Cash Flow Statement Analysis

This assignment presents a detailed cash flow statement analysis. It includes information on operating, financing, and investing activities across multiple periods. The analysis showcases how cash flows are generated and used by a company, highlighting key trends and insights. The data allows students to understand the dynamics of a business's financial health through its cash flow.

Running Head: Accounting and Finance
1
Project Report: Introduction to Accounting and Finance

Accounting and Finance
2
Contents
Introduction.......................................................................................................................3
TELSTRA CORPORATION Limited..............................................................................3
Debt valuation...................................................................................................................3
Share valuation.................................................................................................................5
Cost of capital...................................................................................................................6
Market analysis.................................................................................................................8
References.......................................................................................................................10
Appendix.........................................................................................................................11

Accounting and Finance
3
Introduction:
It is obligatory for every human being, character and shareholder to evaluate the
condition of the market and deposit the money into the security or financial market according
to the various changes such as fluctuations in the market, company’s internal position and
external position, performance of the comapny in terms of finance, state of the stability of the
comapny, comapny various micro and macro factors etc. For identifying the above explained
elements, an entity must take the assistance of financial analyst. Being a consultant, Telstra
Corporation limited has been evaluated to express the investor or individual about the
company’s performance and the opportunity of investment in the TELSTRA
CORPORATION LIMITED. This analysis and paper expresses the result on the basis of
various tools such as debt valuation, securities valuation, analysis of the market, cost of
capital etc. the paper has been made to express the investment prospect in TELSTRA
CORPORATION LIMITED to the share holders and debt holders.
TELSTRA CORPORATION Limited:
This report depicts the investors about the TELSTRA CORPORATION. This
company is recognized as the biggest companies in the Australian market in the industry of
telecommunication and Media. This company develops and runs its activities in the business
of mobile network, internet access, telecommunication networks and numerous other services
of entertainment. The main office of the company is at Melbourne, Australia. Comapny runs
its activities and main operations from there only. The main objective of TELSTRA
CORPORATION is to extend the position of company’s services and products as the biggest
service and products provider of IT (information and technology) in the Australian market
(Our Company.2017). In 1901, this business has come into existence. This company is
frequently increasing its functions and operations through various practices and activities.
Debt valuation:
TELSTRA CORPORATION LIMITED has been examined in terms of finance on the
basis of the debts in this study. Debt valuations study depicts the investor about the
performance and the financial strength of the comapny. The study over the debt valuation of
TELSTRA CORPORATION LIMITED depict that the short term of the comapny is $ 2369
million which has been raised through the bank overdraft and by issuing some debts for the
short term whereas the long term debt has been raised through issuing the debts for a long

Accounting and Finance
4
period into the market to manage the activities and performance. Following are the details of
the debts of the company:
Telstra Corporation Limited
2017 2016 2015 2014 2013
Long term debt 14574000000 14378000000 13887000000 1.3316E+10 14099000000
Short term debt 2369000000 2537000000 1403000000 2199000000 685000000
(Morning star, 2017)
Further, in this analysis, industry has been analyzed and the debt value of the industry
has been compared to the comapny to evaluate the strength and position:
Industry's debt structure
2017 2016 2015 2014 2013
Long term
debt 1459000000 1387000000 1403000000 1287000000 185000000
Short term
debt 200000000 10000000 154700000 12487900 12698745
(Morningstar, 2017)
Through this analysis, it has been evaluated that the debt position of the comapny and
the industry is bit similar. Industry has raised the funds from the debt in current year and
same has been done from the company. Thus it has been found that the debt structure of the
company is bit constant with the performance of the industry.
According to this analysis, comapny is not required to make any changes into the
policies and debt position of the comapny. Current situation depict that the comapny is
leader in the market and thus the position and the state of the company presents the industry.
The industry doesn’t influence over the short term and long term debts of the comapny.
At the end, it has been found that the cost of debt of the comapny is 4.9%. The
interest rate of the debt of the comapny is 7% and according to the Australian government,
the tax rate is 30%. Thus through it, it has been found that the following are the calculations
of the cost of debt of the comapny.
Calculation of cost of debt
Outstanding debt 14574000000
interest rate 7%

Accounting and Finance
5
Tax rate 0.3
Kd 0.0490
(Bloomberg, 2017)
The comapny is required to pay 4.90% to the debt holders. This calculations and rate
depict that if the rate would be higher the comapny would have to pay extra to raise the funds
through debt.
Share valuation:
TELSTRA CORPORATION LIMITED has been examined in terms of finance on
the basis of the equity in this study. Share valuations study depicts the investor about the
performance and the financial strength of the comapny. The study over the share valuation of
TELSTRA CORPORATION LIMITED depict that the following are the details of the cost of
equity of the company:
Calculation of cost of equity
Dividend expected 0.000366759
Growth rate 7%
Price per share 3.52
cost of equity 7.01%
It has been found that the cost of equity of the comapny is 7.01%. The growth arte of
the debt of the comapny is 7% and according to the stock price, the market price of the
comapny is $ 3.52. This calculations and rate depict that if the rate would be higher the
comapny would have to pay extra to raise the funds through equity.
Further, the evaluation study has been performed over the some terms of the
comapny. Following are the details of that:
Revenue 25912000000
Earnings 3891000000
Dividend 0.000366759
Growth 7%
EPS 0.33

Accounting and Finance
6
This expresses that the performance of the comapny is becoming better day by day.
Through the calculations and analysis, it has been found that the performance of the comapny
is becoming more attractive in concern of the shareholders of the comapny.
Intrinsic value of a comapny is the value which is real worth of that stock. The
intrinsic value of the comapny has been analyzed through two models to identify the real
worth of the stock and it has been analyzed that is the current market price of the stock is
worth.
Dividend Discount Model
Dividend expected 0.00036676
Growth rate 7%
Discount rate 5.00%
Intrinsic Value (0.02)
Share Price 3.52
Overvalued
PE Multiple Model
Industry PE ratio 9.76
EPS 0.33
Intrinsic Value 3.22
Share Price 3.52
Overvalued
Through the evaluation, it has been found that various factors are there which have
impacted over the performance of the comapny. This analysis depict that the comapny is
required to look over the EPS, PE ratio of the industry, growth rate. Discount rate, expected
dividend etc.
The analysis over both the models depict that the PE model is way better and more
realistic. According to both the analysis, it has been found that the PE approach is more
reasonable as the intrinsic value through this method is closer to the share price and it takes
the concern of the more reasonable factors.
More, it has been found through me that various factors are there which must also be
calculates and analyzed by the investors while investing over the stock price of the company

Accounting and Finance
7
such as the fluctuations in the share price, dividend declaration, last 5 years’ performance of
the compact etc.
Cost of capital:
TELSTRA CORPORATION LIMITED has been examined in terms of finance on the
basis of the equity and debt in this study. Cost of capital study depicts the investor about the
performance and the financial strength of the comapny. The study over the share and debt
cost of TELSTRA CORPORATION LIMITED depict that the following are the details of the
weighted average cost of capital of the company:
Calculation of WACC
Price Cost Weight WACC
Debt 14574000000 0.049 0.50057 0.02453
Equity 14541000000 0.0701 0.49943 0.03501
29115000000 Kd 0.05954
This table depict that currently the comapny is required to pay around 5.95% of total
to the debt and equity holders in terms of their invested amount (Yahoo finance, 2017).
Australian goverenent has decided the rate of tax is 30%. For analyzing the cost of
capital, 30% tax rate has been analyzed. Following are the values of the debt cost, equity cost
and total debt and total equity of the company:
Price
Debt 14574000000
Equity 14541000000
This difference in the cost of debt and equity has taken place due to the nature of the
debt and equity as well as the fixed % of the interest and the fluctuative profits of the
company. Curreent liabilities must not be added into the cost of capital so that the best
analysis of long term values could be done. Short term debt is just required to manage the
working capital of a company.
WACC’s major value is 5.95% in which the weight of the debt is 2.45% and the
weight of the equity is 3.51%. whenever comapny wants to raisse more funds look over the
cost and risk and make a new decision on the basis of that.

Accounting and Finance
8
The comapny has just looked into the new market to diversify the market as well as
comapny has cracked a big deal. For both of these projects, the comapny has enhanced the
funds from debt and equity as well to amnage the factor of risk and return both (morningstar,
2017).
Below details are of capital structure of the industry:
Capital structure of Industry
Debt 1459000000
Equity 1987263000
Debt 14574000000
Equity 14541000000
The level of the debt and equity of both the companies are similar and the comapny is
just required to manage the optimal capital structure.
Optimal capitslstructure is the level where the debt and equity are in a position that
the risk and cost factors of the comapny is at least level, the standrds optimal capiatl structure
of the comapny must be 2:3. Variosu economical factors such as inflation, GDP etc make an
imapct over the optimal capitals tructure of a comapny.
Market analysis:
Through the evaluation over the entertainment and media industry, it has been found
that the TELSTRA CORPORATION Limited is the leader in the industry and thus the
performance of the comapny is way better in the industry.
The Morningstar (2017) express that the performance in terms of finance of the
TELSTRA CORPORATION Limited is attracting the investors and stakeholders more in the
industry. Yahoo finance (2017) has expressed that the stock performance of the comapny is
way better and the fluctuations on the share price of the comapny is average low. AFR (2017)
express that the TELSTRA CORPORATION Limited doesn’t required to make any changes
into the financial performance. Bloomberg (2017) express that the optimal capital structure is
the main point which must be taken care of by the comapny so that the cost reduction could
be done (Google finance, 2017). The performance of the comapny is way better, the only

Accounting and Finance
9
suggestion to the company is to make the optimal capital structure s o that the risk and return
aspect of the comapny could be managed.
According to the entire evaluation, it has been concluded that the TELSTRA
CORPORATION Limited is attracting the investors and stakeholders more in the industry.
Optimal capital structure is the main point which must be taken care of by the comapny so
that the cost reduction could be done. Though the comapny is leader in the industry and thus
the performance of the comapny is way better.

Accounting and Finance
10
References:
AFR. 2017. TELSTRA CORPORATION LIMITED. Retrieved from
http://www.afr.com/research-tools/TLS/company-profile/operational-history available on
27th Oct 2017.
Bloomberg. 2017. TELSTRA CORPORATION LIMITED. Retrieved from
https://www.bloomberg.com/quote/TLS:AU available on 27th Oct 2017.
Google finance. 2017. TELSTRA CORPORATION LIMITED. Retrieved from
http://finance.google.com/finance?q=ASX:TLS available on 27th Oct 2017.
Home. 2017. TELSTRA CORPORATION LIMITED. Retrieved from
http://www.telstra.com/ available on 27th Oct 2017.
Morningstar. 2017. TELSTRA CORPORATION LIMITED. Reterived from
http://financials.morningstar.com/cash-flow/cf.html?t=TLS&region=aus&culture=en-US
available on 27th Oct 2017.
Yahoo finance. 2017. TELSTRA CORPORATION LIMITED. Retrieved from
https://finance.yahoo.com/quote/tcs.ax?ltr=1 available on 27th Oct 2017.

Accounting and Finance
11
Appendix:
Date Adj Close Return
Adj
Close Return
30-06-2013 3.48 28.9837
31-07-2013 3.48 0 30.7262 0.06012
31-08-2013 3.49 0.00287 34.4575 0.1214371
30-09-2013 3.46 -0.0086 35.885 0.0414278
31-10-2013 3.47 0.00289 35.6291 -0.007131
30-11-2013 3.43 -0.0115 37.0271 0.0392376
31-12-2013 3.38 -0.0146 36.8203 -0.005585
31-01-2014 3.44 0.01775 33.07 -0.101854
28-02-2014 3.48 0.01163 34.7 0.0492894

Accounting and Finance
12
31-03-2014 3.47 -0.0029 35.45 0.0216138
30-04-2014 3.48 0.00288 34.53 -0.025952
31-05-2014 3.49 0.00287 36.69 0.0625543
30-06-2014 3.52 0.0086 37.1 0.0111747
31-07-2014 3.55 0.00852 36.76 -0.009164
31-08-2014 3.43 -0.0338 35.62 -0.031012
30-09-2014 3.49 0.01749 37.56 0.0544638
31-10-2014 3.51 0.00573 36.07 -0.03967
30-11-2014 3.52 0.00285 35.54 -0.014694
31-12-2014 3.55 0.00852 35.98 0.0123804
31-01-2015 3.56 0.00282 35.64 -0.00945
28-02-2015 3.52 -0.0112 36.19 0.0154321
31-03-2015 3.53 0.00284 37.49 0.0359216
30-04-2015 3.48 -0.0142 35.86 -0.043478
31-05-2015 3.48 0 35.99 0.0036252
30-06-2015 3.49 0.00287 36 0.0002778
31-07-2015 3.46 -0.0086 36.74 0.0205556
31-08-2015 3.47 0.00289 38.14 0.0381055
30-09-2015 3.43 -0.0115 44.14 0.1573152
31-10-2015 3.38 -0.0146 41.41 -0.061849
30-11-2015 3.44 0.01775 42.15 0.0178701
31-12-2015 3.48 0.01163 39.9 -0.053381
31-01-2016 3.47 -0.0029 44.45 0.1140351
29-02-2016 3.48 0.00288 39.44 -0.112711
31-03-2016 3.49 0.00287 37.88 -0.039554
30-04-2016 3.52 0.0086 41.22 0.0881732
31-05-2016 3.55 0.00852 41.39 0.0041242
30-06-2016 3.43 -0.0338 42.46 0.0258517
31-07-2016 3.49 0.01749 42.35 -0.002591
31-08-2016 3.51 0.00573 42.03 -0.007556
30-09-2016 3.52 0.00285 41.43 -0.014275
31-10-2016 3.55 0.00852 43.73 0.0555153
30-11-2016 3.56 0.00282 44.51 0.0178367
31-12-2016 3.52 -0.0112 45.76 0.0280836
31-01-2017 3.53 0.00284 49.7 0.0861015
28-02-2017 3.55 0.00567 51.15 0.0291751
31-03-2017 3.56 0.00282 48.16 -0.058456
30-04-2017 3.52 -0.0112 51.15 0.0620848
31-05-2017 3.53 0.00284 48.16 -0.058456
0.037% 1.228%
TELSTRA CORP LTD (TLS) CashFlowFlag INCOME STATEMENT

Accounting and Finance
13
Fiscal year ends in June. 2017-06 2016-06 2015-06 2014-06 2013-06
Revenue
2591200
0000
2583400
0000
2584500
0000
2511900
0000
2.5502E
+10
Cost of revenue
1095800
0000
7247000
000
6870000
000
6495000
000
6418000
000
Gross profit
1495400
0000
1858700
0000
1897500
0000
1862400
0000
1.9084E
+10
Operating expenses
Research and development 2000000 4000000 2000000
Sales, General and
administrative
9178000
000
7863000
000
7905000
000
7523000
000
7503000
000
Other operating expenses
1831000
000
5630000
000
5068000
000
5089000
000
5666000
000
Total operating expenses
1100900
0000
1349300
0000
1297500
0000
1261600
0000
1.3171E
+10
Operating income
3945000
000
5094000
000
6000000
000
6008000
000
5913000
000
Interest Expense
7290000
00
7960000
00
8460000
00
1113000
000
1128000
000
Other income (expense)
2431000
000
1302000
000
9190000
00
1333000
000
6970000
00
Income before taxes
5647000
000
5600000
000
6073000
000
6228000
000
5482000
000
Provision for income taxes
1773000
000
1768000
000
1787000
000
1679000
000
1617000
000
Net income from continuing
operations
3874000
000
3832000
000
4286000
000
4549000
000
3865000
000
Net income from discontinuing
ops
2017000
000
1900000
0
-
2040000
00
Other
1700000
0
-
6900000
0
-
7400000
0
-
7000000
0
-
5200000
0
Net income
3891000
000
5780000
000
4231000
000
4275000
000
3813000
000
Net income available to
common shareholders
3891000
000
5780000
000
4231000
000
4275000
000
3813000
000
Earnings per share
Basic 0.33 0.47 0.34 0.34 0.3
Diluted 0.33 0.47 0.34 0.34 0.3
Weighted average shares
outstanding
Basic
1196800
0000
1220200
0000
1226400
0000
1241800
0000
1.2406E
+10
Diluted
1196800
0000
1221599
9154
1226400
0000
1246355
6851
1.2461E
+10
EBITDA 1081700 1055100 1090200 1129100 1.0848E

Accounting and Finance
14
0000 0000 0000 0000 +10

Accounting and Finance
15
TELSTRA CORP LTD (TLS) CashFlowFlag BALANCE SHEET
Fiscal year ends in June. 2017-06 2016-06 2015-06 2014-06 2013-06
Assets
Current assets
Cash
Cash and cash equivalents
93800000
0
35500000
00
1396000
000
5527000
000
2479000
000
Short-term investments 21000000 62000000 7000000
2300000
0
4300000
0
Total cash
95900000
0
36120000
00
1403000
000
5550000
000
2522000
000
Receivables
54680000
00
47370000
00
4721000
000
4172000
000
4557000
000
Inventories
89300000
0
55700000
0
4910000
00
3620000
00
4310000
00
Prepaid expenses
53100000
0
42600000
0
3460000
00
3290000
00
3140000
00
Other current assets 11000000 8000000 9000000
2500000
0
7900000
0
Total current assets
78620000
00
93400000
00
6970000
000
1.0438E
+10
7903000
000
Non-current assets
Property, plant and equipment
Gross property, plant and
equipment
64312000
000
64960000
000
6.5329E
+10
6.2668E
+10
6.0984E
+10
Accumulated Depreciation
-
4.2962E+
10
-
44379000
000
-
4.488E+
10
-
4.283E+
10
-
4.066E+
10
Net property, plant and
equipment
21350000
000
20581000
000
2.045E+
10
1.9842E
+10
2.0326E
+10
Equity and other investments
21090000
00
27450000
00
2128000
000
1645000
000
1118000
000
Goodwill
12690000
00
13460000
00
1652000
000
3950000
00
1382000
000
Intangible assets
82890000
00
78830000
00
7680000
000
5987000
000
6820000
000
Deferred income taxes 44000000 54000000
6600000
0 7000000 5000000
Other long-term assets
12100000
00
13370000
00
1499000
000
1046000
000
9730000
00
Total non-current assets
34271000
000
33946000
000
3.3475E
+10
2.8922E
+10
3.0624E
+10
Total assets 42133000 43286000 4.0445E 3.936E+ 3.8527E

Accounting and Finance
16
000 000 +10 10 +10
Liabilities and stockholders'
equity
Liabilities
Current liabilities
Short-term debt
23690000
00
25370000
00
1403000
000
2199000
000
6850000
00
Capital leases
10700000
0
11800000
0
9300000
0
7800000
0
6600000
0
Accounts payable
11850000
00
14650000
00
1256000
000
1164000
000
1297000
000
Deferred income taxes
16100000
0
17600000
0
2910000
00
2960000
00
4440000
00
Deferred revenues
12360000
00
11180000
00
1113000
000
9260000
00
1124000
000
Other current liabilities
41010000
00
37740000
00
3973000
000
4021000
000
3906000
000
Total current liabilities
91590000
00
91880000
00
8129000
000
8684000
000
7522000
000
Non-current liabilities
Long-term debt
14574000
000
14378000
000
1.3887E
+10
1.3316E
+10
1.4099E
+10
Capital leases
23400000
0
26900000
0
2510000
00
2310000
00
2140000
00
Deferred taxes liabilities
15390000
00
14930000
00
1558000
000
1286000
000
1330000
000
Other long-term liabilities
20860000
00
20870000
00
2517000
000
2021000
000
2751000
000
Total non-current liabilities
18433000
000
18227000
000
1.8213E
+10
1.6854E
+10
1.8394E
+10
Total liabilities
27592000
000
27415000
000
2.6342E
+10
2.5538E
+10
2.5916E
+10
Stockholders' equity
Common stock
44210000
00
51670000
00
5198000
000
5719000
000
5711000
000
Retained earnings
10225000
000
10642000
000
8533000
000
8331000
000
7519000
000
Accumulated other
comprehensive income
-
10500000
0 62000000
3720000
00
-
2280000
00
-
6190000
00
Total stockholders' equity
14541000
000
15871000
000
1.4103E
+10
1.3822E
+10
1.2611E
+10
Total liabilities and
stockholders' equity
42133000
000
43286000
000
4.0445E
+10
3.936E+
10
3.8527E
+10

Accounting and Finance
17
TELSTRA CORP LTD (TLS) Statement of CASH FLOW
Fiscal year ends in June. AUD. 2017-06 2016-06 2015-06 2014-06 2013-06
Cash Flows From Operating Activities
Other non-cash items 7775000
000
8133000
000
8311000
000
8613000
000
8359000
000
Net cash provided by operating
activities
7775000
000
8133000
000
8311000
000
8613000
000
8359000
000
Cash Flows From Investing Activities
Investments in property, plant, and
equipment
-
3725000
000
-
3051000
000
-
2845000
000
-
2868000
000
-
2818000
000
Property, plant, and equipment
reductions
6790000
00
4700000
00
9400000
0
9400000
0
5700000
0
Acquisitions, net -
6300000
0
1248000
000
-
9800000
00
2232000
000
6880000
00
Purchases of investments -
8200000
0
-
1050000
00
-
1200000
00
-
9100000
0
-
2800000
0
Sales/Maturities of investments 2850000
00
5600000
0
4000000 4000000
Purchases of intangibles -
1596000
000
-
1143000
000
-
2257000
000
-
8940000
00
-
1691000
000
Sales of intangibles 1200000
0
Other investing activities 2230000
00
3180000
00
4120000
00
3930000
00
4450000
00
Net cash used for investing
activities
-
4279000
000
-
2207000
000
-
5692000
000
-
1130000
000
-
3335000
000
Cash Flows From Financing Activities
Debt issued 4710000
000
4987000
000
1793000
000
1572000
000
2074000
000
Debt repayment -
4571000
000
-
3954000
000
-
3413000
000
-
1387000
000
-
4042000
000
Common stock issued 1210000
00
1890000
00
2900000
0
Common stock repurchased -
1502000
000
-
6800000
0
-
1004000
000
-
1490000
00
Dividend paid -
3736000
000
-
3787000
000
-
3700000
000
-
3567000
000
-
3508000
000
Other financing activities -
1005000
000
-
9550000
00
-
6790000
00
-
1088000
000
-
1079000
000