(Doc) Assignment on Corporate Accounting
Added on 2021-06-17
8 Pages2587 Words24 Views
Finance
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qwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmrtyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzxcvbnmqwertyuiopasdfghjklzCorporate accounting
Rio TintoThe company selected for the analysis is Rio Tinto. It is a pioneer in the iron ore and a leaderin the production of iron ore. The company has its operations spread to different continents and is a multinational mining and mineral company. The company is listed in the ASX and has US$ 40.030 billion revenue in 2017. The net income of the company stands at US$ 8.851 billion in 2017. The evaluation of financial statements of Rio Tinto is done below:Cash Flow Statementsi. As per the annual statement of the company it is observed the Net income of the company is evaluated in the statement. It is noted that the assessed net income consists of several of various expenses and income that are notional in nature and the items are projected on the balance sheet of the company. It is needed for the company to either add back or reduce the noncash items and it rests entirely on the case. When the adjustment is given to the net income, it is needed for the management to trace, as well as consider the change that happens in the account of an asset that can impact the financial position of the company (Williams, 2012). In this scenario, the company adds back the noncash items in the form of a dividend from equity accounted division. When it is done, the transactions influence the cash position of the operating assets and are adjusted. In this scenario, the operating income is deducted from the interest form. When it comes to the company, the subsidiary portion is ignored and removed from the capital of the company while non-controlling assets from the equity portion of the company’s capital. When the holders get a dividend then the same should be deducted from the operating income or expenses. Moreover, the tax paid for the year is even taken into consideration. It is a worth notice that the rate of interest has declined in the year 2017 but the taxes have increased (Northington, 2011). There is a strong urge in the share prices and due to such an incident, there has been an increment in the amount of interest.It has been noted from the operating activities of the company that the same has provided net cash that amounted to $13884 million. In addition, it needs to be noted that the investing activities of the company that made an adjustment for the gains, as well as losses from the cash flow, were segregated from the cash flow (Northington, 2011). The noteworthy thing that was noted in the annual report was that the company made a considerable purchase of theplant and equipment, properties and other assets of intangible nature. In the year 2017, the company made an investment of $4482 million that was diverted to the assets purchase. Further, in the same year, the company had a huge sale of the investments that were in joint 2
Rio Tintoventures, associates, and subsidiaries. The investment of the company was seen more in this segment and this investment acted as a liquid fund for the company that is worth $723 million. The figure of the annual sales touched to $2675 million (Rio Tinto, 2017).It has been observed that the companies are making unhealthy decisions in the requirement tothe economic purchases and investments that are being made even after the sales are weak and only 40 million dollar annual sales are recorded which are not enough in order to take thedecision with the company have already taken. It was seen that the $138 million was being funded for the sales proceed of the property, plants and many other intangible assets thus making this type of decision regarding purchase so many assets even after low revenue whichis been incurred by the organization (Rio Tinto, 2017).It has been observed that the company has made very few investments in the mutual fund andalso I have made several other Investments which amounted to dollar 18 million (Rio Tinto, 2017). It was also seen that the company hadn't made any type of investment in joint ventures, Associates or share of subsidiaries. This type of company generally prices to find the financing activities so that it can try and run its day to day operations without any problems and these were the sources of the fund which were drawn primarily in order to make the purchases. The dividend which is paid to the stakeholders of the organization was estimated to be around$4250 million. It was also necessary that the stakeholders were informed about the high sales and the profits of the organization. The borrowing of the company this year amounted to $18 million which was inexistent when compared to the borrowings of the last year which were estimated to be around $4413 million.It was also made necessary in order to analyze the performance of Rio Tinto. The funds which are utilized by the company in the past 3 years were used in order to compare the earnings of this year. There were a lot of transactions relating to the noncash and operating expenses incomes, net income from profit and loss statement and operating income that is needed to be analyzed in order to compare the data. After the analysis is false clear that the operating income for the year 2015, 2016 and2017 was $12102 million, $11368 million and $16670 million respectively (Rio Tinto, 2017). The income from these operations for the year2015 2016 and 2018 was the first to be $9383 million, $8465 million and $13884 million respectively. With the increase in the operating profit, the expenses were also said to be decreased because of the fact that there were negligible borrowings made this year. Hence, 3
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