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BALANCE SHEET  INCOME STATEMENT  CASH FLOW STATEMENT  NOTE  WHAT DO THEY TELL US?         A homework on   NATURE SOCIETY S...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and ...
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How to read a Financial Report?

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A homework on How to read a Financial Report.
Numbers from Balance sheet, Cash Flow and Notes, what do they tell us?

Based on financial reports of 2 NGOs:
NATURE SOCIETY SINGAPORE
AUSTRALIAN WILDLIFE CONSERVANCY
2005 to 2010
Downloaded from their webside

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How to read a Financial Report?

  1. 1. BALANCE SHEET INCOME STATEMENT CASH FLOW STATEMENT NOTE WHAT DO THEY TELL US? A homework on NATURE SOCIETY SINGAPOREAUSTRALIAN WILDLIFE CONSERVANCY Financial reports of 2005 to 2010
  2. 2. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu FINANCIAL ANALYSISAssignment One: Individual Analysis on Financial Statements [12 marks].Examine and analyze the items in the latest balance sheets, income statements, cash flowstatements, notes to financial statements, and auditor’s reports of two organizations from asimilar-type of industry, or not-for-profit organizations, or governmental organizations. I. NATURE SOCIETY SINGAPORE II. AUSTRALIAN WILDLIFE CONSERVANCY TYPE: NOT-FOR-PROFIT ORGANIZATIONS MATERIALS: FINANCIAL STATEMENTS FROM 2005 TO 2010 Page 2
  3. 3. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.eduI. INTRODUCTIONS Nature Society (Singapore) (NSS), is a non government, Not-For-Profit organizationfounded in 1991. Its contributed a big part to promoting the natural heritageof Singapore, an island city state of a total land area of 647 square km.NSS core missions are: to leverage nature appreciation; to advocate conservation of thenatural environment in Singapore and to leverage participation and collaboration in local,regional and international efforts in preserving Earths biodiversity. Its main activities areincluding guided nature walks, overseas eco-trips; nature conservation surveys and projectsand co-campaigns with other partners.Run by volunteers, the NSS depends financially on its members contributions as well ascompanies, institutions and individuals.http://www.nss.org.sg/ Australian Wildlife Conservancy (AWC) is an independent Not-For-Profit organization (2001), working to conserve threatened wildlife and ecosystem and to raise awareness and appreciation to nature in Australia. Based in Australia, home to more bio-diversity than any other developed countries in the worlds but also where wildlife is facing an extinction crisis,AWC works principally through the acquisitions of extensive areas of land. These lands aremanaged for conservation and research programs. The organization also helps implementlarge-scale, practical conservation programs around Australia to provide a more securefuture for threatened animals and their habitats.AWC is funded by the public as well as government grants.http://www.australianwildlife.org/Home.aspx Page 3
  4. 4. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu PART I THE BALANCE SHEETNATURE SOCIETY (SINGAPORE) (NSS)High Payables.BS 2010, Receivables was $30,699SGD, nearly 8 times higher than previousyears of 2009. Question: The organisation had many projects and activities and need tocollect cash quick to fund those, why was Receivables of 2010 so high?Significant Increase In Asset: BS of 2008showed a huge increase in asset of $423,032 SGD, or39,69% in comparison with previous year. The year after that, it recorded a lost in Asset of$65,896 SGD. Question: Why the organisation didnt use its Cash and Cash Equivalent($939,694 SGD) to increase its investment to generate a higher and steady income in thefuture?AUSTRALIANWILDLIFE CONSERVANCY (AWC)Pool Of Cash And No Investment.On BS 2007, AWC had $5,190,051 of "Cash and Cashequivalents" and no "Current Investment" or "Loans and Borrowings". Question: Why itdidnt investits own cash (or borrow more) into some future investments? What is the planfor future?Future Investment. BS 2008showed a jumping total Liabilities, almost 10 times higher thanprevious year which allowed it chance to expand the business. Question: With $10,543,534AUD in "Cash and Cash equivalents" why AWC had a high Loan and Borrowings of another$2,106,206 AUD? What was the money for and why AWC didnt use its "Cash and CashEquivalents" for that. Page 4
