Corporate Accounting: Financial Analysis of AGL, Oil Search, Santos

This report provides a financial statement analysis of three ASX-listed companies: AGL Energy, Oil Search, and Santos. It examines equity and liabilities, highlighting trends in issued capital, reserves, and retained earnings. The analysis of cash flow statements focuses on dividend income, income taxes paid, payments for exploration and evaluation assets, and acquisition payments. The report also discusses other comprehensive income and accounting for corporate income tax, including deferred tax assets and liabilities. Debt equity ratios are calculated to assess financial leverage, providing insights into the companies' financial health and sustainability. Desklib offers more solved assignments for students.

Corporate Accounting

CORPORATE ACCOUNTING 1
EXECUTIVE SUMMARY
The main aim of this report is to understand the financial statement of the company. In this
report, three companies have been taken into consideration to analyse the financial statement
and these are AGL Energy, Oil Search and Santos. It has been evaluated that the company
has high leverage due to raising funds and increasing borrowings. The cash flow statement of
the company states that the companies invest high amount in shares, assets and acquisition. In
this report, comprehensive income statement is also discussed which reflects that the items of
comprehensive statement is not reported in the income statement of the company. The items
of comprehensive statement affect the net profit of the company. As per the analysis of the
deferred tax asset and liability, it is observed that the companies have balance amount of
deferred tax asset and deferred tax liability except AGL. The amount of deferred tax asset and
liability is increases and decreases of the companies as per the financial statements. It has
been seen that the companies have the scope to survive in the market for long time.

CORPORATE ACCOUNTING 2
Contents
Introduction...........................................................................................................................................3
Task 1- Equity and Liabilities................................................................................................................4
Task 2- Cash Flow Statement..............................................................................................................11
Task 3- Other Comprehensive Income Statement................................................................................15
Task 4- Accounting For Corporate Income Tax..................................................................................18
Conclusion...........................................................................................................................................21
References...........................................................................................................................................22

CORPORATE ACCOUNTING 3
Introduction
Corporate Accounting is a special branch of accounting which deals with the accounting of
companies by preparing the final statement. It also analyse the financial results of the
companies and accounting for the specific events like amalgamation, absorption, preparation
of consolidated balance sheet. It is a process of accounting that calculates the operations of a
single company. The company uses this process in order to evaluate the value of assets and
liabilities. It is also use to identify the financial position of the company in the terms of
finance. There are many activities which are involved in the process of Corporate Accounting
such as creation and maintenance of a company accounting system, special expense
management, managing accounts payable, managing accounts receivable and many others. It
is necessary for the company to maintain and analyse the financial statements to evaluate the
financial position. In this report, three companies have been taken into consideration to
analyse the financial position and stability. AGL Energy Limited, Santos, and Oil search are
the companies taken to analyse the financial statements.
The report is classified into four parts to analyse the financial position of the companies. In
the first section of the report, Equity and liabilities of the companies has been analysed in
order to evaluate the debts position. After that, Items of cash flow statement have been
evaluated in order to analyse the financial position of the companies in the market. The third
section is based on the comprehensive income statement of the companies. The last section of
the report will base on the corporate tax.
Overview of the companies

CORPORATE ACCOUNTING 4
AGL Energy is an Australian listed company which is retailing in electricity and gas for the
residential and commercial use. AGL generates the energy from power station that uses the
thermal power, natural gas, wind power, and Coal seams gas source.
Santos Limited is an Australian energy company which large overseas investors and
shareholders. It is the second largest company in oil and gas producer in the country.
Oil Search Limited is the largest oil and gas exploration and development company which are
publically listed on the Australian stock exchange.
Task 1- Equity and Liabilities
I
Santos
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Issued capital 9034 8883 8119
Reserves 51 (510) (699)
Accumulated Losses (1934) (1293) 1
Total Equity 7151 7080 7421
From the above table, it has been seen that the equity component includes the issued capital,
reserves, and accumulated losses. Share Capital has been issued to shareholder is called
Issued Capital. The issued capital of the company is increases in the year 2017 as compare to
2016 and 2015. Reserves are always a credit balance of the company and part of
shareholders. Reserves of the company is increases in the year 2018 but it has been seen that
the company has the negative value in the past year such as 699 and 510 in 2015, and 2016
respectively. Accumulated Losses is the opposite of accumulating gain which means the

CORPORATE ACCOUNTING 5
business debts are greater than the earnings. As per the financial position of the company, the
company accumulated losses is reduces.
Oil Search
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Share Capital 3152.4 3147.3 3147.3
Reserves (6.4) (10.7) (12.97)
Retained
earnings/(losses)
1,791. 7 1588.7 1574.995
Total equity 4,937. 7 4725.3 4709.36
As per the above table, it has been seen that the company report the share capital, reserves,
retained earnings in its equity. The share capital of the company is increases in the year 2017
as compare to the other years such as 2015 and 2016. Reserves amount of the company states
that the company reserve more and invest less in the year 2017 as compare to the year 2016.
Retained Earnings is the accumulated income that is retained by the corporation at a
particular point of time. Retained earnings are increases in the year 2017 with the amount of
1791.7 and in the year of 2016 the amount of the earning is 1588.7 which reflect the
increasing earnings of the company (Oil Search, 2015).
AGL Energy
Equity component 2017 ($m) 2016 ($m) 2015 ($m)
Issued capital 6223 6696 6696
Reserves 16 (24) (65)

