Executive Summary

Now a days, commercial industries are increased in all places. There are many

competitions in all business and firms do not get in equal profit in all period, it may

change in every situation, we cannot predict it. Retail companies like Beacon Lighting

Group Limited (BLX) and VITA Group Consulting (VTG) have facing many problems in

their profits. However, they not only stayed in same progress but also, they increased

their company by more consumers, services, business. The main of this report is to find

out and analyze the financial report of Beacon Lighting Group (BLX) and VITA Group

Consulting for the financial year in 2019. This report will be explained with different

calculation of different ratios and find out, which of these firms has high liquid as well as

find the capital structure and asset management efficiency of these firms. It is also

comparing and identify the firms, which firms is earning more profits in their business

and shows about return on shareholder’s investment, return on assets and capital

expenditure. There a few of the limitations in this report are non-recording of the

intangible assets and it is related on special time and each firms follow various levels of

different accounting, therefore, report of these firms made better challenging and

chance to develop the confidence for working in any other firms.

Company Objectives and Long -Terms Plans.

Vita Group (VTX) is a popular marketing company into three various types and it was

the first firm which was introduced the mobile phone in Australian market, known as

Fone Zone. This firm got more than 120% of presence points in 2019. Vita Group has

various types of businesses, such as Artisan-Skin and wellness brand, Telstra-Telecom

and technology, Sprout- Technology accessories, SQD Athletica- Men’s Athletic wear in
2019, these are listed in ASX as Vita Group. Their business sales for the financial year

is $753.7 million and the net profit of VTG had $24.3 million in2019 (Vita Group

Consulting (2020) Annual Report 2019).

VITA Group has a lot of objectives for the financial year of 2020, they increased their

strong decision and communication technology channel, like as Telstra and Sprout.

They decided to increase the company profits and need to improve device and

accessory sales as well services. Sprout has a plan to introduce a new product and rise

their brand awareness (Vita Group Consulting (2020) Annual Report 2019).

Beacon Lighting Group is a famous firm in Australia. They assure the high qualities of

their products and they need the customer satisfaction. This firm always motivates their

employees for getting hire profits. The company maintained the coordination among

employees and give training to the employees efficiently, in the future also it is needed

to maintain to same level (Beacon Lighting Group Limited (2020) Annual Report 2019)

In 2020, this company want to continue the brand and increase the sales and services

of the lighting. This company planned to increase stores in different places in Australia

and in the future, they are thinking to introduce in different countries. It is needed to

bring new and variety models of products. This company want to develop products into

the online markets in 2020 (Beacon Lighting Group Limited (2020) Annual Report

2019).
 Financial Ratios
Sr no. Particulars 2019

1 Liquidity Ratios Ratio Ratios of

Current Ratio 0.798 VTG Group
Quick Ratio 0.548

Accounts receivable 29.304

Turnover
Inventory Turnover 21.688 times

2 Capital Structure

Ratios
Debt Ratio 49.5%

Interest Coverage 52.719 times

Ratio
3 Asset Management

Efficiency Ratios
Total Asset Turnover 3.518 times
Fixed Asset 31.293 times

Turnover
Equity Multiplier 1.982 times
4 Profitability Ratios

Gross profit Margin 30.472%

Operating Profit 4.559%

Margin
Net profit Margin 3.221%
Return on Asset 16.058%

Return on Equity 22.23%

Financial Ratios of BLX

Sr no. Particulars 2019

1 Liquidity Ratios

Current Ratio 1.738

Quick Ratio 0.559

Accounts 20.572
 receivable

Turnover
Inventory 1.289 times

Turnover
2 Capital Structure

Ratios

Debt Ratio 49.5.%

Interest Coverage 12.729times

Ratio
3 Asset

Management

Efficiency Ratios

Total Asset 1.494 times

Turnover
Fixed Asset 5.389 times

Turnover
Equity Multiplier 1.981 times

4 Profitability

Ratios

Gross profit 64.031%

Margin
Operating Profit 10.118%

Margin
 Net profit Margin 3.186%

Return on Asset 16.044%

Return on Equity 19.3%

Liquidity Ratio

By finding of companies’ liquidity into two ways, by comparing the firms’ current assets

to current liability is needed to calculate the current ratio and quick ratio. On the other

hand, it is researching the time is convenient can convert the liquid assets int cash of

the firm and it is necessary to calculate the account receivable turnover ratio and

inventory turnover ratio. It is discussing the current liquidity ratio compare between with

VTX and BLX.

The calculation data of the current ratio for VITA group is 0.798 and for BLX group is

1.73 in 2019 and the desirable ratio is 1. As the current ratio of the BLX has more than 1

compared with VTG. So, the BLX can solve easily short-term liabilities from their current

assets, because comparison between two companies, BLX group has more current

assets than VTG group therefore, so BLX group can make more liquidity than VTG

group, however there is an issue for BLX, it has more than desirable ratio because if a
company has more than desirable values it is also a problem that means, BLX has more

cash and they are not using efficiently. Therefore, it is needed to check the quick ratio.

The quick ratio of the VTG has 0.548 and the BLX has 0.559, BLX has quicker ratio

than VTG and both have less than desirable ratio, it is a problem to both firms, so it is

needed to calculate the accounts receivable turnover and inventory turnover.