  5. 5. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu INCOME STATEMENT NATURE SOCIETY (SINGAPORE) (NSS)Change Of Expenditure Skew from Print to Online. The 05 ISs showed an obviousmovementtoward Going Online. From 2006 to 2010 the organization decreased its expensefor "Publication & Printing" from $40,111 SGD down to $2435 SGD; while its "WebMaintenance" increased from $0 in the first 2 years to $30,841 SGD. Question? How thischange in expenditure would affect its income and future growth?Management inefficiency.IS 2009: Donation Income decreased heavily, reporting a negativeof $386,485 SGD or 90,05% lost as compared with previous year. QuestionWhy there weremore Staffs and trips expenses on the year and still they couldnt show income efficiency?AUSTRALIANWILDLIFE CONSERVANCY (AWC)Increase in main income. In IS 2008, there was a $9,480,419 AUD increased in Donation andGrants. Being an Not for Profit organization and mainly get income from Public andGovernment grants, what were the financial events or other events that madethisso low thisyear? Why AWC couldnt keep this grow the yearsafter that?Administration and Development. In IS 2010, there was an increase by 91.8% or $459,892AUD of Administration and Development expenditure, in comparison with previous year.Question: Why Administration and Development expenditure increased that much whileoverall operating surplus for the year slightly decrease of $669,215 AUD ? Page 5
  6. 6. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu CASH FLOW STATEMENTNATURE SOCIETY (SINGAPORE) (NSS)High Payables.Looking at CFS 2010, we see that there was an increase in Payables of $63,179 SGD higher than Net Cash generated from operations is $49,192 SGD. Question:Could the organization can financially supportits current activities if Payables was that high?Negative Cash Flow.From CFS 2009, Cash and Cash equivalents at beginning of the financialyear was $908, 898 SGD, at the end of the year it was $856,471 SGD. Question: With so manyactivities and projects on the year, how could the organization can ensure a healthyoperation results with a negative cash flow ?AUSTRALIANWILDLIFE CONSERVANCY (AWC)Increase of Cash Flow Investing Activities. In CFS 2008, there was an significant increase ofCash Flow Investing Activities, brought it to $12,506,970 AUD and Loan Received (Repaymentof Finance Lease Liabilities) of $2,100,000 AUD. Question: What activities or project was itused for ?Low Cash Flow from Operating Activities.CFS 2009 let us know that Net Cash FromOperating Activities decreased to $6,296,594 AUD or 60% as compared to 2008. Question:How and why did net cash decrease so heavily ? Page 6
  7. 7. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu NOTESNATURE SOCIETY (SINGAPORE) (NSS) Unbalanced Budget Between Groups. Of all Special Interest Groups and Committees, Plant group and Vertebrate Study Group brought back the most positive income while expenses were low. Aside Butterfly (which NSS has been running yearlong initiative "PaintedWing"), Incomes from Other Groups like Birds or Marine Conservation were extremely lowcompared to its expenses. Why didnt NSS reallocate its budget to leverage Plant and VertebrateStudy Groups, earn more income to support the other groups?Growing Assets but Losing members.Looking at BS or IS, we see that NSS has been growingpretty good, however the Notes let us know that its losing its members (and income). Singlemembers with annual fee of about $40 SGD has decreased 165 people, or 16,94% in 5 years.Family members also gradually decreased 27.59%.Members are very important to the existenceof NSS, see that income from Single is the most profitable, what should be done to increasemembers from this group? How about drawing potential young members (Junior) or partnershipwith external organizations ? (it will help to get more members)AUSTRALIAN WILDLIFE CONSERVANCY (AWC)Notes of 2009 let us know about the Grants of previous year, included $8.49mto support apurchase but didnt explain about the poor grants of 2009, $130,243 AUD. This was the lowestGrant that AWC received in 5 years. It also didnt explain why Surplus of 2009 was so low($5,741,993 AUD) compared to previous year ($14,639,471 AUD).In the 5 Notes, AWC mentioned about Contingencies that require some long termresponsibilities, some of them can be up to 99 years like the agreement to Protect the land heldat Scotia Sanctuary, Newhaven, Mornington, Marion Downs, Kalamurina, 
Wongalara, TaravaleStation, Mt Zero and Pungalina. Should AWC set up an long-term fund to ensure and support thesuccesses of these ? Page 7
