Accounting Financial Analysis of WSP Global Inc

Running head: ACCOUNTING FINANCIAL ANALYSIS
Accounting Financial Analysis
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1ACCOUNTING FINANCIAL ANALYSIS
Table of Contents
Part II: 2017 financial statements and notes of WSP Global Inc....................................................2
Answer to Question 1:.................................................................................................................2
Requirement a:.........................................................................................................................2
Requirement b:.........................................................................................................................3
Answer to Question 2:.................................................................................................................4
Part III: Annual report of WSP Global Inc, Management discussion and analysis, Non-GAAP or
non-IFRS..........................................................................................................................................4
Answer to Question 1:.................................................................................................................4
Answer to Question 2:.................................................................................................................7
Answer to Question 3:.................................................................................................................8
Part IV: Subsequent financial performance of WSP Global Inc.....................................................9
Answer to Question 1:.................................................................................................................9
Answer to Question 2:...............................................................................................................10
Answer to Question 3:...............................................................................................................10
Answer to Question 4:...............................................................................................................10
Answer to Question 5:...............................................................................................................10
Answer to Question 6:...............................................................................................................11
References:....................................................................................................................................12

2ACCOUNTING FINANCIAL ANALYSIS
Part II: 2017 financial statements and notes of WSP Global Inc
WSP Global Inc is a Canadian organisation involved in providing management and
consultancy services to the developed and natural environment. The organisation is listed on the
stock exchange of Toronto having 36,000 staffs approximately in 500 offices serving in 40
nations (WSP, 2018).
Answer to Question 1:
Requirement a:
In accordance with “Page 80 of the annual report of WSP” in 2017, information about
IFRS 16 Leases could be found. Since the organisation has contractual obligations as operating
leases, material increase is bound to occur to both assets and liabilities upon the enforcement of
IFRS 16.
As found from the annual report of the organisation, it leases several equipment and
office premises under non-cancellable agreements of operating lease. The lease terms differ from
six months to ten years and the maximum lease agreements could be renewed in accordance with
the market rates, as could be observed from “Page 156 of the annual report of WSP”. In this
case, WSP acts as the lessee. The lease payments under these agreements are depicted as
follows:

3ACCOUNTING FINANCIAL ANALYSIS
WSP acts as the lessor as well, as it has mentioned about finance leases, in which the
finance expenses are incurred to the earnings statement over the agreement period. This could be
found from “Page 119 of the annual report of WSP”.
With the help of operating leases, WSP could cope up with the technological
advancements in the industry by maintaining tight cash flows. Another advantage that is
associated with operating lease is the significant tax advantages, in which payments could be
subtracted as operating expenses during the payment period. All the above information could be
accumulated easily from the annual report of WSP (WSP 2017 Annual Report, 2018).
Requirement b:
In accordance with “Page 82 of the Annual Report of WSP” in 2017, the present value
of the future operating lease payments is provided as $1,142.80. According to the rule of thumb
calculation, the estimated increase in debt could be computed by multiplying operating lease
expenses with 6 (Pwc.com, 2018). Therefore, the debt value would be increased by $6,856.80
($1,142.80 x 6). On the other hand, the interest expense would increase to depict the conversion
of operating leases in the form of debt. In order to balance this effect on the balance sheet
statement, operating lease asset of $6,856.80 and operating lease liability of $6,856.80 would be
reported in the balance sheet section under assets and liabilities sections respectively. This