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Table of Contents Contents Introduction Company Overview Financial Statement Analysis 1) Balance sheet 2) Profit and Loss Statement 7 3) Cash flow Statement Conclusion Reference Appendices
Appendix I Appendix II Appendix III

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List of Figures Figures Page

Figure 1: Comparative Balance Sheet of Pixel One. 5 Figure 2: Comparative Profit and Loss statement Pixel One7 Figure 3: Cash flow of Statement of Pixel One... 10

Introduction
The business of event organisers need to learn on event management to make survive for their own business (Fourie, 2009). In Thailand, the event organiser business provide service to various types of customer and this kind of business can be both success and fail depend on the financial management of the company whether how effective it is. According to Palepu and Healy (2008), the top goal of every organisation is be able to survive and continue their growth, which, the organisation must have the ability to generate profit and always make their product sale. Besides, every organisation shall develop and manage the good financial system administration by planning the activities that can help achieve the financial goal and control it according to the plan (Henderson, 2011). Therefore, the budget consideration is important for both the business itself and the investors that will invest to develop the business for increasing their growth. In this study, the analysis of financial statement is demonstrated by focusing on a small or medium business based event management project. The study begins with company background that presents the details of a case company named Pixel one in brief. This company is a small organisation regarded to event projects. The analysis of financial statement is divided into three parts; balance sheet, Profit and Loss, and Cash flow statement; each financial data of the case company was converted the amounts from Baht currency into GBP, so, the amounts in each financial statement have to remain decimal number in order to keep the validity. Finally, the conclusion is drawn in the last section.

Company Overview
Pixel one is an event organiser that established on 2004 by beginning from a little group of people with good idea and willful that try to use their potential both energy and spirit to work no matter for the small or big piece of work for instance, the small party such as wedding ceremony, graduation day, products promoting, grand opening, road show, camp, festival, and city countdown, etc. Presently, Pixel One has operated for 7 years and it was found that the company provides the good service which make their customers feel very satisfy. The company usually gets the big project at least twice a year from the large companies such as, Toyota and Honda. Although, Pixel One is the small firm that consists of only 20 personnel but with the ability and plenitude, it results on the continual growth of the company. Many companies trust in Pixel one to create the event which the income of Pixel one in 2010 was about 28,686.79 GBP. Though, it is not the big amount but if compared to year 2009 with the income 16,874.11 GBP, it can be seen that the companys revenues grow in higher level which is about 70%.

Financial Statement Analysis

In conducting events business daily, there will be many activities taking place and these of economic activities relate to the gain and use of the capital and other resources of the business. Thus, if there is no recording system and the information arrangement into group and up to date, we will never know the result of performance or business status (Palepu and Healy, 2008). Beside, people from external no matter, the institution or trade creditor also unable to know the performance result of business so, they afraid to provide credit or loan which result of the loss of opportunity. Thus, the business needs to have accounting system to bring the list of activity to record in the system, classified and report the summary to measure and evaluate the financial status and the business performance called as financial statement (Henderson, 2011).

Palepu and Healy (2008) indicated that the financial statement analysis is to use any tools to evaluate the companys performance. By considering the budget to know the status and stability of the company and apply it in the investing decision.

In order to evaluate how the business of Pixel One exist in the events business market; balance sheet, profit and loss, and cash flow statement will be applied in this study to analyse the business performance by comparing the financial data between year 2009 and 2010. All of data in this study use GBP currency that was converted from Baht currency. Each amount was rated by basing on Bank of Thailand at 4 November 2011 (1 GBP = 49.2648 Baht).

1) Balance sheet Balance sheet consists of three main factors; Assets, Liabilities and Owners Equity (Ittelson, 2009). The business owner and external investors might recognise the reliability and stability of a business from a balance sheet. Particularly, the creditor could know how the business has ability to pay its debts at the due date. Therefore, it can be supposed that liquidity in business for paying a debt can be provided by balance sheet analysis. In the case of Pixel One Company, the comparative balance sheet at the financial year of 2009 and 2010 can be seen in figure 1.

Figure 1: Comparative Balance Sheet of Pixel One According figure 1, the author uses vertical analysis in order to compare the amount in the year of 2010 and 2009. Fridson and Alvarez (2011) state that financial analysts can apply common-size balance sheet to evaluate how the liquidation of the business be. The vertical analysis in balance sheet of Pixel One Company can provide the trend of business in the future that can be identified as follow.