The accounts receivable turnover ratio for the VTG has 29.304 and BLX has 20.57

accounts receivable turnover ratio, VTG has more accounts receivable turnover ratio

than BLX. Therefore, it is clearly ratio show VTG can make currents assets into cash

more than BLX. In addition, inventory turnover ratio for VTG has 21.688 times and for

BLX has 1.289 times. When a company has more accounts receivable turnover ratio, it

is better for that firm as well as a company has high inventory turnover ratio that

company gets more cash. However, in this situation BLX has more current ratio and

quick ratio than VTG but BLX has less accounts receivable turnover ratio and inventory

turnover ratio than VTX. By calculating with cash and cash equivalents dividing with

total current assets, which can analyses that firm who has more liquidity, from this

calculation, VTG has 34% liquidity and BLX has 18.064% liquidity. To conclude, VTG

has more liquidity than BLX.

Capital Structure

Capital structure ratio is needed for companies to find the source to buy their assets and

need to repay the interest on the debt by calculating the debt ratio and interest coverage

ratio. On the below, compares the capital structure between VTG firm and BLX firm by

using with debt ratio and interest coverage ratio.

 Debt ratio is indicating to calculate the percentage of the borrowing from the

purchased assets. The debt ratio of the VTG has 49.5% and BLX has almost similar

debt ratio. So, it is needed to calculate the interest coverage ratio of both companies,

then it may get the appropriate the calculation to find which firm has more capital

structure. Interest coverage ratio indicates to need to pay the interest of the liability. The

interest coverage ratio of the VTG has 52.719 times and for BLX has 12.729 times, so

VTG has more interest coverage ratio than BLX and from this it is clearly understand

that VTX can get the receivable amount properly from the customers and with this ratio

they utilizes to the debt but BLX cannot get proper amount from the consumers.

Asset Management Efficiency

Asset management efficiency of the company is used in its assets to raise the sales.

Furthermore, for calculating the asset management efficiency, it is essential to calculate

the fixed asset turnover, total asset turnover and the equity multiplier ratios.

Total asset turnover of VTG has 3.518 times and BLX has 1.494 times, VTG has more

total asset turnover than BLX. It is clearly mentioned that VTG can use better efficient

total assets to produce revenue than BLX.

The fixed asset turnover of VTG has 31.293 times and BLX has 5.389 times, it means

VTG has more fixed asset turnover than BLX. Therefore, it is clearly showed that VTG

is properly utilizing its total assets to produce sales more than BLX.

Operating Profitability

A firm’s skill to produce the sales for the expenses can be seen through profitability

ratio. The total expenses of the company’s performances can be do one by using with
profitability ratio. The overall rate of return on the total assets of the firms are available

in return on assets ratio. Therefore, it is needed to calculate the company, how it can be

utilized better on the total assets.

Return on asset of VTG has 16.58% and BLX has 16.044%, therefore VTG has more

return on asset than BLX because gross profit margin, operating profit margin of BLX

has more than VTG. The return on asset of BLX has very less expensive and BLX is not

utilizing the total asset also BLX has more operating profit margin than VTG. The gross

profit of VTG has 30.472% and BLX has 64.031%, BLX has more gross profit than VTG.

The total asset turnover ratio of VTX has 3.518 times and BLX has 1.494 times,

therefore VTG has greater total asset turnover than BLX. The cost of goods sold of BLX

is better than VLG.

Returns on shareholder’s investment

Investment or return on equity of the company is calculated by using with the net profit

and ordinary equity of the company.

Return on Equity for VTG has 22.23% and BLX has 19.3%, which indicates our

company has a more return on equity than the shareholders of VTG firm as well as net

profit margin of VTX is more than BLX, followed by, total asset turnover and equity

multiplier have almost same situation. Therefore, VTX has higher return on

shareholders’ investment than BLX. Equity multiplier also plays a vital role for borrowing

financed from debt use and helps firms attract the VTG Into More

Company ROE Net Profit Total Asset Equity

 Margin Turnover Multiplier
VTX 22.23% 3.221% 3.518% 1.982%
BLX 19.3% 3.186% 1.494% 1.981%

Capital Expenditure

Capital Expenditure is the equity for a firm to but non-current assets such as property,

plant and equipment comparison between the capital expenditures of VTG and BLX for

this year 2018 and 2019. The capital expenditure of VTG has 16962 in 2019 and in

2018 it has 5563, so the difference of the two period is 16962.The capital expenditure of

BLX has 16147 in 2019 and in 2018 has 29862, so the two different two period is

13715. Therefore, we can understand clearly that VTG has more capital expenditure

than BLX.

conclusion

This report of the VTG and BLX become challenged to conclude. By calculating the

report of Liquid ratio BLX has more than desirable value but VTG has less than

desirable value in the current ratio therefore it is needed to increase the current ratio of

VLG also should reduce the desirable value of the current ratio for BLX. The quick ratio

also same that BLX has more than VLX, in accounts receivable turnover ratio and

Inventory ratio is to be vice versa, The capital structure of VTG has more ratio in debt

ratio and in interest coverage ratio than BLX, there BLX is needed to increase the

capital structure. By calculating the asset management efficiency, VTG has more total

turnover ratio and fixed turnover ratio than BLX. Calculating the returns on
shareholder’s investment, VTG is higher than BLX, therefore it is recommended to

improve in return on investment, net profit margin, total asset turnover and in equity

multiplier. Finally, the calculation of capital expenditure, VTG is greater than BLX. To

conclude overall calculating the ratio VTG is higher than BLX and BLX is needed to

improve in the future in most of the part.