CORPORATE ACCOUNTING 6
Retained
earnings/(losses)
1335 1234 2175
Total equity
attributable to
owners of AGL
Energy Limited
7574 7915 8806
Non-Controlling
Interest
- 11 9
Total equity 7574 7926 8815
As per the above table, it has been evaluated that the issued capital of the company is
decreases in the year 2017 but in the year 2016 and 2015 the amount remains same. It states
that the company did not invest due to fewer funds. Non-controlling interest is decreases in
the year of 2017 which is beneficial for the company because it is also known as minority
interest (AGL, 2017).
II
Liabilities of Santos
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Trade and Other
Payables
495 520 618
Deferred income 8 23 7
Interest-bearing loans
and borrowings
207 420 152

CORPORATE ACCOUNTING 7
Current tax liabilities 17 3 8
Provisions 142 121 125
Other financial
liabilities
82 366 2
Liabilities directly
associated with assets
held for sale
- 103 14
Total Current
Liabilities
951 1556 926
Non-current
liabilities
Deferred income 114 99 158
Interest-bearing loans
and borrowings
3736 4819 5246
Deferred tax
liabilities
240 221 153
Provisions 1494 1464 1736
Other financial
liabilities
20 23 309
Total non-current
liabilities
5604 6626 7602
Total liabilities 6555 8182 8528
The company contain all the items in the liabilities which are included in the above table.
Deferred income refers the unearned revenue which is not earned by the company. These are

CORPORATE ACCOUNTING 8
not affected the net profit or loss of the company. The amount of deferred income is
fluctuated. Provision of the company is an amount of cash which is put aside in the accounts
to cover a future liability. Provision of Non-current liabilities of the company is increases in
the year but it remains same in the year 2017 and 2016.
Liabilities of AGL Energy
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Trade and other
payables
1507 1519 1377
Borrowings 173 22 443
Provisions 201 226 191
Current tax liabilities 13 102 86
Other financial
liabilities
827 460 269
Other liabilities 10 - 7
Liabilities directly
associated with assets
classified as held for
sale
- 224 -
Total current
liabilities
2731 2553 2373
Non-current
liabilities
Borrowings 3173 3086 3439
Provisions 520 487 456

CORPORATE ACCOUNTING 9
Other financial
liabilities
293 301 387
Other Liabilities 167 251 363
Total non-current
liabilities
4153 4125 4645
Total liabilities 6884 6678 7018
As per the table, the company reported the above items in their liabilities. Borrowings are the
total amount of collateral against which a lender lends funds to a business. The amount of
borrowing is decreases as per the passing years which reflect that the debts are decreases. The
company also reported the other liabilities. Other liabilities include the small transaction of
the company which affects the net profit (Kennon, 2018). As per the annual report, it has
been seen that other liabilities under the non-current liabilities is fluctuated with the
increasing and decreasing amount.
Liabilities of Oil search
Total Liabilities 2017 ($m) 2016 ($m) 2015 ($m)
Current Liabilities
Payables 199.15 161.64 214.58
Provisions 290.33 179.12 15.98
Borrowings 334.13 315.87 290.3
Current tax payable 644.59 564.03 55.65
Total current
liabilities
626.77 551.83 576.5

CORPORATE ACCOUNTING 10
Non-Current
Liabilities
Payables 24787 19717 186.7
Provisions 584.72 384.299 394.7
Borrowings 3424.77 3758.9 4012.2
Deferred tax
liabilities
913.6 686.05 631.1
Total Non-Current
Liabilities
4947.9 4848.97 5056.87
Total Liabilities 5574.74 5400.81 5633.47
The above items in the table are reported by the company in their liabilities. As per the above
table, it has been seen that the amount of borrowings is increases as compare to the other
years. Deferred tax liabilities are the liability which is due for the current period but yet has
not been paid (Oil Search, 2015). The amount of deferred tax is increases in the year 2017
which reflects that the company has to pay more in future on tax.
III
Financial Analysis of 2017
Santos
Oil
Search AGL

CORPORATE ACCOUNTING 11
Debt Equity Ratio Total Liabilities 6555 5574.7 6884
Total shareholder
equity 7151 4937.7 7574
0.92 1.13 0.90
Debt equity ratio is to evaluate the financial leverage of the company. The formula of Debt
equity ratio is total assets over total share liabilities. As per the above table, it has been
evaluated that the Santos has the debt ratio is 0.92, Oil search has 1.13 and AGL has 0.90
(AGL, 2017). It states that Oil search has high debt equity ratio as compare to the other
companies. Increasing debt ration reflect the issue for the company in generating the cash.
Task 2- Cash Flow Statement
IV- Items of Cash Flow Statement
Cash Flow from operating activities
Dividend received
Dividend received is the earning which is received by the company from the shareholders
based on a specific percentage of the company earnings. AGL and Santos reported the
amount of dividend received in its cash flow statement. But the Oil Search did not report in
its cash flow statement. AGL and Santos has high amount of dividend received with the
amount of 22 and 12 in millions (AGL, 2017).
Income Taxes Paid
Income tax paid is the item which is contain in the operating activities of the company. The
company had to pay the tax on it profit. In the year 2017, AGL has 292 reported as the