The most assets of Pixel One Company are Property and Equipments that is around 43.59% in 2010 and 42.86% in 2009. It can be supposed that the company has little invested in the part of building and office facility. As PixelOne is only a small business that rent the building in central area of the city and invested most on document and computer facility. Accounts Receivable reduce from 21.56% of year 2009 to be 16.73% in 2010 which shows that the company can collect more debt from debtors or it can be implied that the company has strict policy on credit since the low competition of the business, the company then reduce the time to provide credit to decrease the debtors rate. Inventories of Pixel One in 2010 and 2009 found almost no change at approximately 14% of the total assets. Inventories or stock of the event organizers company usually be the tools to set up the event such as stage decoration facility, souvenir that give in each event that reduce. As the inventories remain the same amount in both years, it shows that the company has stable purchasing policy, which the company evaluated that it is good enough, and no need to change. In 2010, creditors of Pixel One Company have lower proportion than 2009. There are creditors 19.44% of total liabilities in 2010 while 23.04% is in 2009. That means the company has the ability to pay back more debt from the past year. Long-term liabilities of Pixel One in 2010 found a little higher from 2009 by in 2010, it was at 44.37% and 30.84% in 2009. This may result from the necessity of the company to increase the effectiveness in their operation by using more liabilities. Owners Equity in both years found not so much change by in 2010 was at 48.45% while in 2009 was at 45.97%. This presented that in 2010 the company has more Net assets and less total liabilities.

2) Profit and Loss Statement As stated by Wild et al. (2010), the performance result of the company in the aspect of Net profit or Loss profit will result on the balance which is in case that the income is more than the payment (Net profit) will make the Owners Equity increase. While in case that the income is less than the payment (Net loss) the result will be inverse. Thus, profit and loss statement is the financial statement that affect to the increase or decrease of the Owners Equity that come from the operation in each of tranche and relate to the increasing and decreasing of the assets.

Figure 2: Comparative Profit and Loss statement Pixel One As presented in figure 2, the comparative data of profit and loss statement of Pixel One Company can be analysed as vertical analysis. The amounts in 2010 and 2009 are compared as percentage based sale revenues and can be identified as follow. 8

i) Pixel One has the revenues in 2010 increase from 2009 for 70% (11,812.68 GBP) which mean that the company has more income from previously. By the main income of the company come from the events employer such as, meeting event, product promoting event and department store grand opening. ii) As the company has more income, it does not mean it will grow further accordingly. The company may gain more income but the cost of sales usually higher too, which can be seen in figure 2. It was found that in 2010, the amount is higher than in 2009 but when compared in ratio, it will be in the same level. This presented that the company has no policy to reduce the cost of payment but still employs the old method of management that why the growing rate is stable. iii) Considering the cost of sales of Pixel One, it was found to be in the middle level about 54%, the company can find the way to reduce the cost of sales but still emphasises on the high effectiveness of service to increase the Net profit. iv) General and Administrative expenses in year 2010 and 2009 are in the similar ratio which is about 12%. This means that the effectiveness of the operation still be in the same level, no additional payment cost from new hire. v) The analysis of the figures of Earnings before income tax of the company can be used as beneficial to the investors to evaluate the effectiveness of the companys operation in the events management. Which the numbers in figure 2 presented that the Earnings before income tax of the company increase only for 0.59% therefore, it can be seen that the company has the ability to generate a little more of profits. vi) Net profit in 2010 increased from 2009 only for 0.57% according to the cost of Office supplies and Premium Insurance ratio that has been reduced. The analysis of profit and loss statement of Pixel One found that the company has stable growing rate though, the total amount of revenues will increase. Thus, it maybe resulted from the old management that does not employ the policy to cut off the cost and mange to reduce the payment cost. However, to know about the background of the money used to manage the business, cash flow statement analysis will be another tool that helps the

investors and the executives in their decision to develop further on their own business (Wild et al., 2010).

