HI5020 Corporate Accounting: Financial Analysis of ASX Listed Firms

This report analyzes the financial statements of three ASX-listed companies: Domino’s Pizza Enterprise Limited, G8 Education Limited, and Navitas Limited, focusing on equity, liabilities, cash flow statements, other comprehensive income, and corporate income tax. The analysis includes a comparative study of debt and equity positions, cash flow activities, and items reported under other comprehensive income. The report also examines the tax expenses, effective tax rates, deferred tax assets and liabilities, and cash tax rates for each company. The debt-equity structure is evaluated, highlighting leverage positions and solvency. The report concludes with insights into how these companies manage their finances and tax obligations, offering a comprehensive overview of their financial health. Desklib provides access to similar solved assignments and resources for students.

Running head: CORPORATE ACCOUNTING
Corporate accounting
Name of the student
Name of the university
Student ID
Author note

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CORPORATE ACCOUNTING
Executive summary
Aim of the report is to analyse the financial report of ASX listed companies Domino’s
Enterprise Limited, G8 Education Limited and Navitas Limited. The report will focus on the
items on equity and liability and changes taken place for those items during the year from
2015 to 2017. The report will further focus on the cash flow statements of the companies and
other comprehensive income statements. Finally the report will highlight the tax treatment of
the companies reported in the financial statements.

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Table of Contents
Introduction................................................................................................................................3
Equity and liabilities..................................................................................................................3
(i) Equity items.................................................................................................................3
(ii) Liability items..............................................................................................................6
(iii) Comparative analysis of debt and equity position.......................................................8
Cash flow statement...................................................................................................................9
(iv) Listed items for cash flow...........................................................................................9
(v) Comparative analysis.................................................................................................11
(vi) Comparative analysis selected for explaining insights..............................................13
Other comprehensive income statement..................................................................................13
(vii) Reported items under other comprehensive income (OCI).......................................13
(viii) Why items of OCI are not reported in the profit and loss statement.....................14
(ix) Comparative analysis of items reported under OCI..................................................15
(x) Including comprehensive income to analyse the manager’s performance................15
Accounting for corporate income tax.......................................................................................15
(xi) Reported tax expenses for 2017................................................................................15
(xii) Effective rate of tax...................................................................................................15
(xiii) Deferred tax assets or deferred tax liabilities.........................................................16
(xiv) Increase or decrease in deferred tax assets or liabilities reported by the entities. .16

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(xv) Cash tax.....................................................................................................................17
(xvi) Rate of cash tax......................................................................................................17
(xvii) Difference of cash tax rate from the book tax rate................................................18
Conclusion................................................................................................................................18
Reference..................................................................................................................................19
Appendix..................................................................................................................................21

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Introduction
Domino’s Pizza Enterprise Limited is involved in operation of the retail foods and
franchise services. Different segments of the company include New Zealand, Australia, Japan
and Europe. The entity is the franchise for Domino’s Pizza brand all over the world. Various
menu served by the company are prawn and chicken pizza, pizza mogul, traditional pizza,
crusts, pizza chefs, chef’s best and gluten free pizza. Further, the customers are availed with
the facility of ordering online. It operates in 7 nations from more than 2000 stores
(Dominos.com.au 2019).
G8 Education Limited is largest child care centre that is listed under ASX and
operates in Australia. The company aims to be the leading provider of the high quality
educational and developmental service centre for child care. The company was established in
the year 2006 and it brought together the team with dedicated professionals that drive high
quality educational and developmental child care services in Australia (G8 Educatio 2019).
Navitas Limited offers the educational services for the professional and students of
Australia, Asia, United Kingdom, Asia, Canada, United States and globally. The company
operates its business through the University partnership, industry segments and careers. The
university partnership segment provides pre-university, university courses and managed
campus. Industry and career segment provides wide range of programs related to higher
education in different fields of the study including film, audio, animation, design and gaming
(Navitas.com 2019).

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Equity and liabilities
(i) Equity items
Domino’s Pizza Enterprise Limited – various components of equity are as follows –
 Issued capital – issued capital is that part of the authorised share capital that is issued
to the shareholders. In other words, shares allotted to the shareholders or the shares
held by the shareholders are known as issued capital
 Reserves – reserves are that part of the profit that is generated by the entity in normal
business course. Reserves are kept aside for using in future for some specific purpose.
However, the reserves can be segregated into the general reserves too.
 Retained earnings – it is the cumulative net earnings that can be in negative or
positive. If the retained earnings figure is positive it creates lot of rooms for the entity
management or business owners for utilizing surplus amount (Dominos.com.au 2019).
Changes in equity are as follows –
Reserves amount changed as the company used it for payment of dividend to the
shareholders. Retained earnings amount changed due to changes in the amount of net
earnings.
G8 Education Limited – various components of equity are as follows –
 Contributed equity – this is the stock value that is purchased by the shareholders
directly from issuing entity. Component of the contributed equity is the direct listing,

