Business Commercialization: Variety Of Products Essay

Question:

Discuss about the Business Commercialization for Variety of Products.

Answer:

Introduction

Dyesol Limited is based in Australia and is engaged in the commercialization of solar cells that caters through a variety of products, as well as services that includes materials, consulting, R&D, training, manufacturing, etc. The performance of the company happens in three major steps that is the development of the partner and customer business, development of the glass application and engineering of the equipment. The main operation of the R&D business unit is to consider and research on the dry solar cell material and enhancement of the generic that is provided to variety of DC product forms. The main operations of the company are in Asia, Australia, Europe, and North America (Dyesol Ltd, 2016). The operation of the company and having a global presence has helped the company to enhance its reach and availability

A. Statement of Financial position

Total Current Assets

Total Current Assets

Current assets

2015

2014

Cash and cash equivalents

54,02,909

51,78,902

Term deposits

-

22,00,000

Trade and other receivables

36,48,014

30,28,561

Inventories

7,31,355

6,79,879

Other current assets

4,04,696

6,56,488

101,86,974

117,43,830

The total current assets declined and this is due to the maturity of the term deposits, decline in inventories. Going by the figures it is clear that there has been a decline of 3 percent. This will not affect the liquidity of the company because the current liabilities have declined simultaneously (Albrecht et.al 2011). Hence, it can be said that there has been a slight decline and will not affect the status of the company.

Total non-current assets

Total non-current assets

Non-current assets

2015

2014

Property, plant and equipment

8,91,667

6,51,918

Intangible assets

49,19,758

50,15,250

Investment in associate/ joint ventures

1,17,162

1,26,474

59,28,587

57,93,642

The total non-current assets of the company increased in 2015 indicating that the company invested in fixed assets and intangible assets. This proves that the company has invested keeping into consideration the long-term perspective. Moreover, the current percentage of non-current assets is 36.78% as compared to 33.03% in 2014 (Dyesol Ltd, 2016)

Total current liabilities

Current liabilities

2015

2014

Trade and other payables

20,72,710

19,14,705

Lease liabilities

1,07,404

-

Borrowings

8,53,617

4,43,272

Provisions

5,04,116

3,94,277

Total current liabilities

35,37,847

27,52,254

The current liabilities of the company increased in 2015 indicating that the company has more obligations. This can be cited due to increase in the provisions, borrowings, lease liabilities, and other payables. In the year the 2014, the current liabilities percentage was seen at 43% that increased to 56.24%.

Total non-current liabilities

Total non-current liabilities

2015

2014

Other payables

86,934

-

Lease liabilities

36,598

-

Borrowings

-

8,07,841

Provisions

3,00,907

2,99,990

Deferred tax liability

3,95,786

4,43,216

Total

8,20,225

15,51,047

The total non-current liabilities declined in the year 2015 and that can be attributed to the payment of borrowed funds. Further, a decline in the deferred tax liability even helped the lessening of the non-current liabilities. The percentage was 65.40% in the year 2014 that declined to 34.59% in 2015.

Total stockholder equity

Total stockholder equity

2015

2014

Contributed equity

1007,13,911

941,83,006

Reserves

69,00,934

63,10,656

Accumulated losses

-958,60,688

-872,66,647

Non-controlling interest

3,332

7,156

Total

117,57,489

132,34,171

The stockholder equity declined in 2015 as compared to 2014 and this is due to increase in the accumulated losses. Moreover, the non-controlling interest has declined that leads to lower shareholder equity. It is not good news for the shareholders as they are not in the company that has declining shareholder equity. As compared to 2014 where the percentage stood at 53%, it fell to 47% in 2015.

