Corporate Accounting: Cash Flow Analysis of BHP Ltd, Santos Ltd, and Funtastic Ltd

CORPORATE
ACCOUNTING

ABSTRACT
The study summarizes discussion of financial results of three separate firms: BHP Ltd,
Santos Ltd, and Funtastic Ltd based on cash flow. In this study, with respect to above-mentioned
organizations, different types of aspects are thoroughly analyzed to assess performance. In later
part of the study-report, evaluation of has been done of such companies as to select most
appropriate company among these for the lending purpose.

Contents
ABSTRACT...............................................................................................................................................2
INTRODUCTION.....................................................................................................................................4
MAIN BODY.............................................................................................................................................4
Part A......................................................................................................................................................4
Part B.......................................................................................................................................................6
CONCLUSION........................................................................................................................................29
REFERENCES........................................................................................................................................30

INTRODUCTION
There are quite a large number of accounting processes in finance field and corporate
accounting is most significant accounting process. It can be characterized as process of
accounting dealing with operation of compiling financial statement comprising cash-flows
statement, income-statement etc (Warren and Jones, 2018). The study is focused on the review of
cash-flows statement roles and concerns in context of three different companies namely: BHP
limited, Santos Ltd and Funtastic Ltd. The study is broken down into 2 sections: A and B.
Analysis of cash flows and income statement done under Part-A. Whereas the consolidated cash-
flows of all three companies have been evaluated to answer different questions.
MAIN BODY
Part A
Reviewing information stated in income statements and cash-flows statements.
A company's financial statements comprises primarily three forms of
statements namely: Income-statement, Company's balance sheet and cash-flows statement report.
All these statements perform a major part and provide in-depth information regarding various
dimensions of company (Thanh, 2016). Below, a thorough analysis of financial statements being
performed in effective way, as follows:
Income statement- This can be perceived as a sort of statement that contains incomes and
expenditure particulars within a given time span. This Statement mainly contains the following
information:
· Sales revenue- Net sales revenue or turnover details stated by the sales less sales return
under income statement.
· Cost of sales- Total costs incurred in the production and distribution of a item are
mentioned in this head, which is referred to as costs of sales.
· Operating income and expenditures- In addition, income statement provides details on
operating incomes generated alongside expenses made in relation to such income
generation.

· Interest Expenses- if corporation has borrowed and interest amount paid periodically then
such aggregate amount of interests paid is shown under the head of finance cost in
the income-statement.
· Tax- It also contains the details of tax rate and amount of liability of income tax.
· Net profit- This head under income-statement consists of net amount of profits earned by
company during a particular period after providing all business expenses.
Cash flow- This is characterised as a statement consisting of comprehensive details concerning
cash in-flows and cash payouts. this is framed by combining cash flow of three major
activities: operational, investment and financial activities. Here below is discussion about all the
major heads of this statement, as follows:
Cash receipts- Particulars on the amount of cash proceeds and the operations is specified in cash-
flow statement. It mainly offers details concerning cash proceeds from 3 distinct operations
involving operational, investment and financial activities (Kristanti and Herwany, 2017).
Cash payments- It contains of details about cash payments transactions under such three separate
activities and deducting from all cash receipts.
Net cash flow- The amount of net cash flow which is generated from three different activities is
also mentioned in this statement.
Importance/significance of cash-flow and income statement in context of investors.
For stakeholders or investors, proper comprehension concerning a corporation 's fiscal dimension
is crucial for them to be able to undertake decisions appropriately. Investors are largely
dependent on different forms of fiscal statements to access crucial information.
Role of income statement for investors:
The investors require reliable information mostly on profits and spending of the corporation over
a reporting period. This could only become feasible due to company's reported income statement.
As with the aid of this, they can know regarding company-earned profit, as well as these details
could be applied to determine earning-per share. Moreover, income statement also helpful in
providing investors with information pertaining to the proportion of costs and business activities.

Based on this valuable detail, investors can take decisions to make investments in the securities
and stocks of a corporation.
Role of cash flow statement for investors:
The cash-flows statement is also beneficial for investors so as to obtain information
regarding cash flows trend of more than one period which is used to make projections of
upcoming years cash-flows. Furthermore, cash flows statement allows investors to fully
understand regarding certain operations that are causing higher costs. Investors decide on the
basis of this knowledge whether they can make an investment in company (Unerman,
Bebbington, and O’dwyer, 2018).
Part B
1. Examination of cash flow of each company.
(a) Major source and uses of cash of each firm.
BHP limited: Based on below sad it can be ascertained that the corporation has various
types of cash generation sources and application which are described here, as
follows: