Analyze The Conceptual Framework Assignment Sample

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Explanation of financial statements in case of A2 milk and Dairy farmers: 

With the help of the financial statement of A2 milk the accuracy of the financial information are collected. The gross profit rate if for $151000 and the revenue rate is $353000. Due to this the operating income also gets raised for $53000 (Dieckmann and Plank, 2012). The rate of net income is $30000. Based upon the income statement the accuracy of the income get framed for this firm. Based upon cash flow statement the depreciation rate is known which is helpful for making the operating activities. The total operating activities of A2 milk is for $21000. However, it is also seen that as the investment rate is higher for that the negative result is seen in the case of the investing activities for $2000. Financial activities are also seen for $44000 (Healy and Palepu, 2012). This is helpful for A2 milk firm for changing the cash equivalents for $63000. With the help of balance sheet, the effective relationship between the assets and liabilities get maintained. The total current assets are for $182000 and for this the rate of total assets are $210000 for A2 milk. This denotes that this firm is in a healthy position. The rate of total liabilities is $77000. These three statements are helpful for A2 milk to identify its financial position in the global market (refer to appendix 1, 2, 3).

However, in the case of Australian Dairy farmers, it is seen that the rate of total revenue is $7000 and the total revenue rate if for $10000. The operating expenses in the income statement are for $12000 (Maditinos et al. 2011). The net income has been found that it is in the loss for $1000. In the balance sheet, the rate of total assets is for $45000. The current liabilities are here less than the assets for $7000. It is seen here that the liabilities are due for which the rate of current liabilities has raised in the case of Dairy farmers (Ioannou and Serafeim, 2014). Cash flow statements in operating activities are in a negative manner for $1000. As a result, the cash equivalents are also in a negative aspect for $12000. Due to this, it can be said that as there is lack of investment activities for that the rate has decreased in a negative manner. AASB standards are measured mainly in case of A2 milk. For this reason, the financial growth rate is higher in A2 milk company (refer to appendix 4, 5, 6).

Identification of the differences between A2 milk and Dairy farmers:

AASB standards are deeply followed by A2 milk which is helpful for them to gain more profit in the global market. The rate of total assets is greater in this firm for $210000. Whereas, the Australian Dairy farmers are consists of $45000 total assets. The aspect of total currents liabilities is also greater for $77000 in the case of A2 (Hsu et al. 2014). On the other hand, Australian dairy farmers have $7000 total current assets. The revenue of A2 Milk Company consists of $353000 and the gross profit is for $151000 respectively. However, Australian dairy farmers have a gross profit for $3000 through which the operating expense has raised for $12000 (Au.finance.yahoo.com. 2016).

The net income of A2 Milk Company is for $30000 and Dairy farmers are in a negative position of the net income for $1000. Thus, the operating loss has been seen here for $2000. A2 Milk Company consists of the financial activities of an amount of $44000. Similarly, Dairy farmers have the financial activities for $12000 (Healy and Palepu, 2012). It is seen that the accurate position is maintained in case of A2 Milk Company with the help of the AASB standards. Therefore, the conceptual framework is also handled in this particular firm in an accurate manner. Dairy farmers are also required for meeting the AASB standards (Australiandairyfarmers.com.au. 2016).

Conclusion:

It is concluded that financial analysis is helpful for conducting the conceptual framework. It is seen that A2 Milk Company has followed all the AASB standards whereas Dairy farmers has not followed all the AASB standards. The gross profit rate and revenue rate of A2 Milk Company are higher in comparison to Dairy farmers.  The net income of Dairy farmers is low in comparison to A2 Milk Company as it has not followed the entire AASB standard. A2 Milk Company and Dairy farmers have framed their corporate reporting so that disparity can be avoided and prudence can be maintained. The current liabilities of Dairy farmers are increasing in comparison to A2 Milk Company. Further, it has been concluded that conceptual framework is essential for the identification of the financial company so that the performance of the company can be maintained. 

Recommendation:

Dairy farmers should maintain all the AASB standards so that the farm can meet their financial requirement in the global market. They should also increase its revenue rate and gross profit rate so that the performance can be maintained in an effective manner. The cash flow statement of this firm also should be managed with the help of investing activities. In the case of A2 Milk Company the investing activities also must be focused so that the accounting framework gets maintained. Dairy farmers also must maintain their financial performance so that healthy relationship between the management and the clients of this firm get framed.

Reference list:

a2milk.com.au. (2016). Milk that’s naturally all A2 - a2Milk™ | Feel the Difference. Available at: https://a2milk.com.au/ [Accessed on 15 Dec. 2016].

Au.finance.yahoo.com. (2016). AHF.AX Income Statement | AUSDAIRY STAPLED Stock - Yahoo!7 Finance. Available at: https://au.finance.yahoo.com/q/is?s=AHF.AX&annual [Accessed on 15 Dec. 2016].

Australiandairyfarmers.com.au. (2016). Dairy Farmers Australia | Dairy Advocacy Group | Australian Dairy Farmers. Available at: http://www.australiandairyfarmers.com.au/ [Accessed on 15 Dec. 2016].

Dieckmann, S. and Plank, T., (2012). Default risk of advanced economies: An empirical analysis of credit default swaps during the financial crisis. Review of Finance, 16(4), pp.903-934.

Finance.yahoo.com. (2016). A2M.AX Income Statement | Balance Sheet | Cash Flow | A2 MILK FPO NZ Stock - Yahoo Finance. Available at: http://finance.yahoo.com/quote/A2M.AX/financials?ltr=1 [Accessed on 15 Dec. 2016].

Healy, P.M. and Palepu, K.G., (2012). Business Analysis Valuation: Using Financial Statements. Cengage Learning.

Hsu, P.H., Tian, X. and Xu, Y., (2014). Financial development and innovation: Cross-country evidence. Journal of Financial Economics, 112(1), pp.116-135.

Ioannou, I. and Serafeim, G., (2014). The consequences of mandatory corporate sustainability reporting: evidence from four countries. Harvard Business School Research Working Paper, (11-100).

Maditinos, D., Chatzoudes, D., Tsairidis, C. and Theriou, G., (2011). The impact of intellectual capital on firms' market value and financial performance. Journal of intellectual capital, 12(1), pp.132-151.

Scott-Clayton, J., (2011). On money and motivation a quasi-experimental analysis of financial incentives for college achievement. Journal of Human Resources, 46(3), pp.614-646.

Woodford, M., (2010). Financial intermediation and macroeconomic analysis. The Journal of Economic Perspectives, 24(4), pp.21-44.

 

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