Fosters Accounting Assignment

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Recommended: Review of literature on financial performance in ratio analysis

I. EXECUTIVE SUMMARY.

Founded in 1888, Foster’s group is the result of a long history of amalgamations. Nowadays, regarded as a premium global multi-beverages company, Foster’s group possesses three main operating arms: Beringer Blass Wine Estate, Carlton and United Beverages, Foster’s Brewing International. The group delivers premium branded beers, wine spirits and entertainment products. With US$5.2 billion in total operating revenue, Foster’s group’s operates in Australia, New Zealand, China, California, Italy, Chile, Vietnam, India and Fiji. Besides, its products are sold in over 150 countries around the world.
The report has analyzed the financial performance and financial stability of Foster’s Group over a three years period that is from 2002 to 2004 included.
The Ratio Analysis technique was used to conduct the report. Therefore, comparison with industry averages and Coca Cola Amatil supplemented the analysis to complement the results.
In 2002, it was found that profitability had increased significantly compared to 2001, this was mainly due to Foster’s group policy in expending its distribution and sales worldwide and Forster’s European partnership which increased its income.
However, 2003 showed smaller profitability than 2002 mainly due to a non profitable foreign exchange rate, tough competition in California, adverse trading conditions in the US and the impact of global events restricting travels, tourism and leisure activities (Swan, 2003: 5). Foster’s group did however generate greater amount of operating cash flows, and made a considerable amount of acquisitions.
In 2004, Profitability ratios did however increase but that was due to the selling off of ALH (Australia Leisure Hospitality) that generated $1.5 billion, “Excluding the impact of significant items, net profit after tax was $469.4 million, a decrease of 17.4% over the previous year’s result” (Foster’s Audit, 2004:61).
On the three year basis, when compared to the industry averages, the stability ratios are actually lower, but when they are compared to Coca Cola Amatil the ratios are actually similar and even a bit higher. Due to the accumulation of consistent profits over the years, both companies do not need as much financial leverage as other companies would, which reflects the stability of the company. In fact, those companies rely more on equity than debt to generate their assets.
Overall, Foster’s group is a relatively stable and performing enterprise. The results show that Foster’s performance and stability have moved in accordance to outside world events. However, the company continues to maintain its position as a leading group in the beverages industry.

II. QUALITY, SCOPE, USEFULNESS,FORMAT AND READABILITY OF THE MOST RECENT ANNUAL REPORT.

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