accountbuster.files.wordpress.com€¦ · web viewthis joint venture was formed with the initial...

ACCT10559 Accounting Learning & Online Communication

Ass#1 Step 2 - 6

S0049661 Toni Daniel

STEP 2 Moodle Profile & Blog

Moodle Profile:https://moodle.cqu.edu.au/user/profile.php?id=70206

Blog:http://accountbuster.wordpress.com

STEP 3 My Company

Website Link: http://www.gazal.com.au

2017 Annual Report: https://accountbuster.files.wordpress.com/2018/03/gazal-annual-report-2017.pdf



The company that I have been assigned, GAZAL CORPORATION LTD is branded simply as GAZAL. GAZAL is a clothing retailer, who specialises in both developing and marketing national and international brands, distributing both at a wholesale and retail level, including clothing such as Intimates, Outerwear and Accessories.

Though initially, as I am certainly no fashionista, I was quite disappointed with my assigned company, the more that I read and researched GAZAL, the more intrigued I became with it.

GAZAL was founded in 1958 by Joe Gazal who built, developed and grew the company. In the early days Joe travelled extensively sourcing fabric and garments, particularly in China and its main business was mens, ladies and childrens clothing. It was a family owned company that was first floated on the Australian Stock Exchange in 1973. The family later bought back the minority shares and it once again became a family owned entity, only to be relisted on the ASX in 1987. Joe Gazal died in 1989 and the eldest son, Michael Gazal was appointed the Managing Director to later become the Executive Chairman, along with one of his brothers David Gazal who is the Executive Director of GAZAL.

GAZAL has over the last 60 years grown its business exponentially and today is a leading Australian branded clothing company, marketing both company owned and licensed brands including Bisley (recently sold), Lovable, Davenport, Van Heusen, Tommy Hilfiger, Pierre Cardin and Calvin Klein. GAZAL was and still is one of the major players in the Australian clothing industry and helped shape it to what it is today.

In 2013, GAZAL announced the formation of a joint venture with US Company PVH Corp; PVH Brands Australia Pty Limited, which took effect in early 2014. This joint venture was formed with the initial focus of having the PVH Brand, Calvin Klein, marketed and expanded in the Australian, New Zealand and South Pacific island nations. While the license term for Calvin Klein was initially 20 years, the joint venture company has already extended its licenses to include the brands Tommy Hilfiger and Van Heusen.

One of the Key Concepts I found while reading the latest Annual Report for GAZAL was the great emphasis that is placed on the remuneration for the directors and executives, the contracts involved and the comparisons between the Long Term Incentives (LTI) and Short Term Incentives (STI), with the performance of the company.

The graph below, taken from the Directors Notes, clearly shows the LTI and STI remuneration in comparison with both the dividend returns and earnings per share over the last five financial years.

It helped me understand that the company must provide validation to the remunerations rewarded to the directors and executives and left me with hope that one day our Australian Government might transparently do the same.

It is also noted with interest, the Shareholding of key personnel and executives total approximately 61% of all shareholding. This includes the two descendants of the founder, Michael & David Gazal, collectively owning almost 56% of all shares. On top of this the joint venture partner PVH Corp own another 10%. The remaining shares are publicly owned. This shows me that the key management and executives would always make business decisions in the best interest of the company and all its shareholders as they too are directly affected.

Observing a dividend of 8 cents per share fully franked, which based on their current share price of $2.12 is about 3.7%, which is not bad for a half year return. (I might have to investigate that one further.)

It was documented in the Directors reports that a fall in the Australian Dollar, and the USD exchange rate has resulted in lower profit margins, despite increased sales. This was caused by current contract pricing. It was also noted that it is expected that a decline in USD exchange rate will continue to affect import pricing to the extent that overseas purchases are not sufficiently hedged. I find it interesting that a multimillion dollar company such as GAZAL that is importing stock and dealing with the USD exchange rate fluctuations would not already have stipulations in their purchasing contracts to counteract exchange rate fluctuations, or perhaps manage it through their own USD bank accounts and transacting in the same currency. Though, as they had a fall in Current Cash & Equivalents in over $10M between the 2016 and 2017 financial years, perhaps this was not a possibility.

