Report on Financial results of Dunedin Wines Ltd.

Report on Financial results of Dunedin Wines Ltd.

Submitted to Mr.ShanName- Amandeep kaurStudent ID 15012233Unit Standard -11624

Title page

Introduction .(3)Executive summary .(3)Findings .(4-6)Conclusion (7)Recommendation .(7)

IntroductionThe main purpose of the report is to provide analysis of Dunedin wines Ltds current position in comparison to Christchurch Wines limited. This is made in attempt to give management information regarding current financial status of the Dunedins to overseas buyers. The report contains analyses of financial situation and providing a detailed based on nature of solvency test and its implications to Dunedin Wines Ltd. This includes the calculations of the ratios to measure the profitability, asset utilization, working capital management, long term financial stability and financial markets. Mostly it is comparing two main competitors in wines industry.

Executive summary.Dunedin Wines ltd and Christchurch wines limited are Main competitors in the market. As Dunedin wines has been producing boutique wines for the Newzealand for 1975 and market and has been very successful overseas. Mark smith and Susan Appleby are current owners of this company . They have business with overseas such as Australia and U.K. Current owners are looking to move away from the wine producing business and venture into something less challenging .As they need to fulfill inquiry of overseas buyers .Inquiry needs to be done regarding Dunedins current position in relation to a competitor in two constructive years mainly 2012 and 2013 .This analysis contains ratios calculations to measure the profitability, asset utilization, working capital and financial market.

FindingsProfitability ratios, working capital and Asset utilization between Dunedin wines Ltd and Christchurch wines ltd .This comparison was done on the basis of two years namely 2012-2013 .The findings for the process are given below 1. Profitability ratio This ratio calculation calculates the companys performance and future capacity to earn profits and profits which are left from income earned after deducted all costs and expenses related to earning the income. It can be calculated in gross profit margin and, Net profit etc. As we done calculations it showed that Percentage change in sales in Dunedin in 2012 was 2.30% and 2013 it was 0.99% .Whereas, percentage change in sales of Christchurch in 2012 was 16% and in 2013 it was 7.47%. Both companies are doing not good in sales maximization but when we compare both companies it shows that Dunedin wines is going smooth than Christchurch wines limited . Gross profit percentage change in Dunedin in 2012 was 52.1% and in 2013 it was 51.4%.Wheras, Gross profit percentage change in Christchurch in 2012 was 27.79% and in 2013 it was 28.70%.This shows Dunedin wines ltd is doing better in gross margin rather than Christchurch wines Ltd. Net profit change in Dunedin in 2012 was 8.87% and in 2013 it was 8.10%.Wheras in Christchurch it was 21.1% in 2012 and 22.1% in 2013. In this situation Christchurch wines ltd is doing better than Dunedin wines ltd. When we compare both Dunedin and Christchurch wines ltd is better for net profits in both years .So compare to both companys profitability ,Christchurch wines is more profitable and better that Dunedin wines ltd .

2. Working capital Working capital ratio measures the companys efficiency it acts as alarm system for whether a company has enough short term assets to cover their short term debt. This can be calculated by two methods namely Current ratio and quick asset ratio. It included short term investments, inventories and cash .It also includes account payable, accrued liabilities .As we see calculations Current ratio change in Dunedin in 2012 was 0.88:1% whereas in 2013 it was 0.87:1%.Chrischarch it was low as compared to Dunedin .It was 0.68:1in 2012 and 0.67:1 in 2013. When we compare then we see that Dunedin ltd is better than the Christchurch wines ltd. Liquid ratio change in Dunedin in 2012 was 0.622:1 whereas in 2013 it was 0.60:1 .In Christchurch it was 0.47:1 in 2012 and 0.46:1 in 2013 . By comparing both companies Dunedin ltd have better quick asset ratio rather than Christchurch wines ltd.

3. Asset utilization. Asset utilization measures the efficiency of a business by using its assets to make money in future. We can calculate inventory turnover found by the cost of produce the goods sold during a specific time period by average value of the business product inventory during the same period. Inventory turnover in Dunedin in 2012 was 7.61 times and in 2013 it was 7.41 times. Christchurch showed 24.5 times in 2012 and 2.5 times in 2013. This result shows that Christchurch wines show better results than Dunedin wines ltd. As we go to day sales inventory in Dunedin in 2012 was 48.46 and in 2013 it was 50.19. In Christchurch it was 15.10 in 2012 and 14.96 in 2013. So Christchurch Ltd is better than the Dunedin ltd for the asset utilization.

4. Long-term financial stabilityThis calculates ratio count that how much debt company can support and also maintains debt and equity equilibrium .The main long term financial stability ratios are debt to equity ratio and debt to asset ratio. We calculated debt to equity ratio which was 0.74:1 in 2012 and 0.84:1% in 2013 in Dunedin wines limited. In Christchurch it was 1.08:1in 2012 and 0.01:1 in 2013.Increase in debt to equity ratio is not at all good for smooth running of the business. In this case when we compare to both of this company we could says that Christchurch wines ltd is far better than Dunedin Wines Ltd. Proprietor ship ratio in Dunedin wines ltd in 2012 was 0.43. Where in 2013 it was 0.40.Chrischruch showed lower result as it was 0.26 in 2012 and 0.25 in 2013.So both companies have not better debt to asset ratio but Dunedin ltd is better in position than Christchurch.

Financial Market Financial market is the place where buyers and sellers participate in the trade of assets such as equities, bonds and dividends. Earnings per share and dividend per share are two main parts of financial markets. Dividend per share can be calculated by dividend paid to shareholder divided by numbers of shares. As we go through, Earnings per share in Dunedin in 2012 was 0.30 whereas in 2013 it was 0.274r share .In Christchurch it was $1&18 dollar in 2012 and in 2013 it was $1&32dollers .Dividend per share in Dunedin in 2012 it was 30cents per shares in 2013 20 cents per share whereas it Christchurch it was $1&18dollers in 2012 and in 2013 it was .70cents per share in 2013.This shows decease in DPS. So, by comparing both companies Christchurch wine ltd shows better DPS compare to Dunedin Ltd.

ConclusionDunedin wines ltd has higher assets as compared to Christchurch .However, Dunedin has good profit than Christchurch. Christchurch Is higher some profit at 52.1% and they higher current sale of 2.30% in the year 2013. At the end we can say that it is good to invest in Dunedin wines ltd rather than Christchurch ltd. Long term financial stability .Working capital ratio and assets utilization ratios are in favor of Dunedin.

RecommendationsIt is good to invest in Dunedin wines ltd rather that Christchurch ltd. Long term financial stability .Working capital ratio and assets utilization ratios are in favor at Dunedin wines ltd. Also there should be calculation of ratios on yearly basis to check companys profitability and stability in the market. Dunedin Ltd needs to grow their wines market increase sales and for net profit. Also earning per share and dividend per share needs to increase it shows less number per share so Dunedin Wines Ltd needs to improve it.

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