Sealink Travel Group Case Study

Document Type:Thesis

Subject Area:Accounting

Document 1

Currently, Sealink has its operations spread out in the four states and the northern territory spanning 10 islands and 12 holiday destinations. It is now a recognized brand in whole of Australia (Ellis, 2013). Shareholders Information A board of directors manages Sealink with the chief executive officer being the secretary to the board and the daily overseer of the running of the company. Jeffrey R. Ellison is the executive director, MD, and chief executive officer of the company. 15 percent of the company making him the third majority shareholder follows him. Fourth on the ownership list is Sarto Pty Ltd with an ownership stake of 4. 97 percent. Fredrick Mann owns a stake of 3. 51 per cent and Belahville Pty Ltd owning a stake of 2. The dividend is high but it is not of a bother to the company as its revenue earning activities are running smoothly and the company is expanding its activities in each financial year.

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The expansion means that the company revenue will continue to rise and the dividend paid out is sustainable in the coming years. For retained income, that amount is satisfactory and enough to allow the company meet its internal expenses such operating costs, salaries and wages, and debt. There will be no strain or pressure from the debtors. Firms Tax Expense The income tax of the company calculated at 30 percent of the operating profit for the 2016, is $9. 5 million. For the 2014/15, the deferred tax liability stood at $1 million. The deferred tax liabilities are recognized for all taxable temporary differences except in situation where the deferred tax liability comes from the initial appreciation of good will or from a liability or asset in a transaction not considered as a business transaction.

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The transaction must not have an effect on the profit and loss account or the balance sheet (Sealink Company, 2016). Company position in the market Sealink operates and owns 75 ferries in their fleet and it includes a further three construction and maritime craft all helping in transporting over 8 million passengers in a single financial year. This safety attracts more tourists every year who participate in inbound travels and holiday destinations. The government involvement in promotion of the tourism sector is also a huge plus in the strengthening of the company’s position in the market. The government boosts the sector by creating an enabling environment to all the companies operating the various spheres of the Australian economy. Australian tax system In the country, the financial year runs from July 1 and ends in June 30 of the preceding year.

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The income tax forms the major revenue stream for the government, and it is deducted on business income, personal earnings and on the capital gains made. The company entered into the market and launched its $1. 6 million catamaran that has a carriage capacity of about 95 passengers between Cape Jervis and Penneshaw. The entry of the new operator tilts the market and creates an imbalance in competition. The new entrant has slashed the transport services instantly and rapidly drawing a controversy and calling on Sealink to devise their new strategy. In reaction of new entrant, Sealink appointed a consultant company that will help in advising on the way forward and how to continue competing effectively and in a profitable manner. On the contrary, Kangaroo Connect Island does not hold the massive infrastructure like Sealink by it is backed by worthy investors who are ready to invest huge capital in the growth of the company.

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Still Sealink has a fleet of vessels and inland transport coaches and buses compared to the single vessel entrant of the Kangaroo Connect Island. The other difference is the level of experience held by each company. Sealink has operated for several decades and has learnt the rope of what transpires in the industry. It understands the lows and highs of the industry. The first representation is a dog connoting products and services with low market share. The second is the question marks representing services with high growth rates but have low market segment. The third symbol is the stars showing services with high growth markets and huge market share. The final symbol is the cash cow representing products in markets with low growth rate but with a high market share.

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