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HI5020 Corporate Accounting T2 2020 Holmes

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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

HI5020 Corporate Accounting
HI5020 Corporate Accounting

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.

Assessment task: Part A

Assignment Specifications

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).

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                   5%

the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful?

What are the major sources of cash for each firm? What are the major uses of cash            1%

for each firm?

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              1%

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).

Was the firm able to generate enough cash from operations to pay for all of its capital            1%

expenditures?

Did the cash flow from operations cover the dividend payment made by the firm (if            1%

any)?

If the firm has generated excess cash from operations, how did the firm invest the              1% excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends?

Did the firm use the  working capital  (current asset  and current  liability) accounts              2%

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).

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            1%

short- and long-term debt)?

What was the trend in working capital accounts? (Answer this question using only the            1% Cash flow statement for BHP Limited).

Critically evaluate the financial strength of each of the three companies based on the            5%

evidence presented in the Statement of Cash Flows.

If you are asked to evaluate these three companies for lending purposes, which of the            2%

three companies you will select for lending? Explain Why.

Conclusion                                                                                                                                                1% References                                                                                                                                                1% Total in Written Assignment                                                                                                                              30% Video presentation                                                                                                                                             10% Total                                                                                                                                                         40 %

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

Source: INQAAHE, 2020

Manipulating  or  inventing  data  with  the  intent  of  supporting  false conclusions, including manipulating images.

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 statement of cash flows. Why do investors find both income statement and statement of cash flows useful?

What are the major sources of cash for each firm? What are the major uses of cash for each firm?

/5            Demonstrate outstanding knowledge beyond requirements on the topic.

Extensive relevant research Independent and in-depth analysis.

Issues and factors are presented and analyzed in a logical manner.

Broad and credible sources of references have been cited using proper referencing style.

/1            Major sources of cash and major uses of cash are identified and discussed in detail.

Demonstrate very good knowledge on the topic.

Substantial relevant research.

Issues are discussed adequately based on sufficient research.

Adequate references in proper referencing style.

Major sources of cash and uses of cash are identified.

Detailed discussion is provided with minor errors.

Demonstrate good knowledge on the topic.

Adequate relevant research.

Discussed the issue based

on some research and facts.

Scopes for improvement

remain.

Adequate references in proper referencing style.

Major sources of cash and uses of cash are identified with minor errors.

Basic discussions are attempted with minor errors.

Demonstrate basic knowledge on the topic.

Some relevant research. Meet the requirements

but with limited

information and

discussion.

Limited references.

Major sources of cash and uses of cash are identified with material errors.

Basic discussions are attempted with material errors.

Demonstrate poor knowledge on the topic.

Limited and/or no relevant research.

The answers do not meet the basic requirement as no factual discussion is provided.

No reference.

No clear attempt is made to identify the major sources

of cash and uses of cash. No discussion is provided.

Questions                              Marks                        Excellent                                       Very Good                                        Good                                     Satisfactory                             Unsatisfactory

What was the trend in cash flow from

(continuing) operations for each firm?

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).

Was the firm able to generate enough cash

/1            Trends in the cash flows from continuing operations are identified and discussed adequately.

Demonstrate outstanding knowledge beyond requirements on the topic.

Independent and in-depth analysis.

Issues and factors are presented and analysed in a logical manner.

/1            Shows a complete comprehension of the relationship between net income and cash flows from operations.

The reasons for the differences between these two

figures are identified and discussed in detail.

/1            Identify all cash flows from operation with specific

Trends in the cash flows from continuing operations are identified.

Discussion is not comprehensive.

Demonstrate very good knowledge on the topic.

Issues are discussed adequately

based on sufficient research.

The relationship between net income and cash flows from operations are explained.

The reasons for the differences between these two figures are identified and discussed with minor errors.

Identify all cash flows from operation with specific

Trends in the cash flows from continuing operations are identified with minor errors.

Basic discussion has been provided with minor errors.

Demonstrate good knowledge on the topic.

The relationship between net income and cash flows from operations are explained.

Identification of the reasons of the differences between these two figures contains material errors.

Identify all cash flows from operation with specific

Trends in the cash flows from continuing operations are identified with material errors.

