Accounting Theory and Analysis - Tabcorp - Case Study Example

Student Name: Professor’s Name Course Title: Date of Submission Part A Company Assessment Email Tabcorp is one of Australia’s leading gambling entertainment corporations whose key business activities include gaming, wagering and casinos. The cash flow prospects are subject to regulations from the government as well as client gambling behavior. The main beneficiaries of the cash flow include the providers and employees, shareholders and governments. As concerns economic analysis, the financial statements may be confusing. It is a challenge to predict if the business shall prosper. The items within the balance sheet and income statement may not be true, however this is not the case with Tabcorp. The company comes along with strong fundamentals. Most of the listed companies come along with a lower mix for profitability and visibility. In the short term, the company has good fundamentals. Here, the strengths of the margin provide for strong levels of profit (Gitman, Juchau & Flanagan 97). The company has also been releasing figures which are above the slated expectations since inception. The forecasts of sales were also revised upwards and the stocks are currently within a long term rising trend above the technical level of support of 4.55 Australian dollars. On the down side, the shares are at their long term resistance considering the periodical data. As such, the potential is limited. Though, further bullish trends during crossing of the resistance would be positive as a signal. The other thing is, the company is not exactly generous with shareholders on distribution of the dividends or bonuses. On the overall, the corporation recently went through a transitional acquisition. By looking at the figures, they depict a lot of growth, which is true. However, it does not show the true value of the corporation. The growth is assets is dropping because of the drop in liquidity, but growth should increase in the mid to long term. Part B Letter of advice: Tabcorp sustainability and corporate social responsibility report From: Investment Ezy To: Tom I am writing this latter in regard to your request concerning the corporate social responsibility and sustainability evaluation of Tabcorp. In effect, it is to guide your investment approach and decision as it regards this company. The company is proud of its record on corporate social responsibility. It was recognized by the Dow Jones sustainability index as one of the global leaders in the gambling industry and one of the foremost leaders in the promotion of responsible gambling in the ratings done 5 years ago. Tabcorp has also been a big donor to the local Australian community and has provided significant donations for the sake of the Victorian Bushfire and Queensland flood causes. The company has more than 136,000 shareholders and the market capitalization is well within the top 100 Australian corporations within the ASX. Tabcorp is also a major Australian employer with about 2,500 workers (Tabcorp Holdings Limited 1). As such, our conclusion is that, the company is committed to responsibly and efficiently delivering its products to benefit all stakeholders. The company maintains a good relationship with the stakeholders in order to retain a good standing in the industry to promote environmental sustainability. The continuing commitment towards corporate social responsibility ended in the favorable assessment of Tabcorp by the inaugural FTSEGood ESG Ratings as one of the leaders in the global travel and leisure department as well as, the aforementioned Dow Jones Sustainability report. Tabcorp has made responsibility as one its core practices. They make proactive decisions in order to lessen the potential negative effects that gambling can have on the subscribers of its services. The company has responsible gambling protocols set in place for the gaming and wagering enterprises that are made to the specific requirements of the clients and they comply according to the relevant regulations of the industry. All of the employees and connected agents within the network receive responsible gambling trainings upon recruitment and refresher training is offered every year (Ronngard 1). This training consists of information on how to assess situations where the clients or even the workers may need support concerning their behavior in gambling. The corporation has a self-exclusion program and becomes available with an employee assistance program which supports gambling counseling services that is open to employees and clients. The training is supported by a responsible gambling connectivity program which comes along with newsletter and brochures in the work place and in the venues depending on the relevancy. Tabcorp Limited advocates for responsible gambling behavior among the workers and has an employee gambling policy that forbids the employees from gambling when they are on the clock, though this depends on small work related exceptions, but they also restrict gambling when the workers are off duty. During the past year, the company also promoted the Responsible Gambling Awareness Week operations within the local scene such as Queensland, Victoria and New South Wales. The employees and businesses provided about 3 million dollars in benefits for the local community causes as well as, charity organizations (Tabcorp Holdings Limited 1). This was inclusive of a 1 million dollar donation to the Premier Flood Relief Appeal after the floods caused a lot of damage in Queensland. The Queensland based workers of the company including the ones from the demerged casino enterprises also gave their expertise and time. The casinos also gave physical premises and hotel facilities and available services to the cause during the disaster. It is thus safe to say, the employee engagement has been inculcated within the stated culture for sustainability. The business unveiled the Tabcare