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Integrated Reporting: Accounting Name of the University Student ID

   

Added on  2021-04-16

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Running head: INTEGRATED REPORTING: ACCOUNTINGIntegrated reporting: AccountingName of the studentName of the universityStudent IDAuthor note
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2INTEGRATED REPORTING: ACCOUNTINGTable of ContentsPart A.........................................................................................................................................3a.Ratio table.......................................................................................................................3b.Discussion of ratios providing indication of receivership...............................................3Part B..........................................................................................................................................4a.Red flag from common size balance sheet......................................................................4b.Additional information from cash flow statement..........................................................5Part C..........................................................................................................................................5a.Principle 2 – Structure of the board to add value............................................................5b.Principle 4 – Safeguard integrity in corporate reporting.................................................7c.Principle 7 – Recognise and managing risk....................................................................7d.Principle 3 – Act ethically and responsibly.....................................................................8Reference..................................................................................................................................10
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3INTEGRATED REPORTING: ACCOUNTINGPart Aa.Ratio tableRatio & FormulaWorkingsCalculation1Current ratio = Current assets/Current liabilities389979/3165271.232Quick ratio = (Cash + Short-term marketable investments + Account receivables)/Current liabilities(29511+53323+10460)/3165270.293Cash ratio = (Cash + Short-term marketable investments)/ Current liabilities29511/3165270.094aInventory turnover = Cost of goods sold/Average inventory (Times)992828/((293044+253814)/2)3.634bDays inventory held = 365/Inventory turnover (number of whole days, round up)365/(992828/((293044+253814)/2))100.525aReceivables turnover = Revenue/Average receivables (times)1319670/((53323+46688)/2)26.395bDays of sales outstanding = 365/Receivables turnover (number of whole days, round up)365/(1319670/((53323+46688)/2))13.836Debt/Assets = Total debt (liabilities)/Total assets x100 (%)339374/508521*10066.747Debt/Equity = Total debt (liabilities)/Total equity x 100 (%)339374/169147*100200.648Interest coverage = EBIT/Interest payments (times)(53379+4111)/411113.989ROE = Net income/Average equityx 100 (%)37905/((169147+166940)/2)*10022.5610ROA = Net income/Average assets x 100 (%)37905/((508521+451171)/2)*1007.90b.Discussion of ratios providing indication of receivershipQuick ratio – it measures the company’s liquidity through stating the ability of the companyfor making the payment towards current liabilities without selling the long-term assets of thecompany (Williams and Dobelman 2017). It can be seen from the annual report and
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4INTEGRATED REPORTING: ACCOUNTINGcalculation table that the quick ratio of the company is only 0.29. It states that the quickassets of the company are significantly lower as compared to the current liabilities. Therefore,to pay off the short-term obligations the company have to sell its long-term assets. As most ofthe businesses use the long-term assets for generating revenues, selling these assets will notonly hamper the operations of the company but also will create an assumption in the mind ofthe investors that the company is not able to generate sufficient earning to make payment forthe short-term obligations (Palepu, Healy and Peek 2013). The quick ratio of 1 state that thecompany’s quick assets are equal to its current liabilities and the short-term liabilities can bepaid off from the quick assets. However, the quick ratio of Dick Smith for the year ended2015 was just 0.29 that is clearly indicating that the quick assets are significantly low to payoff the short-term obligations of the company. Therefore, it is providing an indication that thecompany can go into receivership (Weil, Schipper and Francis 2013).Debt equity ratio - it is a long-run solvency ratio used to evaluate the long-term soundness ofthe company’s financial policies. It shows the portion of assets financed through borrowingand portion that is financed by the shareholders fund (Coates 2014). The debt equity ratio of100% shows that the company’s assets are equally financed by creditors and shareholders.Usually the creditors like low ratio that is less than 100% for debt to equity as low ratioindicates greater protection of their money. Further, the high debt to equity ratio indicates thatthe company is highly leveraged and overburden of interest can lead the company tounsustainable position. As it can be seen that the debt equity ratio of the company is morethan 200%, it is giving an indication that the company can go into receivership (Brochet,Jagolinzer and Riedl 2013).
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