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initial public offerings, secondary offerings and direct public offerings and the issues
of the preferred stock (G8 Education 2019).
 Reserves – Explained above for Domino’s Pizza Enterprise Limited
 Retained earnings – Explained above for Domino’s Pizza Enterprise Limited
Changes in equity are as follows –
Retained earnings amount changed due to changes in the amount of net earnings.
Reserves amount changed as the company used it for payment of dividend to the
shareholders.
Navitas Limited - Various components of equity are as follows –
 Issued capital – Explained above for Domino’s Pizza Enterprise Limited
 Foreign currency translation reserve – when the integral foreign operation of the
reporting entity is categorized as the non-integral foreign operation the exchange
difference generated on translation of the non-monetary assets on the reclassification
date is accumulated in foreign currency translation reserve.
 Cash flow hedge reserve – it is utilised while the entity looking for reducing or
eliminating exposure that generates from the changes in cash flows or the financial
asset or the liability owing to the changes in the specific risk like floating rate of the
debt instrument or risk of interest rate (Navitas.com 2019).
 Retained earnings – Explained above for Domino’s Pizza Enterprise Limited
Changes in equity are as follows –

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Retained earnings amount changed due to changes in the amount of net earnings.
Amount in cash flow hedge reserves is changed due to changes in the rate of interest.
(ii) Liability items
Domino’s Pizza Enterprise Limited – various components of equity are as follows –
 Trade and other payable – it is the amount due for payment to the suppliers for
purchased made or for serviced availed. Trade payables includes short-term payables
those are payable within the period of 1 years and long term payables those are
payable after 1 year period.
 Borrowings – borrowing is raising fund for business operation from the banks and
other financial institution in exchange of interest payment.
 Current tax liability – current tax liability is the tax obligation of the company that is
payable on the current period’s earning that is taxable (Dominos.com.au 2019).
 Provisions – provision is the amount kept aside for meeting future estimated liability
for which the obligation is yet to be certain. The amount kept aside as provision to
meet the uncertain obligation if it becomes certain.
Changes in liability are as follows –

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Changes in the amount of trade and other payables were there due to payment of old
payables and arising of new payables. Borrowings amount has been changed due to raising of
new borrowing and repaying the old borrowing.
G8 Education Limited – various components of liability are as follows –
 Trade and other payable – Explained above for Domino’s Pizza Enterprise Limited
 Borrowings – Explained above for Domino’s Pizza Enterprise Limited
 Provision – Explained above for Domino’s Pizza Enterprise Limited
Changes in liability are as follows –

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Borrowings amount has been changed due to raising of new borrowing and repaying
the old borrowing. Changes in the amount of trade and other payables were there due to
payment of old payables and arising of new payables.
Navitas Limited – various components of equity are as follows –
 Trade and other payable – Explained above for Domino’s Pizza Enterprise Limited
 Current tax payable – Explained above for Domino’s Pizza Enterprise Limited
 Deferred revenue – it is the liability as it refers to the revenue that has not yet been
earned and it represents the services and products owed to the customers. As the
service or products yet to be delivered over time, it is reported as deferred revenue
(Weygandt, Kimmel and Kieso 2015).
 Borrowings – Explained above for Domino’s Pizza Enterprise Limited
 Provision – Explained above for Domino’s Pizza Enterprise Limited
Changes in liability are as follows –
Changes in the amount of trade and other payables were there due to payment of old
payables and arising of new payables. Borrowings amount has been changed due to raising of
new borrowing.

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(iii) Comparative analysis of debt and equity position
Debt –equity amount –
From the above it can be identified that Domino’s Pizza and Navitas Limited is
majorly dependent on debt for its fund whereas G8 Education is majorly dependent on debt
for its fund.
Debt-equity percentage –
Debt equity component of the capital structure is analysed by the analyst to measure
the leverage of the company which in turn indicates the entity’s solvency position. If the
entity is highly dependent on debt finance its leverage position will be high which in turn will
question its long term solvency (Maaloul and Zéghal 2015). Looking into the above table it
can be stated that Domino’s Pizza’s capital structure includes 63.36% debt and 36.64%
equity and Navitas Limited’s capital structure includes 82.72% debt and 17.28% equity.
Hence, these companies are highly leveraged as major component of capital structure is debt.
On the other hand, G8 Education Limited’s capital structure includes 33.08% debt and
66.92% equity. Hence, Novatis is lower leveraged as major component of capital structure is
equity. Hence, it can be stated that the in leverage context, G8 Education Limited is in best
position among all 3 entities.

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Cash flow statement
(iv) Listed items for cash flow
Cash flow statement of all the entities selected above are segregated into 3 segments – cash
generated or used for operation, cash generated or used for investing and cash generated or
used for financing. Cash flow statement as a whole represents the cash position of the entity
that is the amount of cash generated and used during the specific period of time (Marshall
2016). Detail explanation of each segment is as follows –
 Cash generated or used for operation – it represents the net cash flows reported in the
1st section of the cash flow statement. This section focuses on the cash generated or
used from the core activities of the entity and includes adjustments for the non-cash
expenses like depreciation, adjustments for changes in working capital, money
received from customers and money paid to suppliers.
 Cash generated or used for investing - it represents the net cash flows reported in the
2nd section of the cash flow statement. This section focuses on the cash generated or
used for purchasing long term and fixed assets like plant, equipment and property and
the proceeds received from selling of the long term and fixed assets (Watson 2015).
 Cash generated or used for financing – it represents the net cash flows reported in the
2nd section of the cash flow statement. This section focuses on the cash generated or
used for repurchasing of company stocks, payment of the dividends, repayment of the
debt, sale of the stocks and issuance of debts like bonds.
Changes for the cash flows statement items –
Domino’s Pizza Enterprise Limited – cash from operation for the entity has been increased
from $ 128,472 thousand. Increase was due to the amount received from the customers.
Amount used for investing activities reduced from $ 263,968 thousand to $ 88,260 thousand.