Assessment task: Part A Review the existing literature to critically examine the relative information content of the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful? Part B Download the annual financial reports of BHP Ltd, Santos Ltd, and Funtastic Ltd for the year 2019, 2018 and 2017. Examine the consolidated Cash Flow Statements for each companies across three years. Answer the following questions about each of the three cash-flow statements. 1. For each companies [except mentioned otherwise as in c), g) and i) below], across three years on the Statement of Cash Flows discuss: a) What are the major sources of cash for each firm? What are the major uses of cash for each firm? b) What was the trend in cash flow from (continuing) operations for each firm? c) Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question
Page 1 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION Assessment Details and Submission Guidelines Trimester T2 2020 Unit Code HI5020 Unit Title Corporate Accounting Assessment Type Individual Assignment Assessment Title Issues in Cash Flow Statement Purpose of the assessment (with ULO Mapping) This assignment aims at developing a clear understanding of students about income statement and cash flows statement; and use of cash flow statement to comprehend different key business decisions taken by the management. They will have to consult relevant literature and demonstrate understanding of key concepts. As part of their assignment, they will also conduct an empirical analysis on cash flow statement. (ULO 1, 2, 4, 5, 6) Weight 40 % of the total assessments (Written assignment 30 % + Presentation 10 percent) Total Marks Written assignment 30 marks + Presentation 10 marks Word limit 3,000 words ± 500 words Due Date Assignment submission: Final Submission of individual Assignment: 11:59 pm Wednesday 23rd Sep, Week 10 Late submission incurs penalties of five (5) % of the assessment value per calendar day unless an extension and/or special consideration has been granted by the lecturer prior to the assessment deadline Submission Guidelines • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page. • The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers. • Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style. Page 2 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 Assignment Specifications Assessment task: Part A Review the existing literature to critically examine the relative information content of the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful? Part B Download the annual financial reports of BHP Ltd, Santos Ltd, and Funtastic Ltd for the year 2019, 2018 and 2017. Examine the consolidated Cash Flow Statements for each companies across three years. Answer the following questions about each of the three cash-flow statements. 1. For each companies [except mentioned otherwise as in c), g) and i) below], across three years on the Statement of Cash Flows discuss: a) What are the major sources of cash for each firm? What are the major uses of cash for each firm? b) What was the trend in cash flow from (continuing) operations for each firm? c) Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question using only the Cash flow statement for BHP Limited). d) Was the firm able to generate enough cash from operations to pay for all of its capital expenditures? e) Did the cash flow from operations cover the dividend payment made by the firm (if any)? f) If the firm has generated excess cash from operations, how did the firm invest the excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends? g) Did the firm use the working capital (current asset and current liability) accounts other than cash and cash equivalents as sources of cash, or uses of cash? (Answer this question using only the Cash flow statement for BHP Limited). h) What other major items affected cash flows for each firm? i) What was the trend in capital expenditures for each firm? j) What was the trend in dividends (if any) for each firm? k) What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for each firm? l) What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited). Page 3 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 2. Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows, and your answers in (1) above. 3. If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why. Assignment Structure should be as the following: Abstract - One paragraph List of Content Introduction Body of the assignment with detailed answer on each of the required tasks Summary/Conclusion List of references Instruction for video presentation: Based on your written assignment, you will have to make a summary video presentation ranging for 10 minutes. Your presentation should explain the assignment tasks and your key findings. You will have to upload the presentation in YouTube and submit the YouTube link in the blackboard so that the marker can watch and mark your presentation. Your assignment will be marked based on the following criteria: Presentation Style (3 marks) Content (4 marks) Clarity of the presentation ((3 marks) Excellent 3-2.5 4-3 3-2.5 Very good 2.5-1.75 3-2.5 2.5-1.75 Good 1.75-1.5 2.5-2.00 1.75-1.5 Satisfactory 1.5-1.00 2.00-1.00 1.5-1.00 Unsatisfactory 1.00-0 1.00-0 1.00-0 Marking criteria Marking criteria Weighting Abstract 1% List of content & overall presentation of the assignment 1% Introduction 1% Do the relevant research to critically examine the relative information content of the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful? 5% Page 4 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 What are the major sources of cash for each firm? What are the major uses of cash for each firm? 1% What was the trend in cash flow from (continuing) operations for each firm? 1% Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question using only the Cash flow statement for BHP Limited). 1% Was the firm able to generate enough cash from operations to pay for all of its capital expenditures? 1% Did the cash flow from operations cover the dividend payment made by the firm (if any)? 1% If the firm has generated excess cash from operations, how did the firm invest the excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends? 1% Did the firm use the working capital (current asset and current liability) accounts other than cash and cash equivalents as sources of cash, or uses of cash? (Answer this question using only the Cash flow statement for BHP Limited). 2% What other major items affected cash flows? 1% What was the trend in capital expenditures for each firm? 1% What was the trend in dividends (if any) for each firm? 1% What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt)? 1% What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited). 1% Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows. 5% If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why. 2% Conclusion 1% References 1% Total in Written Assignment 30% Video presentation 10% Total 40 % Page 5 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 Academic Integrity Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Sills link on Blackboard. Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment. Table 1: Six categories of Academic Integrity breaches Plagiarism Reproducing the work of someone else without attribution. When a student submits their own work on multiple occasions this is known as self-plagiarism. Collusion Working with one or more other individuals to complete an assignment, in a way that is not authorised. Copying Reproducing and submitting the work of another student, with or without their knowledge. If a student fails to take reasonable precautions to prevent their own original work from being copied, this may also be considered an offence. Impersonation Falsely presenting oneself, or engaging someone else to present as oneself, in an in-person examination. Contract cheating Contracting a third party to complete an assessment task, generally in exchange for money or other manner of payment. Data fabrication and falsification Manipulating or inventing data with the intent of supporting false conclusions, including manipulating images. Source: INQAAHE, 2020 Page 6 of 11 HI5020 Corporate Accounting Individual Assignment 2 2020 Marking Rubric Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory Abstract /1 Apply your judgement List of content & overall presentation of the assignment /1 Apply your judgement Introduction /1 Apply your judgement Do the relevant research to critically examine the relative information content of income statement and