1 Assignment for Submission Subject: BUACC 5930, Accounting Concepts and Practices Semester 1, 2020 This is a Group Assignment. This is due in week 10 or 11. All questions must be completed. Question...

ACCOUNTING CONCEPTS AND PRACTICES
    Serial Number
    Contents
    Page Number
    1.
    Answer to Question 1
    1-2
    2.
    Answer to Question 2
    3-4
    3.
    Answer to Question 3
    5-7
    4.
    Answer to Question 4
    8-11
    5.
    References
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ANSWER TO QUESTION 1
Lendlease is an infrastructure and Property Company based in Australia and is the fifth-largest company in the country. Evaluating the financial statements of the company, it was observed that the total revenue of the company has decreased marginally from the previous year but the corresponding cost of sales has increased in a higher ratio than to an increase in total revenue. The cost to sales ratio in the year 2018 was at 0.908 but the same was at 0.934 in the year 2019. This reflects that the company has incurred more cost per dollar in the year 2019 to earn the same amount of revenue.
The gross profit ratio of the company in the year 2019 was at 6.7% but the same has reduced from 9.17% in the year 2018. There was a huge reduction in the gross profit ratio of the company as the overall revenue of the company has not increased and more so that the cost of sales of the company has increased by 2.69%. As the revenue of the company has not increased and above that, the cost has increased, therefore the income per dollar of the company has also fallen (Moridipour, H. and Mousavi, Z., 2014).
The earnings from Share of profit of equity-accounted investments has become 2.58 times in the year ending June 2019 from the earning of the year ending June 2018. The other income which comprises of the gain or loss from the fair valuation of the assets has decreased by $ 201 million. The investments made by the company in the subsidiaries and the joint venture companies have earned the company more profit in the year 2019 than in the year 2018. This shows that the company is investing in subsidiaries and joint ventures have been performing well and the investment decisions made by the companies have been profiting to the company.
The net profit ratio of the company was at 4.8% in the year 2018 which has decreased to 2.82% in the year 2018. The net profit after tax of the company has decreased by $327 million from 2019 to 2018. There are several reasons for the decrease in the net profit ratio of the company. Most of the expenses have increased between the years and there was no increment in the revenue of the company. The increase in the cost without an increase in the revenue has decreased the gross profit and the net profit ratio of the company. This shows that the company's main business operations did not bring much income in the year 2019 but at the same time, the cost incurred to maintain the same level of revenue has increased significantly (Tamulevičienė, D., 2016). Therefore in the overall performance of the company, the company has underperformed in the year 2019 when compared to 2018.
The basic Earnings per share that is the EPS of the company were at 100.2 cents in the year 2019 and the same has fallen to 55.6 cents in the year 2018. There was a fall of 44.6 cents in the basic EPS of the company. This reflects that the amount of earnings per share as invested in the share of the company by the shareholders has almost reduced to half of what it was in the previous year. EPS is considered as the indicator of the performance of the company and is used for the calculation of the market price of the shares. It is also used in the calculation of the P/E ratio. The decrease in the price of the shares of the company was caused by the decrease in the revenue leading to the fall in the EPS of the company.
The amount of finance costs of the company has also increased during the year. The finance cost was $88 million in the year which increased to $142 million in the year 2019. The finance costs of the company increased due to the increase of the borrowed funds in the year 2019. The borrowed funds increased by $606 million which significantly increased the overall interest cost. The company in which the financing through debt increases, the company becomes more risky, and the cost of equity and the expected rate of return of such company increases.
The current ratio of the company in the year 2019 was at 0.92 which was at 0.96 in the year 2018. The current ratio signifies the ability of the company to be liquid in terms of current liabilities. In the present scenario of the company, the current ratio should generally...