Financial Accounting

100 pages long.

From the following link download Woolworths Limited’s annual report for 2017

https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf

Go to page 53 where you will find the financial statements.

In the 2016 annual report the financial statements can be found on page 55. Here’s the link:

https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf

You will need the 2016 results when calculating average inventory and average receivables for the 2016 efficiency ratios. You can access the closing market price of Woolworth’s shares at

https://au.finance.yahoo.com/quote/WOW.AX/history?period1=1492180200&period2=1498746600&in terval=1d&filter=history&frequency=1d

Required

A Calculate the following ratios for 2017 and 2016: Current and Acid Test ratios

Inventory turnover and days in inventory

Gross profit percentage, accounts receivable turnover and days sales in receivables Debt ratio and debt to equity ratio

Rate of return on net sales ratio and rate of return on total assets ratio Asset turnover ratio and the rate of return on ordinary shareholders equity

Dividend yield and dividend payout. (24 marks)

B Using the ratios calculated in Part A and information gathered from elsewhere in the Annual Reports write a report to a potential investor with your recommendations as to whether Woolworths Limited would make a good investment.

(The report should not be just a re-statement of the ratio calculations but an interpretation of them. Any calculations should be contained within an appendix and not in the body of the report. Remember the report is to a potential investor so the ratios must be of interest to them. Remember a business

report will need: a report structure, title (including reference to whom the report is addressed), author, executive summary, introduction, findings, and a conclusion. Marks will also be awarded for

presentation, business English, content, and where relevant, references.) (20 marks)

C As a rule of thumb the Current Ratio for businesses should be 2:1 and the Acid Test between1.5 to 1 How would you explain these ratios for Woolworths Limited when compared to this rule?

(4 marks)

(48 marks)

Q3. In Note ii (p. 91) of the Qantas Annual Report 2017 it states:

ii. Foreign Operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Australian Dollars at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into Australian Dollars at the exchange rates at the date of the transactions.

Foreign currency differences are recognised in the Consolidated Statement of Comprehensive Income and accumulated in the Foreign Currency Translation Reserve….

Required

Explain this note to a reader of the Qantas report. Your explanation should deal with all the elements of a set of financial statements, with the translation methods adopted for each element, including all the component parts of equity, together with description of why foreign exchange differences arise,

where they are recognized and where do they get transferred to. (13 marks)

Required

Additional information

1)Fixtures and fittings which had cost $2860 and with accumulated depreciation of $520 were sold during the year in a cash sale.

2) Plant which cost $13,000 was purchased in exchange for the issue of 13,000 shares at a price of $1 each.

3) The bank overdraft is to be included in cash equivalents.

A Prepare a Statement of Cash Flows for Flash in the Pan Ltd for the year ended 30th June 2019 using the direct method.

(12 marks)

B The Statement should be accompanied by all the relevant notes (3 in total) including the indirect method.

(14 marks)

(26 marks)