Assessment Title:
ASSIGNMENT STAGE 2 (ASS#2): RESTATED FINANCIAL
STATEMENTS
Student Name:
Duy Hoang Nguyen
Program
CU23 – Bachelor of
Multimedia Studies
Course Name and Code:
Using Accounting for Decision Making – ACCT11059
Lecturer
Peter Zhang
___________________________________________
Due Date: Monday 11 May 2015, 11.00 AM AEST
Requirement 1
Chapter 4
Decision-making or choosing anything is a
very stressful and complicated task. And, to make a good decision, we need
accurate data to support us. Same as in selling and buying equities of a
company, to be able to make the right decision, we need some sort of data as
well. And yet, the most accurate among them all is financial statement. A
document that records company past’s activities in a very detailed way. By
reading the introduction part of this chapter, I got an overall idea of whole
chapter and the importance of the financial report to an investor. Also, I
really like the quote from Machiavelli
“Whoever wishes to foresee the future must consult the past”. It is a
very profound say. A realisable source of past information with an educated
approach of analysis could bring out great results.
Free
Cash Flow (FCF)
The first important thing that I realized
is dividends and cash flow are not the creation of value; they are measure of
transfer of value. It only shows transactions between a firm and its equity
investor. Furthermore, we understand that the successful of a company is how it
allocates its cash from operations (C) and Investment (I). Taking the case
between King Enterprises and Mark Inc, I can see how this knowledge effected my
decision. As both of them have the same operating income in 4 years. However,
King Enterprises take much less investment to achieve the same income as Mark.
If I wasn’t have the base understanding of free cash flow, I would be very
confusing between the two and subsequently make the wrong decision.
In the next part, economic profit,
everything starts to come together and makes more sense. A firm only increase its
value when earning return on net operating asset (RNOA). While in the previous
part, we understand the concept that the more money invest on operating asset,
the more operating income we should get. In this part, I could identify which
elements is the one that bring the true value to the investors and how to
calculate them based on the Economic Profit equation. Moreover, I am totally
agreed with concept that life is a trade and we need to carefully to make the
right investment in every day of our life.
Operating
and financial activities
Operation is the core of all businesses.
Perhaps, being able to see and analysis a business’s operation is the key to
understand the present and the future of a business. This section is my
favourite in the whole chapter. As the author stated, it is a sweet journey to
find the little magic toy inside a chocolate egg. This made me feel very
excited about restating my firm’s financial statement. It looks quite hard for
the start. I was very confused and unsure which variables are financial and
which one are operation. For example in the statement of changes in equity,
there were more than just one total equity but also revers, retained profit.
Thus, as this exercise is to help students gain a better insight into a firm’s
financial position, I tried my best to read the example from the study guide
and finally, I could make it through. After restated the changes in equity, I
felt like I have just learnt one of the most useful tool in my journey of
becoming an equity investor. Not only that, by applying the given equation of
RNOA as well as Tax expenses I was also been able to calculate the true profit
from the tax shield and apply them into my future business.
In conclusion, the key concept of this
chapter is there are two ways a firm could gain its true value, through cash
flow and economic profit. This is a profound way of looking at a company and
that would define our expectation on return of each investment in equities.
Also, by separating firm activities into operating and financial activities, we
could clearly see a firm core value in an equity investor’s perspective. I
really enjoy this assignment and looking forward to the third assignment for
more challenges.
Requirement 2
Spreadsheet has been attached to the
assignment
Complimentary and discussion with other
I was very struggled to be able to
understand and restate the financial statement. First when I started to work on
the financial statement, I though it was very easy and straightforward as have
had some understanding from previous chapters. Started with the change in equity,
I was very confusing between the term profit for the period and other
comprehensive income. Had a good look into the study guide and via the Internet,
I have been able to translate them into my company’s term as retained profit. Furthermore,
calculating tax benefit is another tough task. The tax percentage of the
company has not been displayed in any area near the lost and income field and
it also varies from years to years. It took me fair bit of time to look them up
on the internet and finally could put them into the equation of tax benefit.
Requirement 3
Three products of CTI logistics:
1.
Courier service:
a.
Estimated fixed cost: $1000
b.
Variable cost: $300
c.
Contribution margins: $700
2.
Taxi Trucks rental:
a.
Estimated fixed cost: $2000
b.
Variable cost: $700
c.
Contribution margins: $1300
3.
Fleet management service:
a.
Estimated fixed cost: $700
b.
Variable cost: $200
c.
Contribution margins: $500
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