tax. It was the first time that the company recorded some gain since 2011. This paper tries to explain the financial analysis of Billabong company from 2016 to 2018 half years of annual reports.

Financial analysis is a process that is used in assessing the financial statements of a company in the aim of judging its financial performance. Economic analysis helps in the assessment of stability, profitability, liquidity as well as solvency. Tools such as current size financials, ratio analysis as well as Dupont analysis are used in financial statement analysis, and the most prominent instrument is the ratio analysis. Valuation, liquidity, growth, the capital structure as well as turnover ratios are usually used to judge the different business aspects and therefore financial analysis is useful in the valuation, assessment, and comparison of a company.

The ratio analysis which is the most widely used tool in financial analysis involves the calculation of ratios from financial statements of a company to draw valuable insight into the reports. Some of the financial statements include the balance sheet and the profit and loss accounts of a company with the profit and loss account statements showing the overall results either profit or loss while the balance sheet shows the position of the company financially. Ratio analysis helps in enhancing the usability of a company's financial statements. It also answers the question of whether the profits calculated in the profit and loss accounts are sufficient or not. Ratio analysis will be used in this paper to analyze the Billabong 2016, 2017 and 2018 fiscal, financial half years.

The brands of the company for the year ended 30th June 2016 were Von Zipper, Billabong, Tigerlily, Element, Palmers, Xcel, Kustom, Honolua, and RVCA. Billabong Limited operated 407 retail stores in countries across the globe including 127 stores in Australia, 55 stores in North America, 47 stores in Japan, 104 stores in Europe, 28 stores in South Africa and 29 stores in New Zealand. The stores traded under burners such as Amazon, two seasons, Billabong, Surf Dive 'n' Ski, Honolua, Quiet Flight, Element and Rush. The consolidation of the shares and options of the company on a 5:1 basis as the shareholders had approved on 24th November 2015 was completed on 7th December 2015. The company completed the sale of Burleigh Heads located at 225 Reedy Creek Road next to the company's head office at $6.2 million purchase price with a total cost of sale of $0.2 million on 14th January 2016. Later on, 29th of June 2016, the company announced the sale of sector nine at an approximate price of USD$12million which was a $4.9 million loss including the costs of divestment. No significant changes witnessed at the state of affairs of the company during the 2015-2016 fiscal year. For the year ended 30th June 2016, Billabong experienced a net loss after tax of $23.7 million in comparison to a net profit after tax in the corresponding prior period of $4.2 million. The year included an income tax expense of $7.8 million in contrast to a benefit in income tax of $12.2 million in the prior year. The loss for the income tax for the year ending in June 2016 was $15.9 million in comparison to the previous corresponding period of $9.7 million. The brands of the company for the year ending at 30th June 2017 included Von Zipper, Billabong, Element, Xcel, Palmers, RVCA, Honolua and Kustom a decrease of one brand from 30th June 2016 financial year. As at 30th June 2017, Billabong group operated 372 retail stores across the globe that included 27 stores in South Africa, 49 stores in North America, 46 stores in Japan, 104 stores in Europe and 105 stores in Australia recording a decrease in the number of stores from that of the year ending 30th June 2016 by 34 stores. The company sold its Tigerlily brand on 1st April 2017 to Crescent Capital Partners at $60 million which led to a $47.8 million gain on sale net of divestment costs.

Billabong experienced a net loss of $77.1 million after tax in the year ending 30th June 2017 as compared to $23.7 million net loss after tax in the corresponding prior period. The year had an impairment charge of $106.5 million which was a previous year $0.1 million net impairment reversal.

However, in the period between 2016- 2017 and the 2017-2018 half years respectively, there was the observation of significant improvement changes in various cash flow operations. The tables below represent some of these changes; the half years ended at 31st December of 2017

Operational cash flow between 2016-2017 half years

Cash flow from operational activities Year 2017 half year in ($'000) Year 2016 half year in ($'000)

Customer payment receipts (inclusive sales tax) 549095 586830

Payments to employees and suppliers 510099 542667

Difference 38986 44163

Received interest 159 130

Other sources of revenue 3898 3944

Financial expenditures, i.e. costs 7212 17423

Payment of income tax 2827 3506

Net cash inflow, i.e. (operational activities) 33004 27308

From the above financial report, it is possible to observe that the company made a significant improvement in its net cash flow from their operational activities moving from a net flow of $27,308 in the year 2016 to $33,004 in the year 2017. Other respective cash flow sectors in the company by figures included; investments that saw a shift from $13089-$ 17198 in the 2017 investment half year. From financing activities, the cash outflow shifted from $2228-$2981 in the respective financial years. In total, the net cash flow increment equivalent was from $84176 in the year 2016 to $ 99692 in the year 2017 a net increment of $14876.

Operational cash flow between 2017-2018 half years

Cash flow from operational activities Year 2017 half year in ($'000) Year 2018 half year in ($'000)

Customer payment receipts (inclusive sales tax) 586830 620470

Payments to employees and suppliers 542667 572473

Difference 44163 47997

Received interest 130 179

Other sources of revenue 3944 4598

Financial expenditures, i.e. costs 17423 21134

Payment of income tax 3506 4621

Net cash inflow, i.e. (operational activities) 27308 36078

As per the data collected from the three financial years, i.e. from 2016 to the year 2018, it is possible to identify that Billabong as a company has been on the continued financial growth increasing their overall net cash inflow as the time advances.

The increasing financial spending and capabilities of the company could be attributed to the company's growing clientele base that as a result of the services provided. As a result, the financial analyst teams and committees in the company instituted measures that were aimed at keeping track of the various financial records and expenditure in the company.

Taste and Preferences of the Consumer

The business is customer driven since the more individuals purchase the organization's items, the more benefit the organization will attain after some time. This implies the organization needs to search for approaches to make their items as appealing as conceivable to buyers everywhere throughout the world. Joining quality with strength is an undertaking that most organizations underestimate; however it is a vital factor. Furnishing clients with beautiful items that are likewise strong along these lines build the odds of the client purchasing a more significant amount of the organization's issues and furthermore prescribing them to other people. This will expand the organization's piece of the pie and income o...