No discussion is provided.

Demonstrate basic knowledge on the topic.

Meet the requirements but with limited information and discussion.

A reasonable attempt is made to identify the relationship between net income and cash flows from operations.

A reasonable attempt is made to identify the reasons of the differences between these

two figures but fail to completely grasp the

issue.

Errors are identified in the answer.

A reasonable attempt is made to identify cash flows from operation

No realistic attempt is made to identify the trend.

No discussion is provided. Demonstrate poor

knowledge on the topic.

A poor attempt is made to explain the relationship between net income and cash flows from operations.

No reasonable attempt is made to identify cash flows from operation with specific

Questions                              Marks                        Excellent                                       Very Good                                        Good                                     Satisfactory                             Unsatisfactory

from operations to pay for all of its capital expenditures?

Did the cash flow from operations cover the dividend payment made by the firm (if any)?

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?

mention of whether it is positive or negative.

Identify all capital expenditures and synthesise the adequacy of cash flows from operations to cash required for capital expenditures.

/1            Clearly demonstrate the sources of fund used for and dividend.

Demonstrate outstanding knowledge beyond requirements on the topic.

/1            Clearly identify and explain whether the firm has generated excess cash flows.

Present a good discussion on free cash flows and uses of excess cash flows.

mention of whether it is positive or negative.

Identify all capital expenditures.

Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.

Demonstrate the sources of fund used dividend. Minor errors.

Demonstrate very good knowledge on the topic.

Identify and explain whether the firm has generated excess cash flows.

Present a reasonable discussion on the concept of free cash flows and uses of excess cash flows.

mention of whether it is positive or negative.

Identify most capital expenditures.

Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.

Address the question but unable to clearly indicate whether the cash flows from operations were enough

for dividend payment.

Demonstrate good knowledge on the topic.

Identify and explain whether the firm has generated excess cash flows.

Present a discussion on the concept of free cash flows and uses of excess cash flows with errors.

with specific mention of whether it is positive or negative.

Identify some capital expenditures.

Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.

Some errors are identified in the answer.

Answer the question correctly with a simple “yes” or “No” answer.

No discussion is provided.

Demonstrate basic knowledge on the topic.

Identify and explain whether the firm has generated excess cash flows with some errors.

No discussion is made about free cash flows.

mention of whether it is positive or negative.

Fail to identify most capital expenditures.

Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.

Material errors are identified in the answer.

Incorrectly answered the question with a simple “yes” or “No” answer.

No discussion is provided. Demonstrate poor

knowledge on the topic.

Incorrectly identify and explain whether the firm has generated excess cash flows.

No discussion is made about free cash flows.

Questions                              Marks                        Excellent                                       Very Good                                        Good                                     Satisfactory                             Unsatisfactory

The discussion on uses of excess cash flows is unclear.

No discussion or incorrect discussion is made on uses of excess cash flows.

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).

What other major items affected cash flows?

/2            Demonstrate a clear understanding of how changes in current assets and current liabilities can be source of fund and/or uses of fund.

Correctly explain whether the firm has used working capital items as sources of operating cash flows or uses of operating cash flows.

/1            Cash flows from sources other than operating activities are identified.

Cash flows from investing activities and financing activities are identified and explained in detail.

Demonstrate a comprehensive understanding of the topic.

Present a good discussion on whether

the firm has used current assets

and current

liabilities as sources of fund or uses of fund.

Present an item-wise discussion on each current assets and current liability items with minor errors.

Cash flows from sources other than operating activities are identified.

Cash flows from investing activities and financing activities are identified and explained with minor errors.

Demonstrate a very good understanding of the topic.

Present a reasonable discussion on whether the firm has used current assets and current

liabilities as sources of fund or uses of fund.

Present an item-wise discussion on each current assets and current liability items with material errors.

Cash flows from sources other than operating activities are identified with minor errors.

Cash flows from investing activities and cash flows from financing activities are separately identified and explained with material errors.

Present a discussion on whether the firm has used current assets

and current

liabilities as sources of fund or uses of fund with minor errors.

Unable to present a proper discussion on each current assets and current liability items.

Cash flows from sources other than operating activities are identified with material errors.