3) Cash flow Statement Cash flow statement presents the change of cash and the list that can compare to the cash both in the part of incomes and expenses. It reflects the change of cash that affected by the operating activity, investing activity and financing activity (Fourie, 2009). As indicated by, the record of number can separate into minus number for the use of cash and the positive number for the gaining of cash. For the business of Pixel One which is an event organiser, it was found to operate the business with low cost by hiring small amount of personnel but giving the effective work results. However, it was found that the cash in held is not equal to the net profit in each of financial year therefore; the business analysis from the cash flow statement is another way to know about the background of the cash and the business profits (See figure 3).

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Figure 3: Cash flow of Statement of Pixel One According to figure 3 above, in 2010 Pixel One Company had net decrease cash in held around 436.42 GBP that made total cash at the end of year 2010 decreased from 4,851.33 GBP in 2009 into 4,414.91 GBP in 2010. The analysis of cash flow statement will make the investors know that the company has brought the cash to use in which aspect of activity since, the evaluation from net profit only cannot make they know whether the

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business has the financial liquidity or how much of their ability to pay for debt (Adams, 2006). Therefore, the cash flow budget of Pixel One can be analysed as follow:

i)

The business used cash in their operating activities in 2010 more than 2009 by cash generated from operation in 2010 equal to 57,728.81 GBP while in 2009 was 33,918.72 GBP. The main expenses of the business are that wages/salaries, utilities, premium insurance, advertising interest and tax income that made net cash generated from operating activities of the business in 2010 is 7,074.01 GBP while in 2009 is around 4,922.38 GBP. The company has the amount of expenses mostly in their operating activity of purchasing products that have to import the equipment to use in event organising. The payment cost in this part included the hiring of external labor for interior which is the part beyond the administrative expenses.

ii)

The business has spent more cash on investing activities especially, the current asset like office equipments for instance, the decoration and office repairing to build up the good work environment for the employees. It was found that the business has invested in 2010 at the amount of 4,445.36 GBP which more than 2,594.14 GBP in 2009 almost double times. The investment on this aspect found to be in the small ratio if compared to the total cash outflows since, the company mostly emphasizes more on using cash to operating activity.

iii)

The business has spent the cash in financing activities in the part of dividends only by it was found that the dividends that paid out in 2010 was the cash at the amount of 3,065.07 GBP while in 2009 was 1,802.50 GBP. As the dividends in year 2010 was paid more than 2009, it indicated that in 2010, the business had total revenues and profits more than in 2009 at approximately ratio of 3:2.

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Conclusion
From the analysis of balance sheet, profit and loss, and cash flow, it was found that the business administration of Pixel One tends to have the stable growth if the executives still employ the old policy method. By it was found that the total of revenues of the company is 70% higher but Net profit still in the constant ratio. However, from the information in balance sheet, it made us know that in 2010 Pixel One can pay higher debt than in 2009 and be able to collect more debt from the debtors as well. Besides, the summary of information from cash flow statement found that the company has the minus cash in held, which resulted on the decreasing of the amount of cash in 010 from 2009. The company shall have the policy to manage the cost in operating activity especially, in the purchasing products ratio therefore, the executives shall seek for the low cost product source so; they can generate the higher cash and net profit of the company. Although, the business of Pixel one company will have more revenues in 2010 compared to 2009 for 70% but when calculating the ROI value of each year in comparison, it can be found that the return of investment has increased for 1%. By in year 2009, the ROI value is equal to 14% while in 2010, the ROI is equal to 15%. As a result of the low value of ROI, it can be seen that the company gains not so good return from the investment and the management shall process to reduce some cost such as, Administrative expenses and advertising expense to increase the return of investment. Beside, the company also needs to find additional income to increase more revenues or the cost of services. However, since the event organizer company can provide service in various ways and the company can add more options to provide services other than they ever do such as, changing the customer group to be general people by set up the meeting or seminar to provide business knowledge, training by inviting the speaker orientation, publicize the knowledge and collecting fee from attendants. Therefore, the company executives shall not consider only the information from financial budget in composition to their business decision because all businesses possess risk. The calculation of ROI return then becomes the primary financial tool to assist the executive to make the investment decision.