  8. 8. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu PART II The BALANCE SHEETSize of Companies.The first difference between Nature Society (Singapore) (NSS) andAustralian Wildlife Conservancy (AWC) is the size of 2 organizations. By 2010, Total asset ofNSS was $1,483,197 SGD while that of AWC was $63,148,984 AUD.Reason: They are 2 recognized active NFP organizations of the same category but they have:Different source of income:NSS is mainly funded by donors and its members. AWC is mainlyfunded by government grants.Different coveringarea : NSS works on Singapore, a small island with total land area of 647square km and 4m in population. AWC cover Australia area which is 8,468,300 square km,13,088 times larger.Different activities: NSS focuses on projects for its members, while AWC conductsobservation researches and programs on the land that they own.Invert Ratio of Current Assets and Non Current Assets.Second difference isainvert Ratiobetween Current Assets/ Non Current Assets, by 2010, the ratio are: Current Assets Non Current Asset Currency NSS 967,566 515,631 SGD 65,23% 24,77% AWC 14,877,861 49,920,705 AUD 22,96% 77,14%AWC works principally through the acquisitions of extensive areas of land and this activitiesalways associated with large asset. Theiroperating liabilities and other current assets aremuch smaller in comparison with their Non Current Assets as it includes the lands they own.Different from that, NSS Total current assets has to be higher than their Non Current Assetsas they run several projects a year to complete the organizations missions. Page 8
  9. 9. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu THEINCOME STATEMENTNet Surplus.Net surplus for NSS in 2010 showed an negative number of $3,056 SGD; whileAWC had $5,072,778 AUD. However It didnt look quite like NSS had a bad year and AWC hada good year.2010 was the year NSS had some good news: their efforts to push up Event and activitiesstart to show results in $63,436, representing 334,82% increased compared to previous year.They also spent some $30,841 SGD in Web maintenance - nearly 100 times higher than 2009.The web set-up was part of preparation for strategic plan in future.For AWC, a surplus of $5,072,778 AUD for 2010 is a strong results but it represented adecrease of $669,215 AUD compared to that of 2008, so this is not really a good year forAWC.The Switch in Model of Working.The IS also let us know that NSS has been switching fromPrinting & offline subscription to Online based working model, though this is quite latecompared with other organizations, especially putting in Singapore high internet penetrationlandscape.On 2008, it started to spend a modest amount of money on Website (($481 SGD) and onlyhad it developed in 2010 with $30,841 SGD as mentioned above. During the switching time,number of Membership subscription lightly decreased from $66,600 SGD to $50704 SGD.When it comes to a switch in model of working this is a good result; in other words, NSS hadsuccessfully kept old members and gain more internet sawy ones, as well as pushing moreinteractive activities online and offline.Besides, with a small country of 4m in population and77.8% internet penetration, going online is a MUST so this is a good move.However in AWC case, though they also have a nice website but they will never growing overonline, the website will help with communications and support their operation only. Page 9
  10. 10. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu THE CASH FLOW STATEMENTPurchase / Depreciation of Property, Plan and Equipment of NSS was well budgeted and hasremained quite constantly over 5 years with the mean of $16,522 SGD; this item for NSS wasidentified as part of Operation Activities.This is different from AWC. Their cash flow for Acquisition of Property, Plan and Equipmenthas been various between $5,272,661 and $0, based on the projects they worked on at thetime. This is put on Investing Activities.On SFS of AWC, there was Repayment of Borrowings, which wasnt annually showed up, itcould be as high as $7,796,824 on 2006 or $0 on 2007 and 2010. This is because there wereBorrowings for acquisition new large lands for nature observation and researches, animportant mission of AWC. Its normal.However, NSS hardly ever borrows from banks. They dont have this on the Cash FlowStatement. Page 10