Cash flows from investing activities and cash flows from financing activities are

not separately identified and explained.

Meet the requirements but with limited information and discussion.

Present an incorrect discussion on whether the firm has used current assets and current liabilities as sources of fund or uses of fund.

Unable to present a proper discussion on each current assets and current liability items.

Demonstrate poor knowledge on the topic.

No reasonable discussion is provided on cash flows from sources other than

operating activities.

The answers do not meet the basic requirement as no factual discussion is provided.

Questions                              Marks                        Excellent                                       Very Good                                        Good                                     Satisfactory                             Unsatisfactory

What was the trend in capital expenditures for each firm?

What was the trend in dividends (if any) for each firm?

What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for each firm?

What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited).

Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows.

/1            Trend in capital expenditures for each of the three firms is correctly identified and discussed comprehensively.

/1            Trend in dividends for each of the three firms is correctly identified and discussed comprehensively.

/1            Trend in net borrowing for each of the three firms is correctly identified and discussed comprehensively.

/1            Trend in working capital is correctly identified and discussed comprehensively.

Item-wise discussion is provided

/5            The financial situations of all three companies are comprehensively discussed

Logical and accurate conclusion is drawn based on the discussion.

Trend in capital expenditures for each of the three firms is correctly identified.

A good level of discussion is provided.

Trend in dividends for each of the three firms is correctly identified.

A good level of discussion is provided.

Trend in net borrowing for each of the three firms is correctly identified.

A good level of discussion is provided.

Trend in the working capital is correctly identified.

A good level of

discussion is provided on each item.

A very good discussion is provided on the financial situations of all three companies.

Trend in capital expenditures for each of the three firms is correctly identified but not well discussed.

Trend in dividends for each of the three firms is correctly identified but not well discussed.

Trend in net borrowing for each of the three firms is correctly identified but not well discussed.

Trend in the working capital is correctly identified.

The trend is not discussed item-wise.

The financial situations of all three companies are discussed with scopes for improvement.

Attempt to draw a conclusion but

Trend in capital expenditures for each of the three firms is correctly identified.

No discussion on the trend is provided.

Trend in dividends for each of the three firms is correctly identified.

No discussion on the trend is provided.

Trend in net borrowing for each of the three firms is correctly identified.

No discussion on the trend is provided.

Trend in the working capital is correctly identified.

No discussion on the trend is provided.

The financial situations of all three companies are discussed but most of the discussion is basic and scattered.

Trend in capital expenditures for each of the three firms is not correctly identified.

No discussion on the trend is provided.

Trend in dividends for each of the three firms is not correctly identified.

No discussion on the trend is provided.

Trend in net borrowing for each of the three firms is not correctly identified.

No discussion on the trend is provided.

Trend in the working capital is not correctly identified.

No discussion on the trend is provided.

The financial situations of all three companies are discussed.

The discussions are not logically linked.

Questions                              Marks                        Excellent                                       Very Good                                        Good                                     Satisfactory                             Unsatisfactory

If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why.

Demonstrate outstanding knowledge beyond requirements on the topic.

Issues and facts are presented and analyzed in a logical manner.

/2            Make a clear and accurate selection highlighting the reason for the selection.

Discussion is based on facts and figures.

Logical conclusion is drawn based on the discussion.

Demonstrate very good knowledge on the topic.

Issues are discussed adequately based on sufficient research.

Make a clear and accurate selection.

A good level of discussion is provided on the selection.

it is not logically and factually sound.

Demonstrate of good knowledge on the topic.

Discuss the issues based on some research and facts with scopes for improvement.

Make a clear and accurate selection.

A basic discussion is provided on the reasons for selection.

The discussions are not logically linked.

Demonstrate basic knowledge on the topic.

Meet the requirements but with limited information and discussion.

Make a clear and accurate selection.

No discussion is provided on the reason for the selection.

Demonstrate poor knowledge on the topic.

The answers do not meet the basic requirement as no factual discussion is provided.

The selection is inaccurate. No reasonable

discussion is provided on the reason for the selection.

Conclusion                                                       /1            Apply your judgement References                                                       /1            Apply your judgement Total in Written assignment                         /30

Video presentation                                        /10

Total                                                                 /40