ACC EXCEL

Term Assignment A1

Professor Thomas Martin

Xiang Zhou

10/08/2020

Huawei Annual Report Assignment

Question set #1

1. What is your company's principal business activity?

The core business for Huawei Tech. Company is to provide information, communication and technology smart services, commonly known as ICT and infrastructure.

2. Who is the CFO? What is his/her accounting background?

The CFO of Huawei is Ms. Meng Wanzhou (Saabrina Meng) who is also the Deputy Chairwoman of the company. Ms. Meng holds a master’s degree from Huazhong University of Science and Technology. She has served in various accounting and finance position such as Director of the International Accounting Department, President of the Accounting Management Department and currently as the CFO and Deputy Chairwoman of the Huawei Tech. Company. Ms. Meng has various achievements such as establishing Huawei's globally unified finance organization, developing the standardized and unified organizational structure, financial processes, financial systems, and IT platforms. She is also a leader in the founding of five shared service centers around the world, she was in charge for the completion of Global Payment Center in Shenzhen, China. Ms. Meng is also in charge of Integrated Financial Services (IFS) Transformation Program. She is also recognized for her role in the creation of a DNA for Huawei’s sustainable growth.

3. Is your company managing any ethical issues presently? If so, how do their actions affect their financial performance going forward?

Currently, the company does not have any ethical lawsuits. However, in 2019, the company was accused of “theft and dubious ethics”. The company has a well-laid down business ethics structure that should followed and adhered to by all its employees across the different subsidiary branches.

Question set #2

1.  Identify the costs/expenses as either variable of fixed. For the variable cost per unit, you will have to find or estimate the total products sold during the fiscal year.

The fixed costs for the company includes personal expenses such as salaries and wages, TPU, contributions for retirement plans and rent expenses. Some of these costs are not assigned the monetary value hence difficult to estimate them. Variable costs includes cost of materials/inventory, sales and administrative expenses that are categorized in the variable cost section. The carrying amount of inventory sold in 2019 equals to CNY 456,577 million. However, the total unit sold is not provided

2. Write the total cost function. 

Total cost = Fixed cost + Variable cost

Fixed cost value and number of unit sold is not provided hence difficult to determine that actual cost function.

Question set #3

1. Identify & explain the operating segments of your company. (Geographic/Regional)

Huawei Tech. Company is headquartered in Shenzhen, Guangdong – China. The company has various operation segments as follows:

Clearly, China constitutes the largest market segment for the company (59%) for the 2019 revenue followed by EMEA with 24%. America and Asia Pacific accounts for 6.1% and 8.2% respectively.

2. Prepare a table that compares the percent change in “Total Revenue” to the change in “Operating income” from 2018 to 2019 or the most recent available years

Clearly, from the table above, the operating revenue decreased in 2019 when compared to 2018. This can be attributed to the increase in the cost of sale which increased by 1.0% in 2019.

3. Identify, if any, what regions increased in revenue, but decreased in operating income from year to year.

Three of the four market segments for Huawei Tech. Company reported increase in revenue in 2019 as compared to 2018. The China market segment reported a 36.2% rise (from 372,162 in 2018 to 506,733 in 20190. Similarly, EMEA, America as well as other market segments not mentioned rose by 0.7%, 9.6% and 57.0% respectively. However, the operating income for each segment is not provided hence not able to measure the change in each segment.

4. What might explain this?

The rise in revenue in the China and EMEA segments is attributed to the rollout and high usage of the 5G network in large scale. In the American segment, the competitiveness of the company product and infrastructure resulted to the rise in segment revenue. Nevertheless, the operating expenses and incomes are not provided in the report.