The increase in revenue, compared to profit is also clearly shown in the Income Statement, with the increase in sales from 2016 to 2017 being just over $2.5M, with a shortfall in gross profit of $227K. As the director has noted the reasons behind these lower profit margins, we are not left wondering why.

Also, interestingly, as joint venture brand partner, PVH Corp is listed in the New York Stock Exchange and has a financial calendar ending on or around the 31st January each year, GAZAL provided information that going forward they would align themselves with this calendar (and the retail industry generally) and in future will close their financial year on the 31st January also. While this has not affected the reports I am working with, I found it to be a key concept as I have read and heard other fellow students having different calendar years to work with. While I have no personal experience with reporting under a different financial calendar, I understand that it would be helpful to GAZAL to report concurrently with their international partner and other competitors to enable more comparable reporting methods.

So, while there is some doom and gloom in the news, (here), which seems to be in alignment with the retail industry in general (here), Gazal are still moving onward and upward. Their share price is remaining stable (Share Price), they are continuing to buy and sell brands, it seems to be business as usual.

All in all, despite my initial reserves, I was pretty happy with my company. It is good to see an Australian company, started from the ground up, doing so very well and continuing to flourish. Plus, I may have found a new investment!

PEER DISCUSSIONS

While initially I admit that I was extremely reserved about interaction with my fellow peers, I found that it has actually not been as terrible as I first thought it would be. I have found that reading about other students worries and concerns, such as times frames and lack of time, helped allay my own concerns. I have also found that reading through some of the messages on Face Book, posting one question myself as well as answering a couple, has helped me move through this subject. Both giving and receiving advice regarding our assignment, through personal email, forum, Face Book and blog, has helped me realise the requirements and progress ahead.

I also found the feedback from Studiosity quite helpful. I made a few changes based on the feedback, such as incorrect sentence structure etc. It is definitely a service a will be utilising again in the future.

Personal Blog Posts:

https://wordpress.com/comments/all/accountbuster.wordpress.com/37

Comments left on other peers blogs:

https://alatebloomer1981.wordpress.com/2018/03/25/116/comment-page-1/#comment-49

TOP 3 BLOGS

I have to admit that I really dont have time to actively follow blogs and there is probably only one, which yes, is my favourite, that has a few times caught my eye. So, in order to list my top 3, I had to actively do a little snooping!

1. Christine Smith A Late Bloomer

Yes, this one is both in my Top 3 and my favourite. Christines blog is visually appealing and very well written. I find her writing to be very relatable as she seems to be a stressor too! Christine has a wonderful engaging style of writing while adding visually appealing pictures in each post. She is an active blogger while also actively commenting on other blogs. Definitely my number one.

2. Rebecca Byrne - Besunijourney

This is possibly the most visually appealing blog that I have seen, it suits my taste and style. Bec has a wonderful way of writing, that kept me reading the whole blog! I can relate to the busy working Mum dealing with the hazards of in sickness and in health, putting yourself last and having to deal with the backlog after. Very nice blog, no doubt will be visited again!

3. Emily Smith An Accounting Journey

Emily is an active blogger with a lovely writing style. Emily keeps her blog visually appealing with great pictures added to each post and it kept me reading throughout the blog. She seems to be quite thoughtful about what she writes as well as reaching out and asking for opinions. Very interesting blog, a good read.

STEP 4 Company Financial Statements

Attached Separately in excel format

STEP 5 KCQs Ch2 & 3.1/3.2

I enjoyed reading about the Rules of the Game. Martin writes that during the 19th Century, regulatory rules were developed to ensure that companies comply with the rules of accounting and to produce financial statements for public consumption. Due to the needs of interested external parties, such as banks and investors, certain legislation was established, such as the Securities Act 1933 as well as the Securities & Exchange Commission in 1934 to force companies to provide that financial information.

To me, as an individual applying for loans, as an investor in both property in shares, as well as a bookkeeper who does work for a wide array of entities, I find it interesting and hard to fathom that in historical times, a companys financial information was not prepared and collated in industry standard (and therefore comparable) ways and was NOT available to these parties.

