Introduction to Accounting: Analysis of Telstra's Financial Reports

This accounting assignment analyzes the financial performance of Telstra Ltd. The assignment covers various aspects, including corporate governance, stakeholder theory, and business sustainability. It examines Telstra's commitment to social and environmental considerations and identifies key focus areas. The assignment includes an analysis of Telstra's financial reports, such as the income statement, statement of comprehensive income, statement of financial position, statement of cash flows, and statement of changes in equity. It explores the rounding of financial amounts and calculates and interprets various financial ratios, including profit margin, return on assets (ROA), return on equity (ROE), asset turnover, debt ratio, and earnings per share. The assignment also addresses inventory holding costs and the usefulness of the statement of cash flows. Finally, the assignment evaluates Telstra's profitability and provides insights into its financial performance based on the calculated ratios and financial data.

Running head: INTRODUCTION TO ACCOUNTING
Introduction to accounting
Name of the student
Name of the university
Author note

1INTRODUCTION TO ACCOUNTING
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................2
Question 3..................................................................................................................................2
Question 4..................................................................................................................................2
Question 5..................................................................................................................................2
Question 6a.................................................................................................................................3
Question 6b................................................................................................................................3
Question 6c.................................................................................................................................3
Question 7..................................................................................................................................4
Question 8..................................................................................................................................4
Question 9..................................................................................................................................4
Question 10................................................................................................................................5
Question 11................................................................................................................................5
Question 12................................................................................................................................5
Question 13................................................................................................................................5
Bibliography...............................................................................................................................6

2INTRODUCTION TO ACCOUNTING
Question 1
Which of the following is not believed to be a motive for entities to act in a socially
responsible manner?
b. Entities want to limit interference from government or other groups
Question 2
Which of the following statements relating to corporate governance is not true?
d. None of the above. All are true statements
Question 3
According to stakeholder theory, stakeholders other than shareholders:
c. Are important as they generally contribute value to an entity
Question 4
Which of the following would not be considered a key driver of business sustainability?
d. High unemployment levels
Question 5
Telstra Ltd (Telstra)’s goal is to embed social and environmental considerations into their business in
ways that create value for the company and their stakeholders. Within the Telstra Annual Report
2017, there is a section on their commitment to business sustainability. This section highlights some
of the more significant aspects of sustainability at Telstra. Select from the list below all the focus
areas that the company will help protect environment for present and future generations:
- Climate change and energy

3INTRODUCTION TO ACCOUNTING
- Culture and capabilities
- Environment and resource efficiency
Question 6a
The annual report contains a number of reports with only some of these being ‘financial
reports’. Name all of the financial reports shown for this company in the 2017 annual report
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Question 6b
The amounts shown in the financial reports are rounded. Identify how the amounts in the
financial report for this company are rounded
c. Nearest million
Question 6c
Briefly explain why you believe the amounts shown in the financial reports are rounded in
this way
- Under the option available under the Australian Securities and Investments
Commission (ASIC) Corporations (Rounding in Financial/Directors’ Report)
Instrument 2016/191.

4INTRODUCTION TO ACCOUNTING
Question 7
Ratio calculation of Telstra Ltd –
Ratios 2017 2016
Profitability analysis
Profit margin 24.0 24.4
Return on assets (ROA) 14.6 15.1
Return on Equity (ROE) 25.6 38.6
Asset Efficiency
Asset turnover 0.6 0.6
Debtor days 71.6 66.6
Capital Structure
Debt ratio 65.4% 63.3%
Market Performance
Earnings per share (cents) 32.5 47.4
Dividend per share 15.5 15.5
Liquidity
Current ratio 0.9 1.0
Question 8
(a) Telstra Ltd.
(b) Telstra Ltd.
(c) Net Ltd.
(d) Telstra Ltd.
(e) Net Ltd
Question 9
Using Telstra Ltd’s financial statements and financial ratios are:
c. Often a good guide to future performance

5INTRODUCTION TO ACCOUNTING
Question 10
There are many benefits and costs to hold inventory in the business. Select all the inventory
holding costs in the business
- Risk of deterioration and/or obsolescence
- Insurance
Question 11
The statement of cash flows is most useful in assessing Telstra Ltd’s
a. Liquidity
Question 12
The problem with many of the financial ratio calculation is that:
d. All of the options are true
Question 13
- Profitability is more favourable for Telstra
- ROA indicates a better ability of Telstra Ltd to generate profit from its asset
investment
- The earnings per share for Telstra indicates a better situation for investors
- Telstra share price is higher indicating more demand for their shares

6INTRODUCTION TO ACCOUNTING
Bibliography
Cpaaustralia.com.au. (2017). CPA Australia. [online] Available at:
https://www.cpaaustralia.com.au/ [Accessed 30 Sep. 2017].
Telstra.com.au. (2017). Telstra - mobile phones, prepaid phones, broadband, internet, home
phones, business phones. [online] Available at: https://www.telstra.com.au/ [Accessed 30
Sep. 2017].