Corporate Accounting: Cash Flows, OCI Statement, and Income Tax

CORPORATE ACCOUNTING
Assessment Task 2
STUDENT ID:
[Pick the date]

Selected company – BCI or BC Iron Limited
CASH FLOWS STATEMENT
(i) The cash flow extracts from financial statements of FY2017 are pasted as follows (BCI,
2017).
There are two main items as listed below.
 “Receipts from Customers” – This indicates the cash that the customers pay to the
company for purchase of iron ore and other minerals. In FY2017, this has witnessed a
significant drop upto 60% over FY2016.
 “Payments to suppliers and employees” – These are the cash outflows which arise on
account of paying to the creditors and also salary to employees. In FY2017, this has
witnessed a significant drop upto 70% over FY2016.
Based on the above cash flow extract, it is apparent that the company has not experienced any
cash inflow on account of sale of any PPE or any business. In FY2017, the main cash outflow
is on account of purchase of plant and equipment of about $ 1.6 million. On the other hand, in
FY2016, about $ 8 million was spent on development expenditure and mine property (BCI,
2017).

While in FY2016, the company has not raised any equity capital, this is not true for FY2107
where a total of $ 24.2 million has been raised through equity route. For both the years, the
company has made repayments and hence has reduced the debt on the books. Further, there is
a significant amount of repayment of the royalty rebate in both the years under consideration
(BCI, 2017).
(ii) The three year cash flow trend is shown as follows (BCI, 2017).
The key trends observed on the basis of data indicated above as follows (Lasher, 2017)
 For FY2015 and FY2016, the operational cash flow was negative which may have
arisen owing to the plummeting of price of iron ore which would have lowered the
sales revenues. But in FY2017, the company has again posted positive cash flows at
operational level which towards a brighter future.
 For FY2015, there is a net cash inflow which has arisen on account of subsidiary sale.
However, for FY2016 and FY2017, the net cash outflow is negative since there is no
cash inflow.
 The net cash outflow from financing indicates the intent of the company to deleverage
the balance sheet. In this regards, the company has also raised equity capital in
FY2017.
OTHER COMPREHENSIVE INCOME STATEMENT
(iii) The relevant extract of OCI statement is given below (BCI, 2017).
(iv) The OCI element contains the cash flow hedge related changes. These would arise on
account of some revenue received in a currency which is not the functional currency
(AUD) and hence to hedge the same, cash flow hedge exists. It is a financial instrument
whose value would change in real time and hence notional or real losses and gains have to