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Corporate Accounting Assessment 2 - Retail Food Group

   

Added on  2021-05-27

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HI5020 CorporateAccountingAssessment 2 – Retail Food GroupSTUDENT ID:[Pick the date]
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Corporate AccountingThe company that has been selected for this task is RFG also known as Retail Food Group.The most recent annual report available for the company is for FY2017 which ended on June30, 2017.CASH FLOWS STATEMENT(i)The various components of the cash flow from operations are captured below.Receipts from customers highlights the cash proceeds that company obtains from thefranchising business and this has witnessed a significant jump in FY2017 in comparison tothe previous year. The other major component is the payment that company has done tovarious suppliers as well as employees which has also shown a significant growth in line withthe receipts. There has been an increase in the costs related to the finance that have been paidin FY2017 over the last year. Besides, there has been about 12% increase in the income taxpaid in FY2017 which may be linked to the higher profits made by the company in the sameyear.The various components of cash flow on account of investing activities are representedbelow.One of the major components is the payment done by the company for acquisition of PPEwhich has seen a major uptick in FY2017 when compared to the previous year. There hasbeen some proceeds realised from sale of PPE but that is quite insignificant when comparedwith the monies paid for acquiring PPE. Considering the nature of the business, the company
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Corporate Accountingwhile acquiring other businesses would potentially also acquire related intangible assets andthe payment made for these is also recorded. However, an almost 10 fold jump is seen in thecash spent on making payments for businesses in FY2017 over the previous year.The various components of cash flow on account of financing activities are representedbelow.The most noticeable aspect is that in FY2017, the company has raised equity proceeds to theextent of $ 35.6 million which was nil in the previous year. However, the proceeds fromincremental borrowings continue to increase in FY2017 as the repayment is lesser than thefresh proceeds in this regards. Also, the company has paid dividends to the shareholders inFY2017 to the extent of $42.888 million and represent a significant rise to the previous year.Also, for raising the incremental equity and debt, there are associated costs such as inobtaining approvals, legal fees, merchant bankers which are also recognised.ii) The changes in the three major components of cash flow are illustrated below.Based on the apparent, it is apparent that the operational cash flow has been showcasing ahealthy trend as it has improved in the recent years, which is a reliable indicator of thebusiness model robustness. Additionally, it is apparent that company is investing activelyin the business as in the last three years, there is a significantly cash outflow on account ofinvesting activities. These investments are likely to be EPS accretive in the future whenthe impact of these would be reflected in earnings. Further, with regards to financingactivities also, the company in the recent years has ensured that the balance sheet does notget over leveraged and hence kept the debt within manageable portion while exploringequity based financing.
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