Explain the changes in revenue and profit of your company that have Essay

Explain the changes in revenue and profit of your company that have occurred in recent years - Essay Example Based on the fact that the analysis serves the purpose of portraying financial health of a company, it means that we will focus on aspects of earnings. In this context, the two aspects which show earnings of an organization are revenue and profits. Paul and Krishna (2008) says that companies report earnings in terms of revenue and profit on a periodic basis. Through these earning reports, one can objectively know how much money a company makes, and predict corresponding amount of money that it will make in the foreseeable future. At this juncture, we will focus on a real company, ITV plc, which seeks to deliver growth through transformation of business strategies. ITV plc is a media company within the television broadcasting sector of communication industry. It deals with airing of news, advertisements and online broadcasting. In 2010, ITV adopted a transformation strategy meant to boost its financial status within a competitive business environment. This strategy strives to establis h a balanced performance in all subsectors of the company’s business, including TV studios, Pay and Interactive business and online broadcasting. ITV wants to reap heavily from increasing opportunities resulting from changes in consumer behavior. Improvement attributed to adoption of the transformation plan can be seen through the company’s revenue and profit trends. Supposedly, ITV plc admits that its transformation has contributed significantly to increase in its financial performance, which has continually enabled the company to post double digit earnings. At this juncture, preceding sections will involve dissecting ITV’s balance sheet and cash flow statements for the recent years since 2008. Changes in Revenue Fundamental analysis on ITV plc earnings will begin by acknowledging statistical figures of revenue for the past five years. In 2007, the company posted consolidated revenue of ?2,029 million. In 2008, total revenue generated from the different busines s sectors cumulated to ?2,082 million. In the two years, it emerges that TV broadcasting generates the largest revenue for the company, at ?1,652 million and ?1,750 million in 2008 and 2007 respectively. As at 31st December 2009, the company’s revenue dropped from ?2,350 million to ?1,879 million. Fortunately, 2010 came as relieve for the company after it posted improved revenue from TV studios and online broadcasting. In total, cumulative revenue for the company in 2010 stood at ?2,064 million, which is a substantial improvement compared to the 2009 figure of ?1,879 million. In succeeding years of 2011 and 2012, earnings generated from sales in form of revenue increased in a linear manner. In 2011, ITV plc had total revenue of ?2,140 followed by ?2,196 in 2012. Increase in revenue for these recent years is attributed to corresponding increase in sales within all business areas. In this regard, the figures posted above are true reflection of actuarial variations in revenue tr ends of ITV from 2007 to 2012. Changes in Profits Having appraised the revenue trend for ITV plc, it is not time to examine its profit patterns for the same period of five years. In this context, it is rationally assumed that tax rate for the five years remained consistent, thus profits considered will feature figures before tax. In 2007, ITV plc posted a before tax profit