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The company’s development implies constant changes that bring the organization closer to achieving its specific goals, increasing profits, and sustainable progress. Financial analysis is one of the critical tools for achieving an understanding of the determinants of development. As part of the activities of a beauty and health company, an example of the analysis of financial indicators for evaluation from the point of view of stakeholders is given. The work is presented in the context of a triple bottom line model, within which it is also necessary to assess the potential impact on the community and the environment, which are the most critical factors for sustainable development.
Employees are primarily interested in the solvency of the company and the sustainable development they are trying to ensure. Longevity is dictated by various balance sheet ratios, such as the current ratio or total assets/total liabilities. Diving deeper into the analysis, one can see that the health and beauty company hardly effectively collects receivables accounts. Compared to 2017, in 2018, the company’s revenue increased by about 16%, while this indicator increased by 35%. However, it should be noted that the company has become more efficient in optimizing cost processes: at the same time, revenue increased by 62%, which was reflected in the positive dynamics of cash flows and the cash on hands indicator in the organization’s assets. However, it is worth noting that comparable dynamics can be traced in the year’s data and Apple: net profit increased by 23% compared to the previous year, while only 37 accounts receivables (Macrotrends, 2022). This factor is likely associated with the global crisis of 2018 since, in the future, such dependence is not observed in Apple.
Accordingly, we can conclude that for employees, the beauty and health company is attractive in all respects. The current ratio is 2.3, almost twice that of Apple (Macrotrends, 2022). It allows the company to have assets with a margin to meet current obligations, leaving room for development maneuvers. Moreover, it is equally important to have similar advantages for investors. Financially, the company significantly increases retained earnings after all obligations, which shows its solvency and ability to make significant income within one billing period. However, the dividends paid by the company do not increase, although the development is evident, including the costs in the cash flow from investing activities article.
Consequently, it is possible to conclude that the company does not reinvest free income in shareholders’ welfare without attracting new ones. At the same time, the organization’s financial activity as a whole is more than wealthy, which is essential for developing the TBL model. The company has a good margin for reinvesting in sustainable development and increasing proportion to the share of donations to charity. Social and environmental responsibility directly affects the company’s reputation and investors’ interest in the long term (Shabbir & Wisdom, 2020). Therefore, community groups and investors are similar in purpose and stakeholder interests.
The company reduced the payment on long-term obligations, freeing up part of current assets. The organization’s long-term investment is constantly increasing, but the dynamics are possible in different directions, following the example of Apple (Macrotrends, 2022). Even with a decrease in the long-term investments indicator, it is possible to constantly re-evaluate trends, critical issues, and the corresponding reinvestment process. The increased revenue allowed the company to invest in property and equipment that could be more environmentally friendly. Apple consistently invests in this expense item with an error of several million (Macrotrends, 2022). At the same time, the cash flow from investing activities of the smartphone developer has more radical dynamics due to diversified assets and the flexibility of their management. In good years, Apple increases investments due to free profit; in crisis years, it sells, while property, plant, and equipment signal planned development (Zhang, 2022). At the same time, in percentage terms, the amplitude is commensurate with the dynamics of income, which is better seen in the crises of 2018 and 2020 (Macrotrends, 2022). Community groups are interested in such changes since the environment of the company’s activities may be their living environment. A detailed and direct assessment of the sustainability and adequacy of the organization’s actions is possible only with a qualitative analysis or familiarity with the relevant reports. However, qualitative improvements are extremely unlikely with the stagnation of these indicators or even the absence of costs.
In fact, for employees, the company is currently sustainable in development and attractive in terms of vacancies and job retention. Careful investors can wait out this cash surge in profits and accumulated income and evaluate the company’s actions in the direction of TBL. Information is currently available to groups of various interested communities, allowing them to assume positive dynamics concerning their interests. The Apple example for comparison confirms most of the theses, enabling a better forecast and, in some indicators, a benchmark for sustainable and planned development. As a result, the health and beauty company has the financial potential to move to the TBL model, aspects of which may not have received enough attention at the moment.
References
Macrotrends. (2022). Apple Balance Sheet 2009-2022 | AAPL. Web.
Shabbir, M. S., & Wisdom, O. (2020). The relationship between corporate social responsibility, environmental investments and financial performance: evidence from manufacturing companies. Environmental Science and Pollution Research, 27(32), 39946-39957. Web.
Zhang, X. (2022). Analysis of Business Model and Financial Operation: Evidence from Apple. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 455-459). Atlantis Press. Web.
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