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Reference
Adams, D. (2006). Management Accounting for the Hospitality, Tourism and Leisure Industries: a strategic approach (2nd ed). London: Thompson. Henderson, S. (2011). The development of competitive advantage through sustainable event management. Worldwide Hospitality and Tourism Themes, Vol. 3. No. 3, pp.245 257. Ittelson, T.R. (2009). Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports. Career Press, USA. Fourie, W. (2009). Event Management. Lambert Academic Publishing. Fridson, M.S. and Alvarez, F. (2011). Financial Statement Analysis: A Practitioner's Guide. John Wiley & Sons, USA. Palepu, K.G. and Healy, P.M. (2008). Business analysis & valuation: using financial statements. Cengage Learning, USA. Wild, J.J., Subramanyam, K.R., and Halsey, R.F. (2010). Financial Statement Analysis. McGraw-Hill/Irwin, USA.

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Appendices

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Appendix I: Balance Sheet of Pixel One Company

PIXEL ONE

Balance Sheet At December 31, 2010 and 2009 1 () GBP = 49.2648 Baht () 2010 Assets cash and cash equivalents Marketable securities Account Receivable (Net) Inventories Prepaid premium insurance Prepaid rent Total current assets Land Property and Equipments Less: Accumulated depreciation of investment properties Land, properties and equipments - Net Other assets- Others Total non-current assets Total assets 4,414.91 4,445.36 11,062.66 9,479.38 345.07 213.13 29,960.52 3,491.33 28,823.81 (8,119.38) 20,704.42 11,976.09 36,171.85 66,132.37 2009 4,851.33 3,552.23 12,047.13 7,936.70 263.88 274.03 28,925.30 3,653.72 23,952.18 (9134.30) 14,817.87 8,484.75 26,956.35 55,881.65

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Liabilities and Owners Equity Current Liabilities Creditors Accrued salaries and wages Income tax payable Accrued utilities Long-term liabilities Total Liabilities Owners Equity Ordinary Shares Retained earnings Total Owners Equity Total Liabilities and Owners Equity 4,800.58 1,644.17 5,293.84 1,999.40 10,961.17 24,699.16 11,164.15 30,269.06 41,433.21 66,132.37 4,851.33 1,593.43 5,967.75 2,151.64 6,495.51 21,059.65 9,134.30 25,576.05 25,687.70 55,881.65

Appendix II: Profit and Loss statement of Pixel One Company

PIXEL ONE Profit and Loss Statement At December 31, 2010 and 2009 1 () GBP = 49.2648 Baht

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Sale Revenues Cost of sales Gross Profit Operating Expenses : General and Administrative expenses Advertising Rent Office supplies Premium Insurance Utilities Doubtful Debt Depreciation- office equipments Earnings before income tax Income taxes Net Profit (Loss)

() 2010 2009 28,686.79 16,874.11 15,675.48 9,219.56 13,011.31 7,654.55 3,618.20 1,091.04 456.72 284.18 202.98 157.31 314.63 583.58 6,302.67 2,646.92 3,655.75 2,127.28 641.43 268.95 177.61 202.98 98.45 186.75 343.04 3,608.05 1,554.86 2,053.19

Appendix III: Statement of cash flow of Pixel One Company

PIXEL ONE Statement of Cash flow At December 31, 2010 1 () GBP = 49.2648 Baht

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2010 Cash flows from operating activities: Cash inflows Cash generated from service operation Cash Outflows Purchasing products Salaries and Wages Rent Premium insurance Utilities Income tax Advertising Office supplies Net Cash generated from operating activities Cash flows from investing activities: Cash inflows Cash outflows Office equipments Marketable securities Net Cash generated from investing activities Cash flows from financing activities: Cash inflows Cash outflows Dividends Net Cash generated from financing activities Net increase (decrease) in cash held Cash, beginning of year Cash, end of year (3,065.07) (3,065.07) (436.42) 4,851.33 4,414.91 (3,552.23) (893.13) (4,445.36) 57,728.81 (32,944.39) (4,749.84) (852.54) (487.16) (466.86) (5,967.75) (2,182.08) (568.36) 7,074.01

2009 33,918.72 (19,364.73) (2,801.19) (852.54) (487.16) (304.48) (3,491.33) (1,329.55) (365.37) 4,922.38

(2,070.44) (523.70) (2,594.14)

(1,802.50) (1,802.50) 525.73 4,325.60 4,851.33

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