  11. 11. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu COMMENTSNSS: From Financial Statement of 5 years in a row, I see that the span of time we are lookingat (2006-2010) is the organization’s changing time.Long time established (before officially founded in 1991, It was formerly known as theSingapore branch of the Malayan Nature Society, formed in 1954), the organization is facingthe challenge of retaining its members, expanding with more activities, and catch up withpace of technology-involved world. (Also, it has its FS professional audited)Being an NPFO which has income mainly from donors and membership fee, understandingtarget customers (Members) is very important. With 77.8% of Internet Penetration, goingonline is a must to survive in Singapore, the customers are no longer go to bookshop orreading publications to get information, they go online!. In such a landscape, its quite latefor NSS to start going online until 2008. The numbers tell that with hesitance, it decided tocut cost on Publication one year before that, still it took the organization two more years (3years totally!) to really take steps in online, with a "real interactive website".Closer looking in the Financial Reports, I see that the biggest problems the organization hasto fix now is how to retain and expand its membership. In 5 years of restructuring theworking model, it has lost some 19.64% members of all types; this didnt strongly result in alost of income but membership is very important to model working of NSS, withoutmembers, the NSS cant complete its missions.Another notice in NSSs operation is the unbalanced budgets between groups of interests.There were groups with income of less than half of its expenses; and there were othergroups with nearly no expenses ($2 SGD, Plant Group, 2010) and brought back a quite bigamount ($7.718 SGD).However I can see that NSS managed quite well during the whole time. Its Total asset hasgrown from less than 1m to 1.49m in 5 years and with full effort with online, theres a highpossibility that the trend of growing is up for the next coming years.Summary SuggestionsGood Asset growth rate Balance Expenses between groups of interestActively interactive (Events, exhibitions, Initiatives to draw more membersTalks..)Actively interactive online More partnership with other organizations Page 11
  12. 12. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.eduAWC:Originatedfrom a land purchase in 1991, 10 years after that the AWC became a publiccharitable organization. This clearly set the model working for AWC and it has steadily grownsince then.By acquiring large lands for nature observation and researching purposes, Asset of theorganization increased strongly year on year with an average Growth Rate of 21%.However, based on acquiring lands (and facilities for each) its Loans and Borrowings andLoan are not frequently, thus sometimes its hard to tell just from numbers; justificationshave to be considered from different angles.Regarding to the organisations missions, we see that AWC has completed so well its missionof reserving the nature. So far it owns and manages 21 sanctuaries covering a combined areaof 26,000 square kilometers, more land than any other non-government environmentorganization in Australia.AWCs secondary missions are to conduct researches and observations on its lands. We dontsee this clear on the financial report but the organizations has done well on this and has helpregional Ecologist features in BBC Wildlife and New York Times and other recognized media.Its maintained a good relationship with not only the Government, Ecologists and Media butalso its Readers by its newsletters (also online version).Its done well the reserving mission. One thing AWC can improve is more activities formembers to enhance the appreciation to nature (Such as: designing more eco-activities,initiatives, communications programs...)Summary SuggestionsVery Good Asset Growth Rate Expand more activitiesFulfill its missions More partnership with other organizationsMaintain a very good relationships withother stakeholdersEND. Page 12
  13. 13. Carnegie Mellon University Australia - 90724 Financial Analysis - First Assignment, Feb2012Nature Society (Singapore) and Australian Wildlife Conservancys Financial Statements 2005 to 2010by Thien, Do. PPM S12. Box 65, ttdo@andrew.cmu.edu Page 13

A homework on How to read a Financial Report. Numbers from Balance sheet, Cash Flow and Notes, what do they tell us? Based on financial reports of 2 NGOs: NATURE SOCIETY SINGAPORE AUSTRALIAN WILDLIFE CONSERVANCY 2005 to 2010 Downloaded from their webside

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