program a year later in 2012 for the employees to contribute to the community in the form of initiatives which was matched fundraising and volunteering. The volunteer program allows the employees who are eligible to take one day off- paid volunteer leave each year so as to work with the community partners or a charity of their choice. Under the matched fundraising program, the company sets apart 200,000 dollars of the donations available to match the efforts of the employees in raising funds for the registration of charities. Four years from issuing, the program has come up with valuable program, has provided dividends for the communities and charities. Sean Gray, the shareholder relations and community projects executive claimed when the company first started the program, they were advised that 7 percent volunteer participation rate from the workers would be extremely beneficial. The feedback attained from the workers who have volunteered at the partner companies has been quite positive. At the same time, the company has provided a total of 91.5 million dollars to the State community benefit funds within Victoria, Queensland and New South Wales which was to assist in the delivery of the community facilities and services including roads, health facilities and other infrastructure developments within the community. Workers In order to achieve the strategies of the organization, the talent sustainability of the company focuses primarily on attracting and retaining quality personnel and also supporting the teams which are performing well. To allow the employees to meet their potential and the aims of the company, Tabcorp provides opportunities for development through the utilization of leadership experiences and training as well as promotions and other personal development opportunities. The workers realize good performance within the work environment and demonstrate values for integrity teamwork, client performance and innovations gain rewards through the Shine program (Tabcorp Holdings Limited 22). The code of conduct sets the behavioral and ethics regulations as expected from the workers and is founded according to the values of the company. The occupational health as well as the committees for safety throughout the company group and the board audit risk and compliance committees supervise the effective nature of policies and systems for the minimization of the work environment risks and promotion of safe and healthy work places. Environment Because of the demerger the Tabcorp corporation environmental footprint has reduced a significantly. The previous casino enterprise of Tabcorp is a representation of the environmental obligations that the company had to abide by which was a relation 80 percent of the energy consumption of the group as well as most of the water consumption. In spite of the changes, the Tabcorp group proceeds in its commitment to operating as efficiently as possible in the minimization of impact upon the environment. On the overall, the environmental obligations and discharge quotas are regulated under both the federal and state laws. The group has a record for complying and most of the time, it exceeds the environmental performance obligations. As of the present, there are no environmental braches which have been issued against the company by any government or international agency. Part C Supplier vs. client consideration in capital structure The link between the firms along the supply chain are determined by explicit and implicit contracts. These would affect the capital structure decision in a number of ways. The first is the debt level considering the investment of the customers and in this case the client. The supplier would like to make sure that all the bills are paid within the terms as stated in the contract agreement (Kale 150). The levels of analysis which are needed to make an informed decision depends on the supplier requesting the terms and the credit which is needed. The background analysis needed concerning the history of the company. Once the supplier has drawn specific conclusions concerning the soft information, it would be pertinent to focus attention according to the hard data which is the financial statement. Most of the time the financial statement analysis is going to confirm the preliminary impressions. Analysis of the financial statements also enables one to concentrate better according to the sources of payment. There are major cash sources for a business. These include the convertion of assets to cash which is known as the liquidity in the form of the current ratios. It is a measure of the ability of the corporation to pay the debt obligations and the margin of safety through the calculation of the relevant metrics. The current ratio is done using the current assets against the current liabilities which are available on the financial statements. The other measure the supplier would assess possibly would be the net profits which is a simpler and more direct signal. Obviously a higher net profit means the company’s operations are able to cover the costs of purchases and goods provided to still make a sizeable amount to reinvest in the operations. That would mean paying the suppliers would not be an issue. The suppliers should consider these two as the main symbols to assess the financial health of the corporation. Works Cited Kale, Jayant. Supplier/customer considerations in corporate financial decisions. Volume 26, Issue 3, September 2014, Pages 149–155 Ronngard, Harje. Tabcorp, A Lesson in Financial Statement Analysis. 4th Feb 2016. Retrieved Online. 2nd Oct 2016 Gitman, Lawrence., Juchau, Roger., Flanagan, Jack. Principles of Managerial Finance. New South Wales: Pearson Australia. Print Tabcorp Holdings Limited. Tabcorp to enter new era in Victorian Gambling Industry. 15 Aug 2012. Retrieved Online 2nd Oct 2016 Tabcorp Holdings Limited. Tabcorp Annual Report 2016. 4 Aug 2016.. Retrieved Online 2nd Oct 2016 Read More