Accounting and Financial Management

Running head: ACCOUNTING AND FINANCIAL MANAGEMENT
Accounting and financial management
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1ACCOUNTING AND FINANCIAL MANAGEMENT
Table of Contents
Introduction........................................................................................................................2
Key items in the financial statements................................................................................2
Measurement of key assets...............................................................................................2
Financial performance analysis.........................................................................................2
Conclusion.........................................................................................................................3
Reference..........................................................................................................................4

2ACCOUNTING AND FINANCIAL MANAGEMENT
Introduction
AGL Energy Ltd is the integrated leading energy business and operates for more
than 180 years with proud heritage for innovation. It is engaged in selling and buying of
electricity and gas and associated products as well as services, operation and
construction of the power generation. The company operates largest private portfolio for
electricity generation in Australia with total capacity of 10,143 MW that accounts for
almost 20% of total generation capacity in Australian national electricity market. Further,
the company is active participant in electricity and gas wholesale market with the
customer accounts of 3.7 million those include large and small business group,
wholesale customers and residential customers (Agl.com.au, 2019).
Key items in the financial statements
Some of the key items including assets, liabilities, incomes and expenses those
have significant impact on the reported position of the firm, its performance and decision
making process are as follows –
 Borrowings – it is identified that the long term borrowing of the company has
been reduced from $3173 million in 2017 to $2822 million in 2018. It is signifying
financial strength of the company as it is competent to pay off the debt on time
and was not required new debt for its operation (Agl.com.au, 2019).
 Cash and cash equivalents – cash plays significant role in company’s business
and is required to pay off the short term obligations. Increase in amount of cash
from $154 million to $463 million over the period of 2017 to 2018 is signifying that
the company’s is strong in terms of its liquidity.
 Property, plant and equipment – PPE is crucial for the business operations as it
provides required resources for producing the products. Increase in the amount
of PPE from $6447 million to $6685 over the years from 2017 to 2018 is
signifying that the company has required resources for its operation (Agl.com.au,
2019).
Measurement of key assets
Accounting conventions are basic accounting rules that become acceptable
procedures over the time and are considered as the basis accounting rules. Most
commonly used convention is historical cost convention. It requires that the transactions
shall be recorded at the cost at which the item is acquired. Hence, under this approach
no account for changing prices is taken into consideration. AGL Energy Ltd follows the
historical cost convention approach for valuing reporting its asset that is the PPE are
measured at cost reduced by accumulated depreciation and accumulated impairment
losses (Annualreport.agl.com.au, 2019).