Detailed Cash Flow Analysis of Accent Group Ltd - HI5020 Report

This report provides a detailed analysis of Accent Group Limited's cash flow statements for the financial years 2015, 2016, and 2017. It examines cash flow from operating, investing, and financing activities, highlighting trends and their implications for the company's financial health. The analysis cov...Read More

HI5020
Corporate Accounting
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Contents
Introduction:....................................................................................................................................3
Cash flow statement.........................................................................................................................4
Analysis of cash flow generated from operating activities..............................................................5
Analysis of cash flow from investing activities...............................................................................6
Analysis of cash flow from financing activities..............................................................................7
Analysis...........................................................................................................................................7
Cash flow from operating activities –..............................................................................................7
Cash flow from investing activities.................................................................................................7
Cash flow from financing activities-...............................................................................................8
Other comprehensive income statement:.........................................................................................9
Accounting for corporate income tax:...........................................................................................10
Conclusion:....................................................................................................................................11
References......................................................................................................................................12
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Introduction:
Accent group Limited is a listed company on the Australian securities exchange board and is
the regional leader in the retail and distribution of various footwears with around 420 spaces
situated in 10 different part of the country. The company has huge market in Australia and New
Zealand. The company believes in customer satisfaction and providing a class of footwear. It
was founded in the year 2000 and since then the company is unstoppable. The company has
many brands running under the name of the same company. In the financial year 2017 the
company has witnessed good profits and plus enhancing shareholders wealth.
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Cash flow statement
(i)
Cash flow from operating activities is there in the financial statements and the cash flow
statement for the financial year 2017, 2016 and 2015. The cash flow generated from operating
activities was the highest in the financial year 2017 which provides that the company has earned
good profit in the year 2017 when compared with the year 2016 and 2015. In the year 2016 cash
flow from operating activities was also soon much higher than the year 2015, since the last 2
years 2016 and 2017 the company's position in the market is considerably increasing and
earning good profits for the company (Ma, 2017).
Cash flow from investing activities for the year 2015, 2016 and 2017 provided by the financial
statements from the annual report of the company it can be same that the company has a
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negative cash flow from operating activities which provide that the company is more of
investing then selling such Investments. The company has made huge Investments for the
purpose of increasing its business premises the company has invested in plant, property and
equipment the most. The purpose behind investing in such areas is that the company is clear
with its intentions that it has to increase its business in the upcoming future and that is our
company is investing in such plant, property and equipments. In all the three years the
investment is done by the company but in 2017 the company has made huge Investments in
property, plant and equipment. The company has made no investment in the intangible and
other investing charges for all the financial years’ data 2016, 2015 and 2017.
Cash flow from financing activities for the financial year 2015, 2016 and 2017 from the cash
flow statement that is provided by the Annual General report of the company for the financial
year 2017 is found that cash flow from financing activities or the net cash flow from financing
activities was the highest in the year 2015 that means issuance of long term debt was done most
in the year 2015 and the repayment was not done in the year 2015. The purpose behind the issue
of debt in all the years ‘is to provide cash for the company to run its business and to enhance his
business.
(ii)
Analysis of cash flow generated from operating activities-
When the various items that are given in the cash flow statements are influenced with the net
profit of the company the operating cash flow can be generated. The operating income for the
organization can be provided by reducing depreciation and the working capital that has been
properly calculated has to be monitored with the net profit of the entity. For the purpose of
calculating the various cash flows generated from the operating activities is not to include the
items which fall under the heading cash flow generated from investing activities and cash flow
generated from financing activities (McInnis, 2018). With the help of such bifurcation there
shall be no confusion in the calculation of cash flow generated from operating activities as only
the items that are to be adjusted with their cash flow from operating activities shall be placed
together.
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As per the cash flow provided by the annual General report of the companies it can be evaluated
that cash flow from operating activities are present for the company and the company is running
a successful business and day by day the company is enhancing and increasing its business
opportunities. The objective behind the cash flow from operating activities to ascertain the
company's actual position to repay its actual debts that the company is going through. Operating
expenses are referring a nature and division of the financial statements of the company can with
the help of the cash flow ascertain that whether the company is in the position to pay off its
operating expenses and have sufficient working capital requirement to fulfill its daily needs of
cash outflow.
Analysis of cash flow from investing activities- All the line items under the heading of cash
flow from investing activities have to be considered together by bringing them together under
this heading. When all the activities relating to cash flow from investing activities are held
together then the final amount which is to be receivable or payable by the company can be
calculated separately. The sale of fixed assets and Investments that are held by the company
during the financial year have to be considered for the purpose of cash flow from investing
activities and the purchase of fixed assets and investment which the company does from the
cash flows that the company has generated during the financial year are also considered for the
purpose of cash flow from investing activities. When the company brings in fixed assets and
sells them the net cash flow from such activities can be identified and reported and under cash
flows by investment activities (Annual Report, 2017).
The cash flow from investment activities can be up to type when negative cash flow is and the
other is positive cash flow. Negative cash flow occurs when there is a purchase or an outflow of
cash is made by the company during the financial year. This could be done by making an
investment for the company through which the cash availability in the company gets reduced.
Whereas cash flow from investment activities can be positive as well, when sale or cash inflow
takes place within the company it is called as quality cashless of the company. With the help of
positive cash flow because availability in the company gets increased and such increased cash
the company can repay its other expenses.
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Analysis of cash flow from financing activities- Transactions that involve the stakeholder in
the owner of the company results in the cash flow from financing activities. Such transactions
have to be mentioned in the cash flow from financing activities. Cash flow from financing
activities can be of two types when was positive cash flow and the other is negative cash flow.
When the company issues debt instrument then there is an inflow of cash in the company. When
the company receives various dividends from different companies in which the company has its
stake/ investment then it leads to positive cash flow for the company as the cash flows within
the company as the company receives dividend from another company which leads to positive
cash inflow for the company.
Analysis
Cash flow from operating activities –
For the company the cash flow generated from operating business present in the cash flow
statement that the company has provided in the annual report of the year 2015, 2016 and 2017.
Because of which it can be said that the company's current position and the company's position
in the past few years is very sound. The company has good earnings from their core business
and the company is running smoothly. For the past 3 years the company has cash flows from
operating activities through which the reports can be generated by the department managers and
should be provided to the uses of the reports. The report generated is the new closed by the
investors/ borrowers so that they can invest or lend money to the company by analyzing the
company's position of repaying its debts.
Cash flow from investing activities –
The company provided has sufficient cash flows regulations from the activities that belong to
investments. When cash flow statements of the company that are provided in the annual reports
of the year 2015,2016 and 2017 are viewed, it can be found out that the organization has
purchased/ invested in various fixed assets during the three fiscal years. Huge investments are
made by the company in all the three financial years in the fixed assets of the company through
which it can be analyzed that the company might not have sufficient funds to pay off its
operating expenses, debt liabilities for the upcoming future. But on analyzing the funds of the
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companies it was found that the company has negative cash flow from investment activities for
all the three financial years that have been provided in the cash flow statement. The concert in
the world investment in the various causes effects and has not told anything they said during the
last three accounting years. Do cash flow from investing activities from the company is
negative.
Cash flow from financing activities-
For the company that has been provided it can be found that cash flow from financing activities
are provided in the cash flow statement of the company for the last years 2015, 2016 and 2017
as per the statement provided in the annual report provided by the company. The company has
positive cash flow from financing activities as the company is issuing more and more long term
debt when repaying them through which the countries cash inflow is higher than the cash
outflow which is resulting in operating cash flow for the company. With the help of such
positive cash flow which has been generated from financing activities can be used to pay
various dividend and other financing activities can be paid off with the help of be positive cash
flow that has been generated from the financing activities. Cash flow from financing activities
was generated from common stock by the company in all the three financial year. Issuance of
common stock led to a positive cash flow for the company.
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Other comprehensive income statement:
(iii) Other comprehensive items are the part of the company financial statements. That the
company provided movement in net change in cash flow value as been made in all the 3 years
that are 2015, 2016 and 2017. Because of such foreign hedge reserves there have been a foreign
exchange translation in the other comprehensive income which has been reported in all the three
financial years by the company. It is expected from the company that such foreign exchange
translation has to be reported every year by the company as company is involved in foreign
hedge Reserves which are the part of the company's business (Graham, et. al., 2012).
(iv) The risk associated with recognition of asset or liabilities that are the part of the cash flow
statement have to be reported as hedge. Such hedge has to be reported separately as other
comprehensive income. The income which do not form part of the income statement of the
company has to be reported as other comprehensive income. Foreign exchange escalation on
The Hedge reserve is due to the export and the import conducted by the company during all the
three financial years that are reported in the Annual report.
(v) The income that is reported under the heading other comprehensive income have to be
reported separately because there recognition is not certain and being confused about full for the
company are to be reported under the heading other comprehensive income.
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Accounting for corporate income tax:
(vi)
The tax expense for the company for the year 2017 as per the annual report of the company is
12,072 thousand dollars.
(vii)
The company comes in the Tax slab of 30% tax rate and the company has to pay taxes as per
the income that has been calculated as per the tax requirement. But there's a difference in the
income calculated as per the requirement of tax and the income as per the accounts of the
company. This difference is because of the deferred tax liability of 8,716 thousand dollars,
because of the deferred tax liability there is a difference between the accounting income and
income reported by the company and its annual report (Brouwer and Naarding, 2018).
(viii)
Deferred tax liability of 8,716 thousand dollars weather winter side by the company due to
which there was the tax effect. This is .because of the timing difference that has reduced the
accounting income of the company (Mgammal and Ismail, 2015)
(ix)
For the financial year 2017 the company has to pay taxes as per the requirement of the law of
Australia. The tax rate applicable is 30%.
(x)
No, the income tax shown in the cash flow statement of the company and the income tax that
has been paid by the company is different because of the deferred tax liability and the various
timing differences that have caused this difference.
(xi)
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There were no tax expenses that the company has paid where shown in the cash flow from
operating activities as per the annual report of 2017. Also it is such a big company and the
revenues and expenses that the company conducted in the financial year are low (Noor, et. al.,
2012).
Conclusion:
Accent group limited is a company in which cash flow statement I prepared by the management
and the cash flow from operating and financing activities are found to be positive through
which the company's various expenses can be made on timely basis. Whereas the company's
financial statements in which class flow from investing activities were considered it was found
that the company is investing more the prevention negative factors of the company. Overall
band company was taken the company is successfully growing every year and has good future
aspects. The company should increase its products to increase its revenues in the upcoming
future.
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References
 Annual Report, 2017. Accent Group Limited. Available at:
http://www.accentgroup.org/media/258546/report-and-accounts-2017.pdf Accessed on
May 24, 2018
 Brouwer, A. and Naarding, E., 2018. Making Deferred Taxes Relevant. Accounting in
Europe, pp.1-31
 Graham, J. R., Raedy, J. S., & Shackelford, D. A. (2012). Research in accounting for
income taxes. Journal of Accounting and Economics, 53(1), 412-434
 Ma, X., 2017. Advancing Direct Corporate Accountability in International Human
Rights Law: The Role of State-Owned Enterprises (Master's thesis)
 McInnis, M., 2018. An Analysis of Managerial Accounting and Corporate Reporting
Practices (Doctoral dissertation, University of Mississippi)
 Mgammal, M.H. and Ismail, K.N.I.K., 2015. Corporate tax planning activities: overview
of concepts, theories, restrictions, motivations and approaches. Mediterranean Journal
of Social Sciences, 6(6 S4), p.350.
 Noor, M.I., Nour, A. and Musa, S., 2012. The Role of Cash Flow in Explaining the
Change in Company Liquidity. Journal of Advanced Social Research Vol, 2(4), pp.231-
243.
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