Financial Analysis Amcor

Topics: Financial ratios, Financial ratio, Dividend Pages: 16 (4385 words) Published: March 12, 2011
1. Introduction - Business model
Amcor Limited(AMC) is one of the largest multinational packaging companies, which builded and developed from Australia. It now has over 300 sites in 43 different countries in the world and with sales of AUD $14 billion. AMC offer its customers with the high standards packaging solutions, reliable service and partnerships built on excellence. AMC has variety of materials for its packaging business. The main product of AMC are packaging for lots of staffs, for instance, food, tobacco, healthcare markets and so on. 2. Strengths, Risks and Opportunities in industry

As a multinational company, AMC can control its cost by using different raw materials and labor cost in different countries to get more profitability. In addition, comparing with other companies, AMC has developed technology to support its business and has innovative products and high standard service, these all the strengths of AMC. More over, the strength of scope, while AMC has a stable and strength value chain in the whole world. It holds amount of assets, has a large number of sales and a great many of employees. Those aspects decide that the barrier of this industry for new entrants is very high, and with the good strategy and excellent management, AMC can do its business in a relatively stable environment in this industry in the world. Risks:

AMC is a multinational company which decides that lots of unstable factors can bring risks. Firstly, the risk of new product is unpredictable. The life cycle of product is getting shorter. Even in the packaging industry, different materials and different designs replace very fast. Experts mentioned that, any one day shortage of new product development can brings 0.3% profit. More over, any ten days shortage of new product development can brings 3.5% profit for the company. For example, Siemens company can get 100million profit for shorten new product development. However, the replacement of product can make the competition more stinging and complex. And then bring more risks for companies. Secondly, the risk of investment has to be considered. Most multinational companies have power to invest some big cases to increase their strength. However, the investment also has high risks. For instance, AMC invest lots of money on different countries. Any of these corporations or departments can make profit to the bad. Even in packaging industry, they have to deal with this risk while they do investment. Opportunities:

There are lots of other business that related to the business of AMC and AMC has some opportunities to broaden its business scope. For example, AMC is a packaging company, it also in charge of the distribution business in North American. Moreover, their business includes the global glass tubing business. In this case, we can see the development of AMC is huge. 3. Multinational aspects affect this form’s profitability, cash flows and balance sheet Global financial environment is complex. Different business environment in different areas make the business has different conformation and different affect. Economic crisis affects lots of different industries in the whole world, including the packaging industry. Exchange rate can affects company’s profitability. Exchange rate through the price, import and export, and capital flow impact the business. The fluctuation of exchange rate can impact the profitability and balance sheet for the multinational company. Information exchange and different policies might impact the profitability, cash flows and balance sheet. As a multinational company, information from different countries are difficult to manage and sort out. Information might inaccurate through the exchange process and then impact the final result. 4. Clear identification of areas for financial analysis

There are some different ways to do the financial analysis. In this assignment, we just use ratios analysis to do the financial analysis. Profitability
This class of...
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