Corporate Financial and Managerial Accounting

Question: Discuss about the Corporate Financial and Managerial Accounting. Answer: Mission and vision of Medibank Private Limited: The mission of Medibank Private Limited is depicted as follows: Providing better and affordable health choices through health assurance policies Advocating an enhanced health system, which aims to fetch quality health outcomes The vision of Medibank Private Limited is summarised as follows: Committing to deliver the right service to the customers within time To be one of the leading health insurance providers in Australia To celebrate the differences and treat everyone in identical ways Measurement of the performance of top executives and senior managers of Medibank: In the beginning of 2016, the board has ascertained the target and the stretch level of performance for each group and the performance measures related to STI for ExCo members. In order to set such target, the board takes into account the performance of the previous year, expectations of the shareholders and strategic objectives of the organisation. In addition, the board ensures that the level of performance is set for the existing year in accomplishing long-term strategic and financial goals (Weygandt, Kimmel Kieso, 2015). After the completion of the year, the executives and managers are evaluated against the organisation and measures of role performance for ascertaining the outcomes of STI award. Key measures of performance for 2016: According to the above figure, the operating profit of the health insurance has performed above the financial gateway of STI awards. It has been found that the performance outcome has exceeded, as the amount stands at $510.7 million. In case of operating profit of the group, the outcome has been stretched, as it stands at $505.5 million. The management expense ratio helps in gauging the operating efficacy and value creation for the shareholders. It has accomplished the set target of 8%. The revenue growth of health insurance focuses on increasing its customer base as well as retaining the current customers. However, the growth has been below the set target of 4%. The role specific measure helps in accomplishing the strategic objectives to ensure that they align with the corporate goals and objectives (Braun, Tietz Harrison, 2013). This KPI has been varying from below and above target. Commentary on the company performance: According to Hurdles Witcomb (2017), Medibank has gross margin of 17.2% in 6 months until December 2015. The gross margin for the industry has been highly stable around 15% over the past years. However, the regulating authority might compel the margin of the private health insurers to this level. Therefore, Medibank has submitted the applications of premium round for lowering the growth of premium. As a result, the industry has received an approval of 5.59% rise in premiums. In view of Bentley Bentley (2017), the revenue of Medibank is expected to increase from $6.80 billion to $7.97 billion in 2020 and net profit is anticipated to rise from $418 million to $438 million in 2020. The margins would not be high, as it would remain around 5.5%. In addition, Medibank has increased its earnings rapidly than the Australian insurance industry having a return on equity of 27.6%. Reflection based on the level of remuneration and company performance: According to the annual report and company performance of Medibank obtained from relevant sources, it has been found that the revenue growth of the organisation would remain stable around 5.5%. However, the annual report does not address the submission of application regarding the premium round associated with premium growth. All the other facts are mentioned in the remuneration report of Medibank. Efficiency of Medibank in accomplishing its corporate vision and goals: From the above discussion, it could be evaluated that Medibank has been highly successful in meeting its corporate goals and objectives. However, it has not managed to meet the set revenue growth in 2016 due to declining industrial trend because of falling market demand. However, the other above-mentioned KPIs are performing as per the company expectations in 2016. References: Bentley, A. Bentley, A. (2017).What investors have to know about Medibank Private Limiteds (ASX:MPL) future?.Simply Wall St. Retrieved 4 January 2017, from https://simplywall.st/news/2016/10/28/what-investors-have-to-know-about-medibank-private-limiteds-asxmpl-future Braun, K. W., Tietz, W. M., Harrison, W. T. (2013).Managerial accounting. Pearson. Hurdles, M. Witcomb, G. (2017).Medibank faces big hurdles.Intelligent Investor. Retrieved 4 January 2017, from https://www.intelligentinvestor.com.au/medibank-faces-big-hurdles-1806816 Medibank.com.au. (2017). Retrieved 4 January 2017, from https://www.medibank.com.au/content/dam/medibank/About-Us/reporting-centre-2016/Annual%20report/Medibank_Annual_Report_2016.pdf Weygandt, J. J., Kimmel, P. D., Kieso, D. E. (2015).Financial Managerial Accounting. John Wiley Sons.