Student name: Yuanyuan Ma (Diana)
Student number: 22850
Class: BAE 5
Submission date: January 18, 2011
Table of content
Evaluation of the Gunns Limited ethical issue3
Evaluation of Gunns Limited in terms of financial analysis5
Conclusion and recommendation7
This report is prepared for the investor to consult that whether the Gunns Limited is a good company to invest in. This report is based on the ethical issue and financial study of Gunns Limited in terms of its history, specific journals and annual report of Gunns in 2011.
This report finds an ethical issue of Gunns Limited:
●Although Gunns Limited declares that their wood supply of pulp mill mainly comes from their plantation, the evidence shows that almost 70% of woods will come from the native forest, which means the pulp mill brings serious threaten to Tasmania’s environment.
Evaluation of financial analysis shows those findings:
●The investor believe that the profit and expenditure sheet is one of the most important standard to evaluate the ability of a company. ●Since 2008, the profit, revenue and capital expenditure decreased sharply. The profit even dropped to negative area in 2011. ●Current financial environment of Gunns is not positive.
This report recommends that the client should consider investment in terms of both ethical and financial aspects. Therefore, Gunns Limited is not a good choice to invest in.
The purpose of this report is to investigate whether the Gunns Limited is a good choice for investor to invest in based on two aspect, ethical issue and financial analysis. The ethical investment, which is an approach of investing that combines social and environmental considerations with investment decisions (report on socially responsible investing trends in USA 2001, p.7). In other words, investors who use this type of investment prefer to consider the ethical issue of companies at first.
The Gunns Limited was founded in 1900s by the Gunn brothers, and it is one of largest companies charging majority of forest products in Australia (Gunns 2011, para. 1). It includes four industries in forest products, plantations, timber and pulp mill fields.
This report will evaluate the Gunns Limited in terms of its evaluation of environmental issue and financial study about profitability. Finally, it will make a recommendation as to investing in the Gunns Limited
Evaluation of the Gunns Limited ethical issue
Ethical issue is essential in evaluation of a company, because companies should be responsible for the society. Environmental concern is one of the ethical issues, which can be described as the damage activities to environment in some fields, such as living environment of animals and human being, marine environment and nonrenewable resources (Attfield 1991, p. 75).
According to Chiras (2009, p. 632), the large-scale cutting of forest may leads to a series of problems on environment. The most serious one is that it will destroy the balance of native forest sustainable growth, which is significant for native environment to purify itself (Chiras 2009, p. 632). In addition, with overcutting forests in Tasmania, the ozone hole on the South Hemisphere will be expanded, which contributes to greenhouse effect (Makhijani & Gurney 1995, p.78).
There is a main ethical issue of the Gunns Limited, which is the wood supply issue brought from the Bell Bag pulp mill. Currently, the pulp mill of Gunns is one of the most controversial issues in Australia, and majority citizens against to operate this project (Oosting, 2009, para. 1). Gunns declares that this project is aim to establish a plantation-based bleached kraft pulp mill which will be a total plantation-based and rarely use the native wood resource (Gunns n.d, para. 11). However, according to...