Commonwealth Serum Laboratories Analysis & Recommendations

Questions: Part 1. Provide an executive summary which will include overview of subject matter, methods of analysis, findings and recommendations. Part 2. Use the latest annual report. The group will need to review the major sections of thisreport in order to be familiar with the content of each of the financial statements andappropriate footnotes. Review the balance sheet of the company and indicate the total amount of thefollowing: a) Current assetsb) Non-current assetsc) Current liabilitiesd) Non-current liabilitiese) Stockholders equity Answers: Part 1 Executive Summary The report helps in understanding the financial statements of Commonwealth Serum Laboratories (CSL). The company is a bio therapeutics company. It researches, manufactures and helps in development and delivery of new and innovative biotherapies which can be used to save lives of people and help them from life-dangering conditions. CSL currently employees in more than 30 countries and has 8 manufacturing sites. The company has a turnover of more than 5.5 billion annually with headquarters in Melbourne Australia. The company has more than 14000 employees and 1100 experts in the research and development areas. The company focuses on research and development and has planned on investing more than 2 billion in the next 5 years. The report contains the all the important financial statements and a comparative analysis with the previous year to understand the performance of the company in this financial year. For the balance sheet the various important parts: current assets, non-current assets, current liabilities, non-current liabilities and shareholders equity were analyzed. The value of the parts were noted and it was found that that the size of the balance sheet has increased this year from $6277.7 million to $6401.0 million. The current assets have increased for the company and the company will be able to quickly convert these assets into cash to pay off the liabilities. This is a good sign for the company. For Income statement, the gross profit margin of the company has increased. Also reduced selling and marketing expense and other general expenses while gaining more sales. Thus the performance of the company has been significantly better compared to 2014. From the cash flow statements, the cash earned by the company in 2015 due to operating activities has increased. Also the company has reduced cash outflow in financing activities but the company has increased the investment in intangible assets. Thus the overall cash position is good and it has sufficient cash to carry out its daily activities in the next year. The equity of the company has deceased because of its acquisition of Novartis. Thus the company has reduced reserves and contributing equity but the retained earnings of the company has grown by a significant amount which shows that the company is profitable and the overall health of the company looks good. Contents Part 1. 2 Executive Summary. 2 Introduction. 4 Part 2. 6 Balance Sheet. 6 Part 3. 9 Income Statement. 9 Part 4. 11 Cash Flow Statement. 11 Part 5. 13 Stockholders equity. 13 References. 14 Appendix. 15 Introduction CSL or Commonwealth Serum Laboratories is a bio therapeutics company. It researches, manufactures and helps in development and delivery of new and innovative biotherapies which can be used to save lives of people and help them from life-dangering conditions. CSL is a government body. It was started in 1916 in Melbourne Australia with main focus to produce vaccine. The main focus of CSL is invest in world class research and development (RD), have a high quality manufacturing facility and develop innovative biotherapies and other programs to support patients and save lives of the people with severe medical conditions. CSL currently operates in 30 countries and has more than 14000 employees. It has state of art plasma collection and manufacturing facilities with innovation as its central theme. The annual revenue earned by CSL has increased to $5.5 billion and it has more than 1100 experts in the RD department. It has 8 manufacturing facilities in the countries Australia, United States, United Kingdom, Switzerland, and Germany. The business of CSL can be divided into CSL Behring, bioCSL and RD. CSL Behring is the global leader in biotherapies. It has the biggest range of best quality products with main markets in North America, Europe, Asia and Australia. The company has specialty product and have changed treatment paradigms across the world. The treatment helps improving patients life from bleeding disorders to immunoglobin. The CSL plasma division of CSL behring has the worlds most efficient plasma collection networks. It has more than 120 centres in US and Europe. The company has extended the plasma centers to Hungary and opened 22 new collection centers. The company follows stringent international safety and quality standards in each step of the process. bioCSL has the worlds largest influenza vaccine facility. It manufactures influenza vaccines for the global markets. The influenza industry is US$4 billion industry and CSL has 40 years of manufacturing experience in this industry. It also operates a cold chain logistics business across the Australia for delivering the vacines and other medicines. It distributes antivenoms and Q fever vaccines in the Autralian markets. Research and Development is the main focus of the company. CSL has been heavily investing in RD. It the