B. Stockholder equity

Total stockholder equity

2015

2014

Contributed equity

1007,13,911

941,83,006

Reserves

69,00,934

63,10,656

Accumulated losses

-958,60,688

-872,66,647

Non-controlling interest

3,332

7,156

Total

117,57,489

132,34,171

The contributed equity part increased in the year 2015 because Dyesol issued 33,333,333 shares to Tasnee for a whooping amount of $6 million in consideration of the subscription of the shares at $0.18 per share. The issue of shares led to an increment in the contributed equity part. Moreover, the accumulated losses enhanced in the year 2015 (Dyesol Ltd, 2016). Further, the decline in the part of the retained earnings led to severe fall in the stockholder equity part. This even led to decline in the total non-controlling interest that is visible in the notes to financial statement. In 2014, the total non-controlling stood at $7156 million while it was reduced to $3322 million in 2015. The stockholder equity percentage in 2014 stood at 53% while it was reduce to 47% in 2015.

C. Statement of Profit or Loss

Total Operating revenue

Total operating revenues

2015

2014

Loss

-120,79,686

-150,41,474

From the figures, it is clear that the company has incurred a loss. Operating revenue is the figure derived after the expenses are deducted from the gross profit. In this scenario, the loss has however declined in the year 2015. The loss percentage was 55.46% in the year 2014 that ultimately got reduced to 44.53% in 2015 (Dyesol Ltd, 2016).

Cost of goods sold

COGS

2015

2014

cost of goods sold

-6,12,898

-3,63,738

The cost of goods sold figure is negative in the year 2014 and further increased in negative terms in 2015. A sharp increment in the cost of goods sold figure has been seen in the above case.

Total expenses before income tax

total expenses before income tax

2015

2014

Interest revenue

1,38,594

1,93,777

Other income

4,77,341

6,91,094

Technical expenses

-68,14,703

-53,17,775

Administration and corporate expenses

-51,08,378

-47,34,315

Impairment of intangible assets

-66,732

-35,10,920

Marketing expenses

-10,65,511

-9,11,179

Borrowing costs

-74,886

-7,64,719

Intellectual property expenses

-3,83,639

-4,13,957

Share of losses of associate/ joint ventures

-9,312

-1,78,445

total

-120,79,686

-150,41,474

The total expenses before income tax during the year 2014 was high in terms of negative numbers on the contrary it reduced in the year 2015. Other income declined and other major expenses were reduced that ultimately led to a sharp fall in the year 2015. It was 55.46% in the year 2014 and reduced to 44.53% in 2015. These expenses enable the business to conduct its operations in a smooth and fair manner (Deegan, 2012).

Any non-operating gain or losses – NO

Earnings per common share

Earnings per share

2015

2014

EPS

2.7cents

5cents

The earnings per share of the company have fallen in 2015. It was 5 cents in 2014 but fell to 2.7 cents in 2015. The decline in the EPS indicates that the company was not able to match its cash flow as per the investors’ expectations. A decline in EPS hurts the sentiments of the investors and they become less interested (Christensen, 2011).

D. Statement of Cash flow

Net Cash inflow/outflow from operating activities

Cash Flow used in operating activities

2015

2014

Net cash used in operating activities

-76,36,808

-70,87,873

Percentage increase

51.86399624

48.1360038

Cash was used in operating activities in both the years. The receipts from customers have increased in the current year (Horngren, 2013). However, a new item that is interest paid came into picture. The percentage increment in the net cash used in operating activity projects that the company has conducted a strong business and hence, cash were used. In the year 2014, the percentage was 48.13% while increased to 51.86% in the year 2015.

Net Cash inflow/outflow from financing activities

Net Cash inflow/outflow from financing activities

2015

2014

Cash provided by financing activities

61,09,378

98,88,786

Cash flow from financing activities indicates that there has been a generation of cash from the financing activities (Davies & Crawford, 2012). The company has received borrowing proceeds. However, it repaid a major chunk of the borrowing hence, there has been a decline in 2015. Further issue of share was of high value in 2014 that was less in 2015. In 2014, the percentage was 61.8 that ultimately were reduced to 38.18% in 2015. Overall, the scenario remained positive, as cash is provided by the activity (Dyesol Ltd, 2016).

