Format of the Report
Your submitted assignment atleast should have the following details:
a.Assignment Cover page clearly stating your name and student number b.Executive summaryc.A table of contentd.A brief introductionof the companies you had chosen and anoverview of what you discussed in this assignmente.Body of the reportwhere you write your answerswith appropriate section headings f.Conclusion (No recommendation is necessary).g.List of references.(Inclusion of any references in this listwithout in-text referencing willbe a futile exercise.)
Assessment task
Selectthreepublic limited companieslisted on the Australian Securities Exchange (ASX)thatare in the same industry.Go to the website of your selected companies. Then go to the Investor Relations section of the website. This section may be called, “Investors”, “Shareholder Information” or similar name.
In this section, go to yourcompanies’annual reports and save to your computer your firms’latest annual reports consecutively forlast three years.Do not use your companies’interim financial statements or their concise financial statements.Please read the financial statements (balance sheet,income statement,statement of changes in owner’s equity, cash flow statement) very carefully. Also please read the relevant footnotesof your companies’financial statements carefully and include information from these footnotes in your answer.
You needto do the following tasks:
EQUITY &LIABILITY(5 Marks)
(i)From your companies’ financial statements, list each item of equity reported and write your understanding of each item. Discuss any changes in each item of equity for your firms over last three years articulating the reasons for the change.
(ii)From yourcompanies’ financial statements,list each item of liability reportedand write your understanding of each item. Discuss any changes in each item of liabilityfor your firmsover last three yearsarticulating the reasons for the change.
(iii)Provide a comparative analysis of the debt and equity position of thethreefirms that you have selected.
CASH FLOWS STATEMENT(5 Marks)
(iiii)Fromthefinancial statementof your chosen companies, list each itemreported in thecash flows statementand write your understanding of each item.Discuss any changes in each item ofcash flows statementfor yourcompaniesover last three yearsarticulating the reasons for the change.
(v)Provide a comparative analysis of your companies’three broad categories of cash flows (operating activities, investing activities, financing activities) and make acomparativeevaluation for threeyears.
(vi)Also provide a comparative analysis of thethreecompaniesthat you have selected explaining the insights that you can get fromthe comparative analysis.
OTHER COMPREHENSIVE INCOME STATEMENT(5 Marks)
(vii)What items have been reported in the other comprehensive income statementfor each company?
(viii)Whyhave these itemsnot been reported in Income Statement/Profit and Loss Statements?(ix)Provide a comparative analysis of the items shown in the other comprehensive income statement section for thethreecompanies. If these items were included in the income statement / profit and loss statements of each company, howwould theprofit attributable to shareholders of the companybe affected?
(x)Should other comprehensive income be included in evaluating the performance of managers of the company?
ACCOUNTING FOR CROPORATE INCOME TAX(15 Marks)
(xi)Whatare thetax expenses shown in the latestfinancial statementsof thethreecompanies that you have selected?
(xii)Calculate the effective tax ratefor all three companiesthat you have selected. Effective tax rate is calculatedas (income tax expense / earnings before tax). Which one of the companieshas the higher effective tax rate?
(xiii)Comment ondeferred tax assets/liabilities that is reported in the balance sheetarticulating the possible reasons why they have been recorded.
(xiiii)Was there any increase or decrease in the deferred tax assets or in the deferred tax liabilityreported byeach of your selected companies?
(xv)Please calculate the cash taxamountfor all three companiesusing the book taxamount, changes in the deferred tax assets and deferred tax liability (please do your own research for yourbetterunderstanding of these conceptsand the method ofcalculating the cash tax amountthe booktax amount.)
(xvi)Calculate the cash tax ratefor all three companies. Which company has higher cash tax rate?(Please do your own research to familiarise yourself with how to calculate cash tax rate).
(xvii)Why is the cash tax rate different from the book tax rate?
Please remember some aspects of yourcompanies’treatment of tax can be a very complicated area, particularly for somecompanies.For a better understanding of theconceptsincluded in the assignment that has not been introduced in the class, please do your ownresearch.