Amcor Limited Part 1: Accounting for Decision Making Accounting for Decision Making 23 Financial Statement Analysis

Running Head: Accounting for decision making
Financial Statement Analysis
Amcor Ltd

Accounting for decision making 1
Part 1
Part 1: Question 1
Amcor Limited is packaging company which is operating its business at the global level and
is headquartered at Southbank, Australia. It commenced its business operations in 1926.
However, Amcor’s existence dates back to 1860s when a paper mill was operated by Samuel
Ramsden who came to Australia in search of his fortune. Amcor came into existence as a
paper making business and was formerly known as Australian Paper Manufactures Ltd.
Amcor Ltd is now operating as a leader in the packaging industry through 39 and produces a
wide range of products such as corrugated boxes, cartons, plastic jars, aluminium or steel
cans etc. The company operates its business through 3 major segments i.e. Amcor Rigid
Plastics, Investment segment and the Amcor Flexibles. As a part of business, Amcor serves
diversified markets and customer units. It provides packaging containers for various food and
beverage items such as soft-drinks, water, milk related beverages, beer and other drinks.
Apart from this it provides packaging solution for various pharmaceutical, home and personal
care products. However, the company operates only within the packaging industry and its
business is limited to provision of packaging solution to multiple business units in different
areas (Bloomberg, 2018).
As the company is operating its business through multiple countries it is clear that it is
operating at an international level and not within Australia only. The details of the
subsidiaries of Amcor Ltd are given in the further sections of the report.
Part 1: Question 2

Accounting for decision making 2
The headings of discussion of corporate governance are Board of Directors, Policies and
Standards, Whistle-blower Service, Corporate governance statement and the corporate ethics
and feedback. Under the section board of directors the details of all the members on board
are given such as their qualification and experiences, their designation in company, the
number of directorships and offices they are holding and their term of office. Under the head
corporate governance policies and standards various policies have been incorporated such as
Anti-Bribery and Corruption Policy, Audit & Compliance Committee Charter, Code of
Conduct & Ethics Policy, Company Board Charter, Company Constitution, Delegated
Authority Policy, Disclosure Policy, Environment Policy, Executive Committee Charter,
Fraud Policy Sustainability Policy, Whistle-blower Policy, UK Tax Policy, Share Trading
Policy and so on. Under the head Corporate ethics & feedback, the corporate ethics and
Feedbacks and complains are the major sub-headings (Amcor Ltd., 2018).
Part 1: Question 3:
The page references to access the discussion on corporate governance are as follows:
https://www.amcor.com/investors
https://www.amcor.com/investors/corporate-gov/board-of-directors
https://www.amcor.com/investors/corporate-gov/policies-standards
https://www.amcor.com/investors/corporate-gov/statement
https://www.amcor.com/investors/corporate-gov/ethics-feedback
Further, the page 32 of annual report of Amcor Ltd. for the year 2017 can be assessed to refer
to the discussion on corporate governance in relation to the company.

Accounting for decision making 3
Part 1: Question 4
The positions that were held by the top paid board members were chairmanship, senior
executives, CEOs. The remuneration of CEOs and senior executives was composed of 35%
and 44% respectively, of their salary as a fixed amount. The variable portion in the salary was
24% and 18% respectively and this was in respect of short term incentives that were paid in
cash. Further, the short term incentives paid in the form of equity which comprised of 12%
and 9% of their total salaries were paid to both CEOs and Senior Executives. Furthermore,
they were also entitled to some long term incentives which comprised of 29% of their
respective salaries (Annual Report, 2017).
Part 1 - Question 5:
Amcor has various subsidiaries set-up in different countries across the globe such as Amcor
Packaging Ltd. based at New Zealand, Amcor Packaging Inc. based at United States, Amcor
Sunclipse Inc. in North America, Amcor Europe in United Kingdom, Amcor Packaging Asia
Pty. Ltd, Amcor Flexibles A/S in Denmark etc. In total there are 41 entities across the world,
which are controlled by Amcor Ltd as their parent company. The main countries of
company’s operations are Argentina, Australia, Spain, Poland, United States of America,
China, France, Germany, New Zealand, Switzerland, Russia, Korea, Switzerland, Thailand
and various other countries (Amcor Ltd, 2018).
Part 2
Note: In the present all the financial are expressed in Australian Dollars

Accounting for decision making 4
Part 2: Question 1
In 2017, the amount invested by Amcor Ltd in net assets is $1,158,996,360. The balance of
net assets is determined by deducting total liabilities from the total assets balance for the year
2017. In all the 3 previous years, the balances of total assets and liabilities have varied due to
which the balance of net total assets has also varied in the given years. In 2015, the amount of
net asset investment was $ 2,066,406,250 which had declined to the level of $ 1,138,567,196
in 2016 due to increase in total liabilities. Although the investment in total assets had also
increased from 2015 to 2016 but not as much as the total liabilities increased. However, in
2017 the balance in the net total assets increased but a small level because of increase in
investment in total assets. The increase is primarily due to the business acquisitions that are
partially offset by the negative effect on account of strengthening of USD against various
currencies in which assets are held. The increase in liabilities is mainly due to the interest
bearing liabilities which is reflected by the additional drawdowns to finance the cost of
acquisitions which was partially compensated against the free cash flow during 2017 (Annual
Report, 2017).
Part 2: Question 2:
The total equity for the current year i.e. 2017 is $ 1,158,996,359. The total equity in 2015 was
$ 2,066,406,250 and in 2016 it was $ 1,138,567,196. The major cause of reduction in the
balance of the equity in 2016 from 2015 is the reduced balance of retained earnings. Also
there were some share buy-backs undertaken in 2016. Further, the profits out of business
were also reduced significantly in 2016 as compared to 2015 which contributed to decline in
the balance of equity in 2016. The balance of equity was raised back in 2017 after 2016 due
to increased profitability which increased the balance of retained earnings of the company in
2017 (Morning Star, 2018).

Accounting for decision making 5
Part 2 – Question 3:
The total current assets held by Amcor Ltd in 2017 were of $ 4,272,620,904. Under the head
of current assets there were various assets held by the company such as cash, accounts
receivables, prepaid expenses, inventories, short-term investments, assets that were held for
sale and some other miscellaneous assets. In 2015 and 2016 the balance of current assets was
$ 4,299,892,270 and $ 4,444,010,416 respectively. The balance of current assets in all the 3
years reported here under has varied slightly. Since 2015, the current assets balance has
followed a declining trend (Morning Star, 2018).
Part: 2: Question 4:
The non-current liabilities of Amcor Ltd comprise accounts payable, long term debt,
provision and miscellaneous non-current liabilities. No, there are no new non-current
liabilities entered into in 2017. All the liabilities that are shown under the head non-current
liabilities are same as that were in previous 2 years i.e. 2015 and 2016. However, before
2014, no liability was reported as other non-current liabilities (Annual Report, 2017).
Part: 2: Question 5:
The net profit (after tax and abnormal items adjustments) that was reported in 2017 was $
798,231,929. The net profit in the preceding 3 financial years from 2014 has widely
fluctuated. In 2015, an increase of $ 325,444,791 was reported in the net profit as there was
no tax paid on the abnormal transactions. However, in 2016, there was a steep decline in the
net profitability of the company. Total decline in net profits of $ 553,309,564 was reported.
However, in 2017 the net profit was again increased back by $ 429,796,702 as a result of
reduced tax expenses in respect of abnormal transactions (Morning Star, 2018).
Part: 2: Question 5: