Financial Statement Analysis Of The Blackmore Company Finance Essay

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A firms earning capability and financial position can be predicted, compared and evaluated with the help of analysis of information available in the major financial statements i.e., balance sheet and income sheet. Balance sheet indicates the firms’ financial condition or the state of affairs of the business where as Income sheet reflects earning capacity and financial strength of a firm. To practically implement the knowledge gained so far about these financial statements, and to perform the analysis on a realistic data; the following study has been conducted on the firm Blackmore.

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Blackmore, being a leading supplier of different products which includes equipment, plastic trays to the horticulture industry; had faced great loses despite of increasing plant capacity and undergoing new market campaigns. This study tries to analyze the financial statements of Blackmore and comment on the changes that could be taken for surviving and establishing itself as a profitable business.

Contents

Introduction

Company’s financial information is foundation of financial planning & analysis which is needed to predict, compare and evaluate a firms’ earning ability. This financial information is provided in the company’s financial statements or accounting reports i.e., balance sheet, income sheet and cash flow statement. Balance sheet and Income sheet are amongst the most significant financial statements, used to determine the financial condition and financial strength of a firm. Balance sheet provides information about assets, liabilities and owners’ equity for a business firm as on a specific date. It reflects the financial position of the firm at the close of the firm’s accounting period. Income sheet presents summary of revenues, expenses and net income of a firm. It acts a measure of firm’s profitability. Financial health of the firm can be judged by proper financial analysis. Financial analysis needs careful relation establishment between different financial statements like balance sheet and the income statements. Relative analysis of items of cash flow statement, income statement & balance sheet gives clear view of financial health of organization.

Blackmore is a leading supplier company of different items like equipments. It had recently increased plant capacity and had undertaken a new market campaign to go national. Despite of these efforts, it had faced great losses in the year 2008 and is concerned about its survival. Faisal, Blackmore’s chairman, who is planning to bring back the firm into sound financial position, has appointed Hazza as his assistant. Examining the monthly data and comparing it with the annual data, Hazza found that the lags between spending money and deriving benefits were longer than that of Blackmore’s managers had anticipated. Thus, they could see a hope for the company if it could survive in the short run. This study proceeds further, to help Hazza by analyzing the balance and income sheets of the firm and commenting on further proceedings.

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