Key Concepts and Questions

Ugh, trying to decipher my way through a 110 page Annual Report was an absolute nightmare! My company is Top Form International, a Bra company based out of Hong Kong. I felt a little unsettled about being assigned a bra company, mostly just because I am now probably going to spend my money there! It seems like a high end lingerie company in Hong Kong who do not currently have an online store. Anyway, here are my thoughts on my company:

Top Form International is a company that manufactures bras for sale. Initially, upon downloading the 2014 Annual Report for Top Form, I was overwhelmed by the sheer size of the document: 110 pages is a lot of reading! If I had tried to tackle this document before I attended the Week 2 lecture I would have been quite flabbergasted as the only experience I have with accounting was in grade 10 business education.

Upon first read, I was having trouble comprehending that when a figure is written in brackets on the statement of Profit or Loss, this means it is a liability. I just looked at it and had no clue as to why it was written that way. But then when I was reading the Consolidated Statement of Cash Flows it was reversed: increase/gain was in brackets. I have no comprehension of what is going on with these figures, it just confuses me. I haven’t even done my own taxes before; my experience with financials is quite minimal. Something else I also struggled with was the fact that it is written in Hong Kong dollars. I have no experience with foreign currencies. I understand that it’s the same principles as with Australian dollars, if a value is numerically higher than another it means there is more, but I couldn’t make an informed decision as to whether the figures given described a high volume company, a small company or somewhere in between as I have no idea what the conversion rate between Hong Kong and Australian dollars is. The consolidated reports were a little baffling. I feel as if I was being provided with too much information so that I would think the company is in a better financial position than it really is.

Areas that are important to me about the business are the inflow and outflow of cash as well as the volume of liabilities the company holds. I can see that the company’s equity has increased compared to the previous financial year, as they had made a loss in the previous financial year. It appears the company has made a turnaround, having reported a loss overall for 2013 and are now quite profitable. The challenge is keeping this up. It would appear from my untrained accounting eye that the company sold off some assets such as property in order to purchase investment properties in the hopes of generating more income. The company’s current strategy appears to be generating more income from other avenues in order to have the capital available to increase stock and become a higher volume business.