HI5020 Corporate Accounting: Analysis of Adairs Limited's Financial Statements

HI5020 Corporate Accounting
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Table of Contents
Introduction.................................................................................................................................................3
1 Various items of cash flow statement.......................................................................................................4
2 comparative analyses of cash flow statements..........................................................................................5
3 What items have been reported in the other comprehensive income statement?.......................................6
4 Understanding of identified items.............................................................................................................6
5 Reasons for not including them in income statements..............................................................................6
6 Tax expense in latest financial statements................................................................................................7
7 Is this figure the same as the company tax rate times your firm’s accounting income? Explain why this
is, or is not, the case for your firm...............................................................................................................7
8 Comment on deferred tax assets/liabilities that are reported on the balance sheet articulating the possible
reasons why they have been recorded..........................................................................................................7
9 Is there any current tax assets or income tax payable recorded by your company? Why is the income tax
payable not the same as income tax expense?.............................................................................................8
10 Is the income tax expense shown in the income statement same as the income tax paid shown in the
cash flow statement? If not why is the difference?......................................................................................8
11 What do you find interesting, confusing, surprising or difficult to understand about the treatment of tax
in your firm’s financial statements? What new insights, if any, have you gained about how companies
account for income tax as a result of examining your firm’s tax expense in its accounts?..........................8
Conclusion.................................................................................................................................................10
Reference...................................................................................................................................................11
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Introduction
Adairs limited is a leading company and specialty retailer that produces home furnishings and it
operates in Australia. It consists of a national footprint of stores with a number of store formats.
This company aims to present consumers with providing trending fashion products, quality,
strong value and a well-managed customer service. Adairs' has a wide range of products such as
bedding, bed linen, towels, and other home furnishing. Adairs provides vertically integrated
product design and do retail operations. Almost all the products of this company is sold under its
own private brands. Some of the products of this company are sold under some third-party
brands. Currently, Adairs has established 160 stores in Australia and some of them are named
Adairs, Adairs Kids, Adairs Homemaker and Adairs Outlets. This company is also growing its
reach with the online stores. The profit margin of this company has shown exponential growth in
last few years.
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1 Various items of cash flow statement
The cash flow statement of Adairs is determined in this report regarding the assessment of the
finance and overall cash flow of the company in the year 2015, 2016 and 2017. This cash flow
statement has multiple cash flow statements such as the cash flow from operating activities, cash
flow statement from investing activities and from financing activities. The cash flow statement of
Adairs is given below:
Cash flow statement from operating activities:
According to the cash flow statement of Adairs from operating activities, the Payments to
suppliers and employees (inclusive of GST) has shown extensive growth in 2017 which is
248,550$ which is very high in comparison to 2016 and 2015. Income tax paid by this company
is also increased in 2017 which is 15,152$ that was only 8,659 $ in 2016. On the other hand, the
interest paid by Adairs is getting low in 2017 which is 1,731 and in 2016 it was 1,936 $. So the
new cash flow from operating activities is 27,644 $ in 2017 which is maximum in comparison to
2015 and 2016.
Cash flow statement from investing activities:
According to the cash flow statement from investing activities, the Acquisition of property, plant
and equipment is 11330 $ in 2017 which was 10324 $ in 2016 and 6878 $ in 2015 so it can be
said that the property acquisition has increased exponentially in 2017. Investing cash flows from
discontinued operations is not present in 2016 and 2017 but in 2016 it was 1,374 $. Along with
that, Cash loss attributable to a discontinued operation is also not present in the cash flow
statement of 2016 and 2017 but it was 7,044 $ in 2015.
Cash flow statement from financing activities
In accordance to the cash flow statement from financing activities, Net increase in cash and cash
equivalents is decreased in 2017 on a higher scale which is 363$ which was 5,239 $ in 2016 and
14,940$ in 2015. The Cash and cash equivalents at beginning of the period are also increased in
2017 which is 14,676 and in 2016 it was 9,437$.
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