Lease Accounting Analysis and Valuation

This assignment presents a detailed lease accounting analysis example. It includes lease payments breakdown, calculation of key ratios like Asset-to-Liabilities Ratio, and the valuation of the leased asset. The data is presented in a tabular format with specific figures for each period. The assignment also references various academic sources on financial valuation and risk management, suggesting further exploration of these concepts.

Running head: FINANCIAL ANALYSIS & BUSINESS VALUATION
Financial Analysis & Business Valuation
Name of the Student:
Name of the University:
Author’s Note:

1FINANCIAL ANALYSIS & BUSINESS VALUATION
Table of Contents
Answer to Question 1:.....................................................................................................................2
Standardized Balance Sheet:........................................................................................................2
Standardized Income Statement:.................................................................................................3
Standardized Cash Flow Statement:............................................................................................4
Answer to Question 2:.....................................................................................................................6
Answer to Question 3:.....................................................................................................................6
Bibliography:...................................................................................................................................9

2FINANCIAL ANALYSIS & BUSINESS VALUATION
Answer to Question 1:
Standardized Balance Sheet:
Standard
classificatio
n Typical line items
Amoun
t $M
Standard
classificatio
n Typical line items
Amoun
t $M
Assets Liabilities and
equity
Cash and
Marketable
Securities Cash 1,980
Current debt
Trade
receivables
Accounts
receivables 795
Trade
payables Accounts payables 1,986
Inventory Inventory 336
Other current
liabilities
Revenue received
in advance 3,525
Interest-bearing
liabilities 441
Other current
assets
Other financial
assets 229
Other financial
liabilities 203
Others 101 Provisions 873
Assets classified as
held for sale 17
Non-current
debt
Non-current
tangible
assets
Plant, property and
equipment Land 11,670
Deferred tax
liability
Non - current
intangible
assets
Non - current
intangible assets 909
Other non-
current
liabilities
Revenue received
in advance 1,521
Deferred tax
asset 39
Interest-bearing
liabilities 4,421
Other financial
liabilities 61
Other non- Investments 197 Provisions 414

3FINANCIAL ANALYSIS & BUSINESS VALUATION
current assets
Other financial
assets 46
Minority
interest 5
Receivables 134
Other 252
Shareholders'
equity
Issued capital 3,625
Treasury shares (50)
Retained earnings (100)
Reserves (220)
TOTAL 16,705 TOTAL 16,705
Standardized Income Statement:
Standard Classification Typical Line Items Amount
Sales Revenues 16,200
Cost of Sales Manpower and staff related (3,849)
Fuel (3,250)
Selling, general and
administrative (SG&A)
expenses
Other operating expense
Amortisation of intangibles (1,224)
Aircraft operating variable (3,362)
Non-cancellable aircraft operating
lease rentals (461)
Other (2,411)
Net interest expense
(income) Finance costs (284)
Interest income 65
Investment income
Other income
Transfer of hedge reserve to the
Consolidated Income Statement,
net of tax 198
Net changes in hedge reserve for
time value of options, net of tax 35

4FINANCIAL ANALYSIS & BUSINESS VALUATION
Foreign currency translation of
controlled entities 2
Foreign currency translation of
investments accounted for under
the equity method 24
Other expense
Effective portion of changes in fair
value of cash flow hedges, net of
tax (187)
Recognition of effective cash flow
hedges on capitalised assets, net
of tax (40)
Share of other comprehensive
income of investments accounted
for under the equity method (2)
Defined benefit actuarial
(losses)/gains, net of tax (209)
Tax expense Income tax expense (395)
Net comprehensive
income for the period 850
Standardized Cash Flow Statement:
Standard classification Typical line items Amount
Operating cash flows (other
than net finance costs)
Under the direct method:
Cash from customers 17,723
Payments to suppliers (14,600)
Cash payments to employees
for redundancies and related
costs (90)
Cash payments to employees
for wage freeze bonus (53)
Dividends received from
investments accounted for
under the equity method 4
Income taxes paid (2)

