Financial Statements Analysis Assignment

Added on - May 2020

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Running head: CORPORATE FINANCIAL REPORT ANALYSISCORPORATE FINANCIAL REPORT ANALYSISName of the Student:Name of the University:Author’s Note:
CORPORATE FINANCIAL REPORT ANALYSIS1Executive SummaryThe main purpose of this report is to analyze the financial statements of two separate companieswhich belong to different industries. The report will be analyzing four different area of thefinancial statement and what impacts theses assets have on the financial report of the companies.The area which this report will be discussing are leases, liabilities including contingent liabilitiesand provisions, Earning per share, intangible assets. The two selected companies for thisassignment are Sirtex Medical Limited and Altech Chemical Limited.
CORPORATE FINANCIAL REPORT ANALYSIS2Table of ContentsIntroduction......................................................................................................................................3Overview......................................................................................................................................3Part 1................................................................................................................................................3Concept........................................................................................................................................3Company Analysis of Leases.......................................................................................................4Literature Review........................................................................................................................6Measures and Findings................................................................................................................7Part 2................................................................................................................................................7Concept........................................................................................................................................7Company Analysis of EPS...........................................................................................................8Literature Review........................................................................................................................9Measures and Findings..............................................................................................................10Part 3..............................................................................................................................................10Concepts....................................................................................................................................10Company Analysis.....................................................................................................................10Literature Review......................................................................................................................11Measures and Findings..............................................................................................................12Part 4..............................................................................................................................................13Concept......................................................................................................................................13
CORPORATE FINANCIAL REPORT ANALYSIS3Company Analysis.....................................................................................................................13Literature Review......................................................................................................................14Measures and Findings..............................................................................................................15Conclusion.....................................................................................................................................15Reference.......................................................................................................................................17
CORPORATE FINANCIAL REPORT ANALYSIS4IntroductionThe main purpose of this report is to analyze two company’s financial report whichbelong two different industries. The companies which are selected for this report are SirtexMedical ltd and Altech Chemical ltd. The report will also be analyzing specific areas of thefinancial statement and a comparison will be made between the two companies.OverviewSirtex Medical Limited is an Australian company which is engaged in providing medicaltreatment to the society. The company also provides medical services to the society and treatspatients. The company specializes in radioactive treatment for inoperable liver cancer. Thecompany has its headquarter situated in Australia and the company was established in 1997.(Sirtex.com 2018).The other company which is selected for this assignment is Altech Chemical Ltd whichhas its headquarters in Australia and it is also listed in the Australian stock exchange(Altechchemicals.com,2018). The company is engaged in providing material and supply ofminerals. The company specializes in the production of alumina. The company is engaged inexploration and mining activities.Part 1ConceptLeasing is the process of financing which is used by the companies in day to daybusiness. In a lease agreement, the lessor gives the right to use the property of the lessor to anindividual who is known as lessee for a certain rate of interest. Nowadays lease agreement areused by businesses extensively for business purposes. The application of leases are more
CORPORATE FINANCIAL REPORT ANALYSIS5prominently used in airline industry, retail industry and shipping industries (Schallheim, Wellsand Whitby 2013). Some of the airline business are also in the business of leasing the aircraftwhich is used in the business. Generally leases are of two types operating leases and financialleases. Operating leases is the lease which is of a short term basis and which is used bybusinesses to acquire equipment on short term basis. Generally the useful life of the assetacquired in an operating lease is more than the term of use of the lease. As per the previousstandard on leasing operating leases were not disclosed and represented in the balance sheet ofthe company. Financial leases are more frequently used in business where assets are brought bythe lessor in order to finance theses to the lessee for a certain rate of interest. Financial leases arerecorded in the financial reports of the business.Company Analysis of LeasesAs per the balance sheet of Sirtex Medical ltd, the terms of leases of the company are that thelease payments for operating leases, where all the risks and benefits remain with the lessor andcharged as expenses in the period in which such expenses are incurred. All leases are recognizedas a liability and amortised accordingly on the straight line basis as per the policy of thecompany. Sirtex Medical ltd has recently replaced AASB 117 with the new lease standard AASB16 which recognizes all leases as liability and are accounted for on balance sheet, other thanshort term and low value leases. The new lease standard provides new effect on the definition,application, sales and back accounting of lease transactions (Cornaggia, Franzen and Simin2012). The new standard also requires proper disclosures of the same in the annual reports of thecompany. As the management has implemented the new AASB 16 currently so the effect on thefinancial report is not ascertained completely. However the management expects the followingchanges will take place:
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