Corporate Accounting: Financial Statements Analysis of ASX Listed Organisations

Running head: CORPORATE ACCOUNTING
Corporate Accounting
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1CORPORATE ACCOUNTING
Executive Summary:
The report would concentrate on assessing the various financial statements of three ASX listed
organisations functioning in the identical sector. For meeting this purpose, the organisations
include Woolworths Group Limited, Wesfarmers Limited and JB Hi-Fi Limited that are
operating in the Australian retail sector. It has been analysed that these organisations have
invested largely in PPE; however, the positive cash flows generated from operations are adequate
to cover these outflows. Along with this, they do not consider the other comprehensive income
items to be included in their income statements owing to their extraordinary nature. Finally, from
the taxation part, it has been assessed that the companies take into account certain items like
income tax expense, deferred tax assets, deferred tax liabilities and finance cost for appropriate
calculation of their cash tax rates.

2CORPORATE ACCOUNTING
Table of Contents
Introduction:....................................................................................................................................4
Equity and liability:.........................................................................................................................5
Part (i):.........................................................................................................................................5
Part (ii):........................................................................................................................................6
Part (iii):.......................................................................................................................................7
Cash flow statement:........................................................................................................................8
Part (iv):.......................................................................................................................................8
Part (v):........................................................................................................................................9
Part (vi):.....................................................................................................................................12
Other comprehensive income statement:.......................................................................................13
Part (vii):....................................................................................................................................13
Part (viii):...................................................................................................................................13
Part (ix):.....................................................................................................................................13
Part (x):......................................................................................................................................14
Accounting for corporate income tax:...........................................................................................14
Part (xi):.....................................................................................................................................14
Part (xii):....................................................................................................................................15
Part (xiii):...................................................................................................................................15

3CORPORATE ACCOUNTING
Part (xiv):...................................................................................................................................15
Part (xv):....................................................................................................................................16
Part (xvi):...................................................................................................................................16
Part (xvii):..................................................................................................................................16
Conclusion:....................................................................................................................................17
References:....................................................................................................................................18

4CORPORATE ACCOUNTING
Introduction:
The report would concentrate on assessing the various financial statements of three ASX
listed organisations functioning in the identical sector. For meeting this purpose, the
organisations include Woolworths Group Limited, Wesfarmers Limited and JB Hi-Fi Limited
that are operating in the Australian retail sector. The analysis of the annual reports of the last
three years of these organisations is evaluated, in which the main aspects covered include cash
flow statement, equity and liability, accounting for corporate income tax and other
comprehensive income statement.
Woolworths Group Limited has been established in 1924 in Australia and it is involved in
operating retail stores via Australian Food, Endeavour Drinks, New Zealand Food, Big W Hotels
and other drinks. Moreover, it has liquor stores and hotels as well with an employee base of
around 201,522 (Woolworthsgroup.com.au 2019).
Wesfarmers Limited is the leading Australian retail organisation and its operations
mainly include retail, distribution of industrial and safety products, coal mining and production,
chemical and fertiliser production and investment businesses in Australia, UK, New Zealand and
others. The company has been established in 1914 and at present, it has staff base of 217,000
(Wesfarmers.com.au 2019).
JB Hi-Fi Limited is mainly involved in retailing home consumer products operating
through JB Hi-Fi Australia, The Good Guys and JB H-Fi New Zealand. The main products of the
organisation include audio equipment, cameras, computers, DVD products, musical instruments
and others. The company has been founded in 1974 with a staff base of around 12,229 in 2018
(Jbhifi.com.au 2019).

5CORPORATE ACCOUNTING
Equity and liability:
Part (i):
From the annual reports of Woolworths Group Limited, the equity section contains
contributed equity, reserves and retained earnings. It has been identified that contributed equity
would increase from $5,252.2 million in 2016 to $6,055 million in 2018, as additional equity
shares are issued in the market. However, reserves have increased from $93.9 million in 2016 to
$353 million in 2018, as there is presence of foreign currency translation reserve, hedge reserve
and others (Van Mourik 2014). Finally, there has been increase in retained earnings as well from
$3,124.5 million in 2016 to $4,073 million in 2018 (Woolworthsgroup.com.au 2019).
In case of Wesfarmers Limited, all items are same as Woolworths; the only addition is
reserved shares. The issued capital has increased from $21,937 million in 2016 to $22,277
million in 2018 owing to the increase in the issuance of equity shares in the market. However,
retained earnings have fallen significantly in 2018 due to the decline in overall net income
earned by the organisation. In addition, reserves have increased from $166 million in 2016 to
$344 million in 2018, as hedge reserve and foreign currency translation reserve have increased
over time. Finally, no significant change could be observed in reserved shares of the organisation
from 2016 to 2018 (Wesfarmers.com.au 2019).
For JB Hi-Fi Limited, the equity items are contributed equity, retained earnings and
reserves. Significant increase in contributed equity could be observed from 2016 to 2018, as the
firm has raised its issuance of equity shares in the market for meeting capital needs (Bauman and
Shaw 2016). After this, retained earnings are observed to increase during this period as well
owing to significant rise in profit margin. Finally, reserves are seen to be increased over the years
(Investors.jbhifi.com.au 2019).