Net cash inflow/outflow from investing activities

Net cash used in investing activities

2015

2014

Total

17,99,620

-28,06,134

Net cash is used in investing activities in the 2014 however; in 2015, there was usage of cash. In 2015, the scenario is not the same as 2014 owing to the fact that there was less payment in the year 2015. The equity investment was nil in 2015, no loans were provided to joint venture. However, in terms of percentage the investing activity proved to be of less intensity. Overall, the used up cash in investing activities projects that the company has invested the amount in activities that will help the business in attaining a better position and hence, this is a strong point for the company (Merchant, 2012).

Net increase or decrease in cash during the year

Net increase or decrease in cash during the year

2015

2014

Net increase/(decrease) in cash and cash equivalents held

272190

-5221

In 2014 cash was used in the operations while in the year 2015, cash was generated during the year. This means that all the activities led to the cash generated and hence, it is positive for Dyesol as it has sufficient cash at the end.

Conclusion

From the above study, it is clear that Dyesol has not operated in optimum level. This can be well cited with the fact that the company has witnessed a reduction in the current assets on the contrary there has been an increment in the current liabilities that is not a valid combination for any company (Kaplan, 2011). This needs to be removed at the earliest. Moreover, the stockholder equity declined that reflects a mild situation for the company. The stockholder equity percentage in 2014 stood at 53% while it was reduce to 47% in 2015. Apart from this the profit and loss indicates the financial statement indicates that the company has incurred loss and hence it is not ideal. The earnings per share declined in 2015 that is a strong blow to the company and is not ideal for the purpose of investment because the shareholders are least interested in the company that has declining EPS as it projects weakness in the company (Brealey et. al, 2011). Moreover, the cash flow is not an ideal one and contains deficiencies. The importance of this study lies in the fact that the study is not dependent on any financial tools or techniques that will contain any deficiencies. It is done simply with the help of financial statements and with the help of percentage form in terms of comparison. Since, it is error free in nature, the result derived is free from any flaws. The result gathered from the above study for Dyesol is a clear cut eye opener for the management and hence, the management needs to have a proper emphasis and an in-depth look into the functioning else it will ruin the business as a whole (Brigham & Daves, 2012). In all probability, the management should strive to produce a strong plan and implement in no time.

Recommendation

From the above finding, it is evident that the performance of the company is under immense difficulties as the financial statements represent a weakness. Moreover, some of the weakness persists in the major items and hence a worry for the entire stakeholder group. The company failed to post a favourable return and it has declining earnings per share that is the biggest negative point for the company (Graham & Smart, 2012). The management needs to stress on the weakness point and try to improve the functioning of the company. Therefore, it is essential that the company should vouch for a strong management that will help in establishing a proper strategy that goes in the best interest of the company. However, to understand the total scenario in a better fashion, ratio analysis can be done that will represent a better picture and comparison will be in terms of numbers. This aids in differentiation and leads to a better understanding.

References

Albrecht, W., Stice, E. and Stice, J 2011, Financial accounting, Mason, OH: Thomson/South-Western.

Brealey, R., Myers, S. and Allen, F 2011, Principles of corporate finance, New York: McGraw-Hill/Irwin.

Brigham, E. & Daves, P 2012, Intermediate Financial Management , USA: Cengage

Brigham, E.F. & Ehrhardt, M.C 2011, Financial Management: Theory and Practice, USA: Cengage Learning.

Christensen, J 2011, ‘Good analytical research’, European Accounting Review, vol. 20, no. 1, pp. 41-51

Davies, T. and Crawford, I 2012, Financial accounting, Harlow, England: Pearson.

Deegan, C. M 2011, In Financial accounting theory, North Ryde, N.S.W: McGraw-Hill.

Dyesol Ltd 2016, Dyesol Ltd Annual Report 2015, viewed 6 September 2016,

Graham, J. and Smart, S 2012, Introduction to corporate finance, Australia: South-Western Cengage Learning.

Horngren, C 2013, Financial accounting, Frenchs Forest, N.S.W: Pearson Australia Group.

Kaplan, R.S 2011, ‘Accounting scholarship that advances professional knowledge and

Merchant, K. A 2012, ‘Making Management Accounting Research More Useful’, Pacific Accounting Review, vol. 24, no.3, pp. 1-34.

practice’, The Accounting Review, vol. 86, no.2, pp. 367–383.

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