FIN1FSA Beyond International Financial Health Report - Assignment Solution

Introduction

Beyond international is an Australian-based film production and television content distributor company. It is ranked number 1953 out of the top 2000 companies that are operating in Australia (IBISWorld, 2019). The majority of the revenue of the company is generated from Sound Recording Activities and Motion Pictures within the Australian Communication industry. Currently, the Beyond Intl. has over 113 employees with a total revenue of $86,734,000 (IBISWorld, 2019). 

Beyond Intl. Ltd. has expertise in production and distribution of the television programs and the feature films that are produced across Australia, USA, North America, Latin America, Middle East, Europe and Asia (Wall Street, 2019). Currently, Beyond Intl. Ltd. has the following operations:

- Television Production and Copyright: Beyond Intl. Ltd. has gained full ownership of the television product copyrights and it produces a huge range of television content through Beyond Production, Beyond Screen Production, Beyond Actions and 7Beyond (D&B Hoovers, 2019). 

- Film and Television Distribution: Beyond Intl. Ltd. also distributes and licenses television programs and feature films across the global broadcasters  (D&B Hoovers, 2019).

- Home Entertainment: Beyond Intl. Ltd. distributes the feature films, television and gaming DVDs to the retailers throughout the New Zealand and Australia  (D&B Hoovers, 2019). Its catalogue includes the programs that are aired on Discovery Channel and A&E Network like Smurfs, Pokemon and Strawberry Shortcake.

- Digital Marketing: Beyond Intl. Ltd also has expertise in search engine optimization services, website creation services and online media sales across New Zealand and Australia  (D&B Hoovers, 2019). 

This report will discuss the risk and profit potential, accounting analysis, accounting strategy and financial statement recasting in upcoming sections for Beyond Intl. Ltd. for the year 2018. 

Risk and Profit Potential 

2.1 Industry Analysis

Beyond Intl. Ltd. performs in the Motion Picture & Video Production and Distribution industry in Australia. The overall analysis of the industry is done using Porters’ Five Forces i.e. barriers to entry, threats of substitute, bargaining power of suppliers, bargaining power of buyers and rivalry. By using Porters’ Five Forces, the analysts are able to identify the competitiveness and attractiveness of the industry and gauge its profit potential. 

Threat of New Entrants:

The industry has moderate to high barriers to entry. The entry barriers to the industry are the economies of scale due to low market share concentration, finance requirements, inability to attract talent and requirement of production equipment. Licensing of rights for renting, broadcasting and distribution of pictures accounts for 35% of the industry revenue (D&B Hoovers, 2019). So, the profit potential is higher in the industry due to moderate to high entry barriers.

Bargaining Power of Suppliers:

Almost all companies operating in the industry have to get their raw material from powerful suppliers in media sector (D&B Hoovers, 2019). The negotiating power of the suppliers in this industry is high as suppliers can decline to distribute the content produced by Beyond Intl. Ltd. which then it has to distribute on its own. Hence, the high bargaining power reduces the overall profitability of the industry. 

Bargaining Power of Buyers:

Due to almost no switching cost associated with shifting to other content distributors and producers, the bargaining power of buyers (viewers) is high. Buyers has a strong and powerful base which allows them to seek discount and offers on the content aired by the companies hence it put pressure on the profitability of the company in long run (IBISWorld, 2019).