Report on Financial results of Dunedin

Wines Ltd.

Submitted to Mr.Shan
Name- Amandeep kaur
Student ID 15012233
Unit Standard -11624

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Title page

Introduction
.(3)
Executive summary
.(3)
Findings
.(4-6)
Conclusion
(7)
Recommendation
.(7)

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Introduction
The main purpose of the report is to provide analysis of Dunedin
wines Ltds current position in comparison to Christchurch Wines
limited. This is made in attempt to give management information
regarding current financial status of the Dunedins to overseas
buyers. The report contains analyses of financial situation and
providing a detailed based on nature of solvency test and its
implications to Dunedin Wines Ltd. This includes the calculations
of the ratios to measure the profitability, asset utilization, working
capital management, long term financial stability and financial
markets. Mostly it is comparing two main competitors in wines
industry.

Executive summary.
Dunedin Wines ltd and Christchurch wines limited are Main
competitors in the market. As Dunedin wines has been producing
boutique wines for the Newzealand for 1975 and market and has
been very successful overseas. Mark smith and Susan Appleby
are current owners of this company . They have business with
overseas such as Australia and U.K. Current owners are looking to
move away from the wine producing business and venture into
something less challenging .As they need to fulfill inquiry of
overseas buyers .Inquiry needs to be done regarding Dunedins
current position in relation to a competitor in two constructive
years mainly 2012 and 2013 .This analysis contains ratios
calculations to measure the profitability, asset utilization, working
capital and financial market.

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Findings
Profitability ratios, working capital and Asset utilization between
Dunedin wines Ltd and Christchurch wines ltd .This comparison
was done on the basis of two years namely 2012-2013 .The
findings for the process are given below
1. Profitability ratio
This ratio calculation calculates the companys performance and
future capacity to earn profits and profits which are left from
income earned after deducted all costs and expenses related to
earning the income. It can be calculated in gross profit margin
and, Net profit etc. As we done calculations it showed that
Percentage change in sales in Dunedin in 2012 was 2.30% and
2013 it was 0.99% .Whereas, percentage change in sales of
Christchurch in 2012 was 16% and in 2013 it was 7.47%. Both
companies are doing not good in sales maximization but when we
compare both companies it shows that Dunedin wines is going
smooth than Christchurch wines limited . Gross profit percentage
change in Dunedin in 2012 was 52.1% and in 2013 it was
51.4%.Wheras, Gross profit percentage change in Christchurch in
2012 was 27.79% and in 2013 it was 28.70%.This shows Dunedin
wines ltd is doing better in gross margin rather than Christchurch
wines Ltd. Net profit change in Dunedin in 2012 was 8.87% and in
2013 it was 8.10%.Wheras in Christchurch it was 21.1% in 2012
and 22.1% in 2013. In this situation Christchurch wines ltd is
doing better than Dunedin wines ltd. When we compare both
Dunedin and Christchurch wines ltd is better for net profits in both
years .So compare to both companys profitability ,Christchurch
wines is more profitable and better that Dunedin wines ltd .

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2. Working capital
Working capital ratio measures the companys efficiency it acts as
alarm system for whether a company has enough short term
assets to cover their short term debt. This can be calculated by
two methods namely Current ratio and quick asset ratio. It
included short term investments, inventories and cash .It also
includes account payable, accrued liabilities .As we see
calculations Current ratio change in Dunedin in 2012 was 0.88:1%
whereas in 2013 it was 0.87:1%.Chrischarch it was low as
compared to Dunedin .It was 0.68:1in 2012 and 0.67:1 in 2013.
When we compare then we see that Dunedin ltd is better than the
Christchurch wines ltd. Liquid ratio change in Dunedin in 2012
was 0.622:1 whereas in 2013 it was 0.60:1 .In Christchurch it was
0.47:1 in 2012 and 0.46:1 in 2013 . By comparing both
companies Dunedin ltd have better quick asset ratio rather than
Christchurch wines ltd.

3. Asset utilization.
Asset utilization measures the efficiency of a business by using its
assets to make money in future. We can calculate inventory
turnover found by the cost of produce the goods sold during a
specific time period by average value of the business product
inventory during the same period. Inventory turnover in Dunedin
in 2012 was 7.61 times and in 2013 it was 7.41 times.
Christchurch showed 24.5 times in 2012 and 2.5 times in 2013.
This result shows that Christchurch wines show better results than
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Dunedin wines ltd. As we go to day sales inventory in Dunedin in

2012 was 48.46 and in 2013 it was 50.19. In Christchurch it was
15.10 in 2012 and 14.96 in 2013. So Christchurch Ltd is better
than the Dunedin ltd for the asset utilization.

4. Long-term financial stability

This calculates ratio count that how much debt company can
support and also maintains debt and equity equilibrium .The main
long term financial stability ratios are debt to equity ratio and
debt to asset ratio. We calculated debt to equity ratio which was
0.74:1 in 2012 and 0.84:1% in 2013 in Dunedin wines limited. In
Christchurch it was 1.08:1in 2012 and 0.01:1 in 2013.Increase in
debt to equity ratio is not at all good for smooth running of the
business. In this case when we compare to both of this company
we could says that Christchurch wines ltd is far better than
Dunedin Wines Ltd. Proprietor ship ratio in Dunedin wines ltd in
2012 was 0.43. Where in 2013 it was 0.40.Chrischruch showed
lower result as it was 0.26 in 2012 and 0.25 in 2013.So both
companies have not better debt to asset ratio but Dunedin ltd is
better in position than Christchurch.

Financial Market
Financial market is the place where buyers and sellers participate
in the trade of assets such as equities, bonds and dividends.
Earnings per share and dividend per share are two main parts of
financial markets. Dividend per share can be calculated by
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dividend paid to shareholder divided by numbers of shares. As we

go through, Earnings per share in Dunedin in 2012 was 0.30
whereas in 2013 it was 0.274r share .In Christchurch it was $1&18
dollar in 2012 and in 2013 it was $1&32dollers .Dividend per
share in Dunedin in 2012 it was 30cents per shares in 2013 20
cents per share whereas it Christchurch it was $1&18dollers in
2012 and in 2013 it was .70cents per share in 2013.This shows
decease in DPS. So, by comparing both companies Christchurch
wine ltd shows better DPS compare to Dunedin Ltd.

Conclusion
Dunedin wines ltd has higher assets as compared to
Christchurch .However, Dunedin has good profit than
Christchurch. Christchurch Is higher some profit at 52.1% and
they higher current sale of 2.30% in the year 2013. At the end we
can say that it is good to invest in Dunedin wines ltd rather than
Christchurch ltd. Long term financial stability .Working capital
ratio and assets utilization ratios are in favor of Dunedin.

Recommendations
It is good to invest in Dunedin wines ltd rather that Christchurch
ltd. Long term financial stability .Working capital ratio and assets
utilization ratios are in favor at Dunedin wines ltd. Also there
should be calculation of ratios on yearly basis to check companys
profitability and stability in the market. Dunedin Ltd needs to
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grow their wines market increase sales and for net profit. Also
earning per share and dividend per share needs to increase it
shows less number per share so Dunedin Wines Ltd needs to
improve it.

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