Chapter 1

Personally, I enjoy the way Martin Turner writes his work. It is refreshing to read something that feels like a novel and not a boring textbook. The way Martin sets the scene by describing his surroundings really got me hooked in what he had to say. In chapter one, Martin link business partnerships with living with flat mates. This is something I personally can relate to. I have been living out of home for exactly two years now with four of my close friends, and I can assure you we don’t always get along. Just like in a business partnership, my flat mates and I often have disagreements about things. For example, one housemate wastes a lot more power than the rest of us, even though at the end of the month we all pay the same amount.

Chapter One Questions

Why do we have double-entry accounting? Why do we put in everything twice? Why not just once?

Double entry accounting is a system in which transactions are recorded in terms of debits and credits. A debit in one account will be offset by credit in another account. Therefore the sum of all debits must be exactly equal to the sum of all credits. Double-entry accounting makes it easier to accurately prepare financial statements directly from the books of account and makes it easier to detect errors. Because each transaction contains both a source and a destination, double-entry accounting provides valuable details that can be sorted and viewed in report form later.

For your firm, identify three Assets, three Liabilities and three items of Equity. Describe what each item means to you (you may find some footnotes in your firm’s financial statements may help you to make more sense of these items). Put on your blog your answer to this question and comment on the answers to this question of at least three other people. Include links to your blog and also to your comments in other people’s blogs.

Asset - Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise of cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

Asset - Trade and other receivables

Trade receivables, which generally have 30 to 60 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for any uncollectable amounts. Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectable are written off when they are identified. An allowance for doubtful debts is raised when there is objective evidence that the Group will not be able to collect the debt.

Asset - Investments

When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributed transaction costs. The group determines the classification of its financial assets at initial recognition and, when allowed and appropriate, re-evaluate this designation at each financial year-end.

Liability – Trade payables

Trade payables are carried at amortised cost and represent liabilities for goods and services provided to the group prior to the end of the financial year that are unpaid and arise when the group becomes obliged to make future payments in respect of the purchase of these goods and services. In 2013, Navitas had $81,895 in current liabilities for trade and other payables.

Liability – Provisions

Provisions are recognised when the group has a present obligation as a result of a past event. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. In the 2013 financial statement, Navitas had provisions of $4355 in current liabilities.

Liability - Borrowings

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the balance date. In 2013, Navitas had a current borrowing liability of $2979.

Equity – Issued Capital

Ordinary shares – Ordinary shares have no par value and have the right to receive dividends as declared and, in the event of winding up the company, to participate in the process from the sale of all surplus assets in proportion to the number and amounts of paid shares held. In the 2013 financial year, Navitas had a total issued capital of $195,375.

Equity – Reserves and retained earnings

The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested. The financial year 2013 saw Navitas with $39,966 in retained earnings.

Short video about Navitas

Here I have attached a short video high lighting the basics of what Navitas does. You can see in the video that Navitas' main target is international students wishing to gain entry to University.

https://www.youtube.com/watch?v=ZhiS9F524N0

Top 3 Blogs...

After looking through numerous peoples blogs, these are the three that I found the most engaging and easiest to read.

1) Keller Group http://xuetingli.blogspot.com.au/

Very well set out blog with lots of information about the company 'Keller Group'. Wide variety of information regarding the companies background and also their financial position. This blog also provides a link to the companies website where you can view a video of the Chief Executive Officer providing you with even more first hand, inside information on the company.

2) Envirozel (EVZ) http://kenbwphantomhatch.blogspot.com.au/

First blog I started following, great set out and the author provides his personal opinion a lot which is something I find helpful. Huge amount of information about Envirozel (EVZ).

3) MYER http://cliffordpower.blogspot.com.au/

This blog has a lot of information about the company, both its history and financial position, but also includes a broad range of opinions the author had on Myer before even starting this assignment. One thing that stands out to me is the authors use of pictures. What's great about the pictures is that the author hasn't just copy and pasted from the internet, they have actually designed and made them himself.

Navitas Financial Performance

In an improving operating environment Navitas has maintained its record of revenue and EBITDA (Earnings Before Interest, Taxation, Depreciation and amortisation) growth while also returning to modest NPAT (Net Profit After Tax) growth.

Total Revenue Year Ended 30 June 2012 - $688.5m
Total Revenue Year Ended 30 June 2013 - $731.7m

EBITDA Year Ended 30 June 2012 - $126.8m
EBITDA Year Ended 30 June 2013 - $130.0m

NPAT Year Ended 30 June 2012 - $73.1m
NPAT Year Ended 30 June 2013 - $74.6m

The full year fully franked dividend was 19.5 cents per share. This represents 98% of tax paid earnings for the year, marking the beginning of the transition from a 100% to 80% payout ratio. The final dividend for the year is 10.2 cents per share.

Total revenue increased by 6% to $731.7m with growth recorded in all divisions as the operating environment in the key Australian market continued to recover. The University Programs division recorded revenue growth of 9%, two thirds of which related to price growth. The Professional and English programs division also grew revenues following strong performance from government contracts and educational businesses.

Group EBITDA rose 3% to $130.0m. This rise was largely driven by Professional and English Programs while the Group EBITDA margin decreased by 0.6% to 17.8% (FY12: 18.4%) due to:

• Year-end foreign exchange hedging
• Increases in the EVA based ValueShare incentives predominantly due to prior year credits related to below target FY12 performance.

Key Highlights for Navitas in 2012-2013 FY.

Return to student growth in University programs during the year.

Signed agreement with University of Canterbury to establish first University Programs College in New Zealand.

Enhanced SAE leadership leadership team and expansion of new courses and qualifications.

Merger of English and Professional Divisions to create Professional and English programs.

Continued growth in education businesses and government contracts drives strong Professional and English programs' results.

Commencement of implementation of key strategic and structural review recommendations.



If you would like to know more about any of these key highlights please leave a comment.

Brief Background of Navitas

Navitas Limited is an educational based service company, seeking to help people all over the world gain an alternative entry into University. Navitas has locations in twenty-eight countries around the world, with more than one hundred campus locations. Founded in 1994 by Rod Jones and Peter Larsen, Navitas began its first operation with Edith Cowan University called the Perth Institute for Technology (PIBT). They began this operation with just 198 students. Today, Navitas is one of the most globally recognised educational providers in the world providing an extensive range of educational services for students and professionals including University programs, English language training and settlement services, creative media education, workforce education and student recruitment.