Business Analysis Case Study: Case of CSL Limited Answer
Guidelines for Business Analysis Case Study
A Case of CSL Limited: A Managerial Accounting Analysis
This task is designed to provide students with an opportunity to demonstrate their understanding of the concepts and techniques in management accounting, through the application of relevant material(s) covered in the subject and its prerequisite subject, to a real world case study. It involves the analysis of data and information relating to CSL Limited from a management accounting point of view. Students are required to prepare a report in an academically acceptable from which comments on various aspects of the company.
2. Structure of the Report
C: Executive Summary (Summary of the report at the beginning) D: Table of contents
Body of the report
E: Introduction (the purpose of the analysis)
F: Discussion and the analysis of the report’s findings (with
G: Tables, graphics, charts (optional but recommended) H: Conclusions and recommendations
250 words maximum 2,500 words maximum
250 words maximum 3,000 words maximum
I: List of references
J: Appendices (relevant pages of the documents used in the report, detailed calculations,
printout of the excel sheets, and other relevant detailed information)
3. Report Details
This assignment analyses CSL Limited using a variety of sources including; company annual reports, company website, internet, newspapers and articles. The analysis utilizes various management accounting processes, techniques and methods. The report should address the followingrequirements:
- Provide a brief summary of the company. Include details such as the industry sector, primary activities, and recent performance. The importance of this section is to effectively introduce the company, the nature of its business, identify the company’s profit drivers and key risks, etc. This should be written in paragraph format (250 words maximum-5 marks).
- Identify and comment on the Vision, Mission and key strategies of the company (150 words maximum-5 marks)
- Provide a financial statement analysis of CSL Limited for 2019 using ratios and comment on the following aspects of the company
- Market value
- Overall financial performance and financial status
(750 words maximum-15 marks).
- Identify five measures that the company has taken to promote sustainability (100 words maximum- 5 marks).
- Prepare an analysis and summary of the major financial and non-financial strengths and weaknesses of the firm. Financial strengths and weaknesses are generally based on significant observations of your analysis (financial statements and ratios). Non-financial strengths and weaknesses are based more on anecdotal and specific evidence from research, etc. Based on your analysis in this section, indicate the company’s strategies for solving its problems and its outlook for the future (250 words maximum-5 marks).
- Use the figures in the consolidated income statement of the company annual report and prepare the followings on an Excel Spreadsheet:
(i) Summarized absorption costing income statement for 2019 showing operating profit of the company (Hint: You may need to ignore some revenue and expense items presented in the current consolidated income statement and consider 2,504.0 operating profit as the bottom-line profit).
(ii) Summarized contribution margin income statement for 2019. You may need to use appropriate cost classification methods and assumptions for this purpose. Assume all expenses are either variable or fixed except for cost of sales and selling and marketing expenses which should be classified as mixed costs. Cost of sales can be separated out to fixed and variables costs assuming that 40% of the total cost of sales in 2019 consist
of fixed manufacturing overhead costs while selling expenses could be separated using high low method with annual sales units as the measure of unit level. You may consider sales for 2018 and 2019 as a measure of level of activity for estimating cost function.
(iii) Budgeted income statement for 2020. This statement should be prepared using the contribution margin income statement you prepared in requirement (F.ii) above and making realistic and logical assumptions about the trends. You are not required to prepare operational budgets such as sales budget, production budget, to prepare a budgeted income statement.
The excel file used for preparing the above three statements should consist of two sheets. The first sheet should be used to record any input data and assumptions that you use for your calculations. For example, data used with high-low in F(ii) above should be shown here. The second sheet of your excel file should show the output of the analysis (i.e. the three statements mentioned in (i) to (iii) above. Input and output sheets should be linked by formulas. In other words, the excel file should be readily available for sensitivity analysis (“what if analysis”) i.e. if the manager change the input data or an assumption in the input sheet, he/she should be able to see the impact of the changes on the output sheet immediately.
While only the three statements you prepare should be presented in the body of the report, the printouts of both sheets of the excel file should be submitted in appendices. The soft copy of the excel file should also be submitted through the link on the Moodle site. Please make sure to use as many formulas (cost functions) as possible to obtain required estimates and to clearly state the assumptions you make for calculating your estimated figures for the 2020.
(500 words maximum -20 marks).
- Managers regard relevance, accuracy, and timeliness as important characteristics of information. However, much of accounting information provided to managers does not rank highly on these criteria, because some management accountants are tied to financial models of reporting. To regain their role as primary information provides, management accountants need to become more directly involved in the operation of data collection and reporting systems, and move closer to the managers they are serving (McKinnon & Bruns 1992). In light of the above statement, provide 5 examples of information that management accountants can provide to managers of CSL Limited to assist them in managing company resources (example, customer profitability analysis to identify the most important customers of CSL Limited) (250 words maximum-5 marks).
- Refer to the 2019 annual report of CSL Limited and answer the following questions.
I. Can you identify cost objects in the annual report? If so, what are they?
II. Can you identify a product cost in the annual report? If so, what is it? and how
much is it?
III. Identify three period costs, and explain why they are period costs.
IV. Would CSL Limited be able to make use of cost–volume–profit analysis within its
business operations? Explain.
V. Examine the segment information contained in the annual report and comment
on the results.
- After examining the annual report, conclude whether there is a budgetary system in operation in CSL Limited.
- What would be the key element driving a budgetary system for CSL Limited? What budgets might the company prepare?
(250 words maximum-15 marks).
- Marking Criteria
- Executive summary (5%)- Concise summary of the main points, arguments, conclusions, and recommendations.
- Introduction (5%)- Terms of reference (purpose of the report), methods and outline of report’s structure.
- Content (75%)-Relevant and specific description/discussion on the aspect(s) of the company that you analyse and clear demonstration of the application of management accounting practices in the given context. Good use of evidence to support the points made in the report.
- Conclusions (5%)- Concise summary of the main points, arguments, conclusions, and recommendations.
- Structure, Presentation and Style(5%)-Meets the required style and format requirement; academic writing style, clear expression, structure and readability; correct spelling, grammar, punctuation, length.
- Referencing (5%) Harvard style of referencing used within the body of the report and in the reference list. Referenced all materials, except student’s own, used in the report. Demonstrates knowledge of the subject matter with relevant and adequate citations.
- Style and Format
- The report must be word processed using 12-point font (Times New Roman), 1.5 line spaced, and 3 cm left and right hand margins. Justified texts.
- Use of appropriate headings, graphs, charts in the body of the report is encouraged.
- Ensure that you have the capacity to provide a duplicate copy, should this be requested. Problems with computers, printers, software, lost disks, etc, will NOT be accepted as
excuses for late submission. Always make a backup of your disks as you work.
- Pages are to be consecutively numbered.
- Referencing must follow an acceptable academic format using the Harvard style.
- Do not plagiarize. Plagiarism is the unacknowledged work of another person. Plagiarism
can result in zero marks or possibly expulsion.
- Assignments may be penalized for failure to meet any of these requirements.