As an individual I cannot imagine trying to apply for a loan from a bank for a potential rental property, without that bank wanting to know the ins and outs of my financial securities, i.e. how much money I make, how much money I owe, how much capital I own, potential revenue of that investment etc etc. This is all information that I have ready at hand, as I know I must provide this to be able to obtain a loan.

Likewise, I cannot imagine investing money in shares, without knowing the ins and outs of the company that I am wanting to invest in. I have access to their financial statements, I have access through the internet to any news stories that might have come up about that company and I have access to their share and dividend history. I would not buy shares in a company without first perusing all this available information. Not to say that all my investment choices have been profitable, however they have been educated!

Also, as a bookkeeper who helps create the reports for the firms that I work for, I cannot imagine the days, where all these reports were not required. Both for the sake of the owners of the company, so that they know where they are at, as well as being able to provide information on their behalf, when required, for example a bank requiring this for a potential loan or lease.

I believe that these changes helped form the backbone of the financial and accounting industry as it stands today.

Another key concept in Chapter 2 for me was the section on Accrual Accounting. Martin describes accrual accounting as recognising the sale or revenue for an item when the transaction actually occurs, not when money changes hands. He uses the example of a prepaid bus card, with the transaction actually occurring when he uses the bus, rather than at the time of putting extra dollars on his card. Using my experience as a bookkeeper, I understand this concept as I still do Cash Reporting for a few little firms, while all the bigger firms utilise accrual accounting. I do believe that accrual accounting is a better way of reporting, as we recognise the transactions as and when they occur, not as and when they are paid for.

An example I will use to explain this, is an engineering firm doing a big job that will cost them a week of wages and a lot of materials, that they will charge out upon completion, but if they get paid on time, it will not be for another 30 days. The job is started in the middle of the month. The labour is paid for at the time of the job, as wages are paid weekly. Some of the materials are paid for immediately, as they are paid on credit card, while some are put on account and are paid for in 30 days time. The invoice for the job is sent to the customer upon completion however that customer is lagging in their payments and does not pay for another 55 days.

If I was reporting using Accrual Reporting, the expenses are recognised as they occur (wages upon being paid and materials as they are entered into the accounting program on the date they are bought) while the revenue is being recognised on completion of the job, upon invoicing. This style of reporting matches the expenses and revenues and will clearly show if money is being made.

If I was using Cash Reporting, this one job would be looked at through the Profit and Loss reports, over a timeframe of 2 months, as this is how long the process is completed in the cash cycle. How can a business possibly know if they are making money like this! The expenses and revenue are not being matched up.

While this example is certainly over simplifying the whole concept, I believe that Accrual Reporting is by far the correct way of recognising expenses and revenues, that is, as and when they occur.

I liked Martins analogy on a firms accounting as it being forever a dance with others, and that it is a constant hive of activity with fluid changes and challenges arising. I agree wholeheartedly with this analogy. I believe that a business, even a slow-moving business is never sitting still. There is always something happening in order for it to move onwards and hopefully upwards. These movements are shown in both the profit and loss reports and the balance sheet reports. If a sale is made, revenue is increased (P&L-CR), therefore either the cash account (BalSht-DR) or the Debtor account (BalSht-DR) is increased. If an inventory item is bought, the inventory account is increased (BalSht-DR) while the credit card account is increased (BalSht-CR) or a Creditor account is increased (BalSht-CR). Everything is fluid, everything is balancing.

I also agree that one of the exciting things about running a business is facing the challenges that arise each day. These challenges are what makes a business REAL. They are what determines if it succeeds or fails. These challenges range from competitors and pricing in the field, to the quality and product demand of the goods being sold, to the quality of staff being employed, to the quality of the marketing being utilised. These challenges are the nitty gritty of the business, it is the interesting stuff! So yes, some business may be more boring than others, but they have all have the nitty gritty. It is the nitty gritty that I Love!

STEP 6 Peer Feedback

I have both given and received feedback with three of my peers. I feel that the feedback I have been given has enabled me to view my own work through the eyes of a third party. While I did not agree with everything that was said, I did find myself making small changes, double checking links etc. Unfortunately, when I posted my draft work, I had not yet done KCQs for Step 5 and after receiving feedback, realise that feedback on this would have been valuable also. Both the negative and positive feedback was highly useful, taken on board, appreciated and utilised. I must admit that this style of interactive learning is actually not too bad!