next 5 years it has planned to invest $ 2 billion in RD to support the existing licensed products of CSL and help in development of new therapies. It has built competency using recombinant technology to develop breakthrough medicines. CSL has invested in development of protein based medicines which can help in treatment of serious human diseases. They have their headquarters in Melbourne. The building was renovated and has sustainable features. The building has been awarded by Victorian Architecture Awards in June 2015. Part 2 Balance Sheet Balance sheet of a company summarizes the companys assets, liabilities and equity of the owner at that time. The balance sheet can be broken down into Assets, Liabilities and Shareholders Equity. The accounting equation every balance sheet follows is Assets = Liabilities + Shareholders Equity. The Assets are listed on the top of the balance sheet in the order of liquidity with assets more easily convertible to cash in the top. The assets can be classified as current assets and non current assets. The current assets are the assets which can be converted to cash in less than one year. Eg: cash and cash equivalents, account receivable, inventory, prepaid expenses and marketable securities. Non current assets are the assets which cannot be converted to cash in less than one year. Eg: Long term investments, fixed assets, and intangible assets. The liability is the money the company owes to different parties. The liabilities can be classified as current liabilities and non current liabilities. The current liabilities are the liabilities which has to be paid in less than one year. Non current liabilities are the liabilities which is not to be paid in less than one year. The last part of the balance sheet contains equity. It is the amount that is invested by the owners of the company to run the business. Retained earnings are the earnings from the business which is reinvested into the business for the growth of the business. It gives a clear way to realize if the assets are financed using the money borrowed from banks or other lenders or own money of the owners. General business have a small initial amount that is invested and has an acceptable method of calculating the profit which is withdrawn at the end of the period. But as the companies do not get cash when the start, they invest money to acquire various goods or equipment which are the assets for the company and will generate cash. These investments do not converted to cash immediately at the end of each period. In financial statements, Balance sheets are of critical importance for any company to carry out the financial analysis as it includes various diverse factors of accounting, economics and investments. It gives a precise version all the financial accounting of the company. It is a direct sign of financial health of the company. Taking the balance sheet for CSL into consideration, Current assets. The current assets consists of Cash and cash equivalents, trade and other receivables, inventories, current tax assets, other financial assets. The total current assets for CSL in 2015 = $3339.1 million. The total current assets for CSL in 2014 = $3207.6 million. % change in current asset = (3339.1 3207.6)/ 3207.6 = 4.10% Non-Current assets. The non-current assets consists of other receivables, other financial assets, property plant and equipment, deferred tax assets, intangible assets and retirement benefit assets. The total non-current assets for CSL in 2015 = $3061.9 million. The total non-current assets for CSL in 2014 = $3070.1 million. % change in non-current asset = (3061.9 3070.1)/ 3070.1 = - 0.27% Current liabilities: The current liabilities consists of trade and other payables, interest bearing liabilities, current tax liabilities, provisions, deferred government grants, derivative financial instruments. The total current liabilities for CSL in 2015 = $936.1 million. The total current liabilities for CSL in 2014 = $845.3 million. % change in current liabilities = (936.1 845.3)/ 845.3 = 10.74% Non-Current liabilities: The non-current liabilities consists of share based payments, interest bearing liabilities, deferred tax liabilities, provisions, deferred government grants and retirement benefit liabilities. The total non-current liabilities for CSL in 2015 = $2718.0 million. The total non-current liabilities for CSL in 2014 = $2270.4 million. % change in non-current liabilities = (2718.0 2270.4)/ 2270.4 = 19.71% Shareholders Equity: The shareholders equity consists of contributed equity, reserves and retained earnings. The total Equity for CSL in 2015 = $2746.9 million. The total Equity for CSL in 2014 = $3162.0 million. % change in total equity = (2746.9 3162)/ 3162 = -13.13% Thus it can be seen that the size of the balance sheet has increased from $6277.7 million to $6401.0 million. The current assets have increased for the company. Thus the company will be able to quickly convert these assets into cash to pay off the liabilities. This is a good sign for the company. The equity of the company has deceased because of its plan to acquire Novartis. Thus the company has reduced reserves and contributing equity but the retained earnings of the company has grown by a significant amount which shows that the company is profitable and the overall health of the company looks good. References Cash flow statement. (n.d.). Balance Sheet. (n.d.). Income statement. (n.d.). CSL Corporate profile. (n.d.). Wright,Tiffany. 2016. Companys financial performance.