Breville Case Study
Contents
Executive Summary 2
Business and Strategic Analysis 3
1. Economic Analysis 3
2 Industry Analysis 4
3 Competitive Strategy 6
4 Industry and company’s potential 7
Accounting analysis 9
Step 1: Identify Key Accounting Policies 9
Step 2: Accounting Flexibility 10
Step 3: Evaluate accounting strategy 11
Step 4: Quality of disclosure 12
Step 5: Potential red flags 12
Step 6: Undo accounting distortion 13
Financial Analysis 13
1. Profitability 13
2. Liquidity 14
3. Solvency 16
4. Efficiency 17
5 Cash flow analysis 18
Reference 20
Appendix 23
Executive Summary
Breville Group (BRG) is a market leader in the kitchen appliances industry according to the Investor Presentation of BRG in 2012. We had classified BRG as a company in the consumer discretionary group as accordance to the Australian Stock Exchange (ASX). In this report, we will investigate BRG mainly from its annual reports up till 2011.
We will first analyze the economic environment BRG is facing from various macro-economic data. We will then take a deeper look into BRG's strategy and the industry characteristics using Porter's Five Forces. With all these information, we will analyze the industry and company's potential and whether BRG will be profitable in the near future.
Besides business and strategic analysis, we will put emphasis in investigating the accounting policies and quality of BRG's financial statements. With the financial statements, we will calculate various ratios and compare it with its peer, which we choice G.U.D Holdings Limited (GUD). By making comparisons, we can have further information to make conclusions.
We had concluded that BRG although is in a low potential industry, BRG itself is a high potential company due to its success business strategy in differentiation of products, a healthy balance sheet in this volatile economy and we did not spot significant red flags which may hide the truth of the company. The share price of BRG rose from AUD3 to
Executive Summary 2
Business and Strategic Analysis 3
1. Economic Analysis 3
2 Industry Analysis 4
3 Competitive Strategy 6
4 Industry and company’s potential 7
Accounting analysis 9
Step 1: Identify Key Accounting Policies 9
Step 2: Accounting Flexibility 10
Step 3: Evaluate accounting strategy 11
Step 4: Quality of disclosure 12
Step 5: Potential red flags 12
Step 6: Undo accounting distortion 13
Financial Analysis 13
1. Profitability 13
2. Liquidity 14
3. Solvency 16
4. Efficiency 17
5 Cash flow analysis 18
Reference 20
Appendix 23
Executive Summary
Breville Group (BRG) is a market leader in the kitchen appliances industry according to the Investor Presentation of BRG in 2012. We had classified BRG as a company in the consumer discretionary group as accordance to the Australian Stock Exchange (ASX). In this report, we will investigate BRG mainly from its annual reports up till 2011.
We will first analyze the economic environment BRG is facing from various macro-economic data. We will then take a deeper look into BRG's strategy and the industry characteristics using Porter's Five Forces. With all these information, we will analyze the industry and company's potential and whether BRG will be profitable in the near future.
Besides business and strategic analysis, we will put emphasis in investigating the accounting policies and quality of BRG's financial statements. With the financial statements, we will calculate various ratios and compare it with its peer, which we choice G.U.D Holdings Limited (GUD). By making comparisons, we can have further information to make conclusions.
We had concluded that BRG although is in a low potential industry, BRG itself is a high potential company due to its success business strategy in differentiation of products, a healthy balance sheet in this volatile economy and we did not spot significant red flags which may hide the truth of the company. The share price of BRG rose from AUD3 to