Feedback From: Toni Daniel

Feedback To: Christine Smith

My Comments

Step 1

KCQs

KCQs on Chapter 1 are great. I enjoyed reading it, you have a great writing style and show a lot of yourself in your writing.

Step 2

Your introduction and description on yourself is enjoyable, I feel that I know you from reading it, which is wonderful.

Your photo included is lovely.

Your blog links all work well.

Introductory words in Description box

Photo and description

Link to your blog/Set up blog

Step 3

I enjoyed reading your intro on your company, I could feel your initial disappointment as it mirrored my own! Background information on the company was precise and detailed, I felt as if I knew a lot about it just by reading this. I think your KCQs show that you have read a lot about the company and studied their financial statements. You did have a lot of Qs but considering that we are in Introduction to Accounting I guess everyone would.

You are an active blogger, kindly and considerately commenting on others blogs. Your own blog is Wonderful, it is colourful both with the pictures and the writing as well as being very relatable.

Background information on company

Comments/KCQs

Comments on others blogs

Step 4

Not available

Input companys financial statements

Step 5

Your KCQs for Step 5 seemed to encompass the entire Chapter. It was well worded and showed your growing understanding for the rules and concepts of accounting, using both your experience so far as well as outside research and relating it to your company.

KCQs

Step 6

Individual feedback with others

Not available

Overall ASS#1

I think it is well written, relevant and enjoyable. It shows your developing understanding for the accounting world. Well done!


Feedback To: Jacqueline Watts .

My Comments

Step 1

KCQs

N/A

Step 2

Your moodle profile made realise your challenges and struggles in life. While I cannot fathom how you have time to study a university degree, I see it is not your first! Your photo tells me that you like to get your photo taken as much as I do.

Your blog links were all good.

Photos on your blog were lovely.




Step 3

Background info on Crowdspark was enough so that I felt I had a handle on what they do, even though I too am tech NOT. I see from your KCQs that you have put a lot of research into your company, both in the financial reports and out of them. You also put a lot of thought into what we are learning and used this to relate to your company.

Your wordpress links did not seem to work for me, this might be my computer, but it may be worth checking out.


Comments/KCQs


Step 4

I could not see a link to your financials so could not compare to your spreadsheet. Your closing balance for 2014 is not the same as opening for 2015 in your Move in Equity. It should be, might be worth double checking, or at least noting on the side of the sheet.

Another student has noted to me that my consolidated revenue should be broken down using the notes, I am yet to do this, but will before handing it in. I note that your revenue is also consolidated.


Step 5

Not Available.

KCQs

Step 6


Not Available.

Overall ASS#1

I really enjoyed reading your assignment Jacqui, I thought it was well written and showed a lot of work and thought was put into it. It showed that you put a lot of thought into what we are learning and used this to relate to your company. Well done!


Feedback To: Wendy Konstas

My Comments

Step 1

KCQs

KCQs on Ass1Ch1 were great. Great coverage of the reading material and easy to see it through your eyes. You helped me see where you were at with accounting and your level of understanding as well as your interest in the journey to learn more.

Step 2

Your Moodle profile told me what you are studying and where you are up to with it.

Your photo included was very professional and lovely.

Blog link was good, but the Misc View blog entries did not seem to work.




Step 3

Background info provided on the company was very encompassing of their business ventures and clearly detailed what each division was of the business does.

Your KCQs showed that you put a lot of research and thought into the company, through deciphering the financial statements and your understanding of that, as well as some of the notes on the financials.

You listed your fave blogs, (cannot understand why mine is one, but thank you!) and I will be sure to check out your number 1. I note that you are actively commenting on other blogs as well as Facebook, very positively and considerately.


Comments/KCQs


Step 4

Your financial spreadsheet looked good to me. Another student noted on mine that I need to break down the Revenue, using the notes. I am yet to do this. Yours looks like it is also consolidated and might need the same.


Step 5

Not available.

KCQs

Step 6


Not available.

Overall ASS#1

Great work Wendy! I think it is very well written, easy to follow and easy to to read.

accountbuster.files.wordpress.com€¦ · web viewthis joint venture was formed with the initial...

Documents