5FINANCIAL ANALYSIS & BUSINESS VALUATION
Investing cash flows
Payments for property, plant
and equipment and intangible
assets (1,618)
Payments for investments
accounted for under the
equity method (39)
Proceeds from disposal of
property, plant and equipment 509
Net loan repayment from
investments accounted for
under the equity method 27
Aircraft operating lease
refinancing (778)
Interest paid and capitalised
on qualifying assets (24)
Net interest cost Interest received 64
Interest paid (227)
Net debt issuance(net of
repayments)
Repayments of borrowings (807)
Net receipts/(payments) for
aircraft security deposits and
hedges related to debt 62
Dividends Cash dividends paid on
ordinary shares
Net issuance of shares (net of
repurchases)
Payments for capital return (505)
Payments for share buy-back (500)
Payments for treasury shares (75)
Net Increase/(Decrease) in
Cash Flow (929)
Cash & Cash Equivalent at the
beginning of the year 2,908
Effects of Exchange rate
changes on cash & Equivalent 1

6FINANCIAL ANALYSIS & BUSINESS VALUATION
Cash & Cash Equivalent at the
end of the year 1,980
Answer to Question 2:
The following accounting policies of Qantas should be monitored very closely:
a) Dividend Policy,
b) Risk Management Policy,
c) Inventory Policy,
d) Foreign Exchange Policy
Answer to Question 3:
Adjustment Worksheet:
Assets = Liabilities + Equity
Adjustments
Current
Assets
Non-
Current
Assets
Current
Liabilities
Non-
Current
Liabilities
Net
Income OCI
Retained
Earnings
Other
Equity
1 2,245 = 2,245
2 (427) = (427)
3 = 523 (523)
0 1,819 = 523 1,722 0 0 (427) 0
4 = (554) 554
5 = 163 (163)
6 = 165 (165)
0 1,819 = 523 1,722 (226) 0 (200) 0
7 63 = 63 0
Total 0 1,882 = 523 1,722 (163) 0 (200) 0
Reported 3,458 13,247 = 7,028 6,417 1,029 (179 (950) 3,360

7FINANCIAL ANALYSIS & BUSINESS VALUATION
)
Adjusted 3,458 15,129 = 7,551 8,139 866
(179
) (1,150) 3,360
Workings:
Computation of Discount Rate:
Particulars Amount Amount
Interest Expense 284
Interest Bearing Liabilities:
Current 441
Non-Current 4421 4862
Discount Rate 5.84%
Determination of Total Operating Lease:
Particulars
Aircraft
&
Engines
Non-
Aircraft Total Spread
Not Later than one year 366 188 554 554
Later than 1-5 years 952 503 1455 291
Later Than Five Years 187 187
Later than 5-10 years 320 320 64
Later than 10 years 367 64
TOTAL LEASE
OBLIGATIONS 1505 1011 2883 973
Period
Lease
Payment
s
Discount
Rate
Present
Value
1 554 5.84% 523.425

8FINANCIAL ANALYSIS & BUSINESS VALUATION
6
2 291 5.84%
259.766
6
3 291 5.84%
245.430
5
4 291 5.84%
231.885
5
5 291 5.84%
219.088
1
6 419 5.84%
298.047
2
7 315 5.84%
211.702
9
8 128 5.84%
81.2776
9
9 128 5.84% 76.7921
10 128 5.84%
72.5540
6
11 47 5.84%
25.1706
7
Total Lease Payments 2883
2245.14
1
Asset-to-Liabilities Ratio 81%
Leased Asset
1818.56
4

9FINANCIAL ANALYSIS & BUSINESS VALUATION
Bibliography:
Damodaran, A. (2016). Damodaran on valuation: security analysis for investment and corporate
finance (Vol. 324). John Wiley & Sons
Masari, M., Gianfrate, G., & Zanetti, L. (2014). The Valuation of Financial Companies: Tools
and Techniques to Value Banks, Insurance Companies, and Other Financial Institutions.
John Wiley & Sons
Mohammad, A. N. (2016). Valuation Tools for Determining the Value of Assets: A Literature
Review. International Journal of Academic Research in Accounting, Finance and
Management Sciences, 6(4), 63-72
Sadler, A., Daghestani, A., & Payne, B. C. (2016). A Risk Return Profile and Ranking of the
Determinants of the Enterprise Multiple. Academy of Accounting and Financial Studies
Journal, 20(1), 93.
Van Deventer, D. R., Imai, K., & Mesler, M. (2013). Advanced financial risk management: tools
and techniques for integrated credit risk and interest rate risk management. John Wiley &
Sons