Comparative Analysis of Financial Statements of Ausdrill Ltd and Rio Tinto Ltd

This report provides a comparative analysis of the financial statements of Ausdrill Ltd and Rio Tinto Ltd for the last three years. The report covers areas such as equity capital, cash flow statements, disclosures, and tax treatments.

Corporate accounting
Comparative analysis of the financial
statements

The chosen ASX listed companies
For the analysis the chosen companies operating
in Australia are:
• Ausdrill Ltd: The company is occupied with
the operations of extricating minerals and
mining business in Australia
• Rio Tinto Ltd: It is as one of the main
organizations in Mining industry in Australia

Aim of the report
• The primary motive of the analysis will be to break down
the yearly reports of both the organizations for a time of
last three continuous years beginning from 2017.
• The significant areas that are covered from the annual
reports the companies include equity capital, cash flow
statements, disclosures and tax treatments.
• Moreover, calculations regarding effective tax rate and
other tax computations are done in this report.

Owner’s Equity
• The owner equity represents the equity capital and businesses
retained earnings which are utilized for financing the operations`
• For Ausdrill Ltd: The owner’s equity of the business for the year
2017 is appeared to be $ 546,447,000 which is same as the
figure which was appeared for past years (Campbell 2015).
• For Rio Tinto Limited: The owner’s equity of the business is
appeared to be US$ 4,140 million which has altogether
enhanced in contrast with earlier year. This is because of the
way that the organization has issued certain number of offers
amid the year with a specific end goal to draw capital from the
same.

Comparison of cash flow activities
Ausdrill Ltd
• Operating activities: It includes money
receipts which the business gets from
operating activities of the business and
furthermore money payments which are
made by the Ausdrill to its suppliers`
• Investing activities: The investing
activities cash flow of the business
adequately demonstrates that primary
income from the purchase of property,
equipments and plants amid the year
which is appeared to be $ 147,418,000
• Financing activities: The income from
financing activities incorporates different
reimbursements which are attempted by
the business amid the year`
Rio Tinto Ltd
• Operating activities :The specific item
which is appeared in the operating activity
cash are Dividends from equity account
units and the expenses of tax which the
business brings about amid the year.
• Investing activities:). The money from
investing activities of the business which is
appeared for the year 2017 include
purchase of properties, equipments and
plants and purchase of financial assets
• Financing activities: The cash flow from
financing activities of the business for the
FY 2017 tells us that the cash outflows
has taken place due to loans repayments,
shares buyback and payment of dividend
during the year

Comparison of cash flow activities
Ausdrill Ltd Rio Tinto Ltd

Other Comprehensive Income Statement
Analysis
The comprehensive income statement involves the items which
are not appearing in the statement of profit or loss of the
business.
• Ausdrill Ltd: The items includes, trade gains on exchange related
to operations of foreign and amunts to $ 882,000 (DeFusco et al.
2015). There is additionally a income which the business has
been obtained from joint of the business
• Rio Tinto Ltd: For the year 2017 shows actuarial gains and
adjustments which are made to tax on various post-retirement
plans. The business likewise represents loss and gains on
revaluation and cash flow hedge gains, which are sale of variable
stock of the business (Riotinto.com. 2018).

Accounting for Income Tax
• Ausdrill ltd :The expense of income tax of the business is
shown for Ausdrill ltd for the FY 2017 is shown to be $
13,885,000 that has slightly increased from the previous
analysis which is represented to be $ 4,581,000 for the
FY 2016(Bryce, Ali and Mather 2015).
• Rio Tinto Ltd: The expenses of income tax of Rio Tinto
Ltd is represented in the annual report of the business
for the year 2017 which is $ 3,965 million and the same
was shown to be $ 1,567 million for 2016 (Bieber 2016).

Effective Rate of Tax
• The effective rate of tax refers to the aggregate tax rate
at which the business profits are taxed
• The effective rate of tax of Ausdrill ltd and Rio Tinto Ltd
is represented in the above figure which is 30.63% and
30.94% (Ausdrill.com.au. 2018) .
• Hence, it is clearly observed that the effective rate of
tax of Rio Tinto Ltd is improved than Ausdrill ltd and the
same is higher.

Cash Tax Amount and Rate of Both Company
$ $
Particulars Ausdrill Ltd Rio Tinto Ltd
Income Tax Provison 13,885,000.00$ 3,965,000,000.00$
Add: Increase in DTL 1,507,000.00-$ 507,000,000.00$
Less: Increase in DTA 928,000.00-$ 333,000,000.00-$
Add: Taxes on Finance Costs 9,453,600.00$ 497,400,000.00$
Cash Tax amount 22,759,600.00$ 5,302,400,000.00$
EBIT 76,840,000.00$ 14,474,000,000.00$
Cash Tax Rate 29.62% 36.63%
Computation of Effective Tax Rate
The cash tax rate of Rio Tinto is higher than Ausdrill ltd
which is shown in the above figure which is 36.63% for the
year 2017.

References
• Ausdrill.com.au. 2018. Annual Reports :Ausdrill. [online] Available at:
http://www.ausdrill.com.au/investors/annual-reports.html [Accessed 13 Sep.
2018].
• Bieber, L., 2016. Financial Statement Analysis A Global Perspective. Perspective, 1,
p.4.
• Bryce, M., Ali, M.J. and Mather, P.R., 2015. Accounting quality in the pre-/post-IFRS
adoption periods and the impact on audit committee effectiveness—Evidence from
Australia. Pacific-Basin Finance Journal, 35, pp.163-181.
• Campbell, J.L., 2015. The fair value of cash flow hedges, future profitability, and
stock returns. Contemporary Accounting Research, 32(1), pp.243-279.
• DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E.,
2015. Quantitative investment analysis. John Wiley & Sons.
• Riotinto.com. 2018. [online] Available at:
https://www.riotinto.com/documents/RT_2017_Annual_Report.pdf [Accessed 17
Sep. 2018].

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