Corporate Accounting Report: Financial Analysis of Companies

This report provides a comprehensive financial analysis of three Australian listed companies operating in the electronic and telecommunication industry: JB Hi-Fi, Harvey Norman, and Flexi Group. The analysis includes a detailed examination of their cash flow statements, focusing on operating, investing, and financing activities, and highlighting significant changes over the past year. The report investigates the companies' equity structures, comparing debt-to-equity ratios and identifying key trends in share capital. Furthermore, it delves into the companies' comprehensive income statements, scrutinizing reported items and their impact on profit and loss accounts. A crucial aspect of the report involves evaluating the companies' tax expenses, computing effective tax rates, and analyzing deferred tax assets and liabilities. The report concludes with a comparative assessment of the financial performance of the three companies, drawing insights into their operational efficiency, financial health, and tax strategies. This report is designed to provide a clear understanding of the financial performance of these companies and their accounting practices.

Corporate Accounting

EXECUTIVE SUMMARY
With the ramified change, each and every company needs to pay off tax to the
government. This report reveals the key financial information of three Australian listed
companies operating in the electronic and telecommunication industry. The cash flow
statement of company showcase the inflow and outflow of these three companies from the
investing, financial and operating activities. The equity shareholding capital of these
companies has been increased throughout the time. However, Harvey Norman has faced high
increment in its share capital due to the issue of more capital. In addition to this, the tax rate
on which tax is being paid by the company is also way too high as compared to other two
rival companies. In addition to this, it is considered that a company can never have deferred
tax assets and deferred tax liabilities in its books of account at the same time.

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................2
INTRODUCTION.................................................................................................................................5
OWNERS’ EQUITY.............................................................................................................................6
The answer to the question- (i).............................................................................................................6
LISTING OF ITEMS OF EQUITY............................................................................................................6
Evaluation of the equity items of the all these three companies......................................................7
Answer to the question- (ii)...................................................................................................................9
Answer to the question- (iii)..................................................................................................................9
COMPARATIVE ANALYSIS OF DEBT AND EQUITY...............................................................................9
Changes in Cash Flow Statement.........................................................................................................10
Answer to the question- (iv)................................................................................................................10
UNDERSTANDING OF THE MAIN ACTIVITIES OF CASH FLOW STATEMENT AND THE CHANGES IN
THE CASH FLOW ACTIVITIES OF VOTH THE COMPANIES OVER THE PAST YEAR..............................10
Answer to the question-- (v)................................................................................................................17
Comparative analysis of three cash flow activates of three companies..........................................17
Answer to question no- (vii)................................................................................................................18
COMPARATIVE ANALYSIS OF INSIGHTS OF COMPANY....................................................................18
Comprehensive income statement......................................................................................................19
Answer to question no-- (vii)...............................................................................................................19
Reported items in the comprehensive income statement of these three companies................19
Comprehensive income statement of JB HI-FI Company.................................................................19
Comprehensive income statement of Harvey Norman Company...................................................20
Comprehensive income statement of Flexi Group..........................................................................20
Answer to question no- (viii)...............................................................................................................21
Reason to record these items in the Comprehensive income statement........................................21
Answer to question no- (ix).................................................................................................................21
Comparative analysis of these items shown in the comprehensive statement and its impact on the
profit and loss account....................................................................................................................21
Answer to question no- (x)..................................................................................................................22
Evaluating the performance of manager.........................................................................................22
Accounting recorded for income tax...................................................................................................22
Answer to question no- (Xi).................................................................................................................22

Tax expenses of these three companies..........................................................................................22
Answer to question no- (xii)................................................................................................................23
Computation of the effective tax rate.............................................................................................23
Answer to question no- (xii)................................................................................................................23
Deferred tax liabilities and assets recorded.....................................................................................23
Answer to question no- (xiii)................................................................................................................24
CHANGES IN THE DEFERRED TAX ASSET OR LIABILITY.................................................................24
Answer to question no- (xiv)................................................................................................................24
CASH TAX AMOUNT.........................................................................................................................24
Answer to question no- (xv) and (xvi)..................................................................................................25
Computation of the tax cash rate....................................................................................................25
Answer to question no - (xvii)..............................................................................................................26
CASH TAX RATE VS BOOK TAX RATE................................................................................................26
CONCLUSION...................................................................................................................................27
REFERENCES....................................................................................................................................28

INTRODUCTION
Financial analysis is used to assess the financial performance of company. In this
report, three companies have been selected for the financial analysis purpose. It has become
easy for the investors to assess the financial data of these companies. In this report, JB Hi-Fi,
Harvey Norman and Flexi Group Limited Company have been selected for evaluating the
inflow and outflow of cash and recording of the tax transactions in the books of account of
company. These all three companies are Australian listed companies. In the starting of this
report, assessment of the cash flow statement of these three companies have been analysed.
After that equity capital changes and recording of the tax in the books of account have been
done. In the end, description related to recording of the deferred tax assets and deferred tax
liabilities have been evaluated. Afterward, assessment of the compressive income statement
of three companies have been analysed which will help in changes in the profitability of
company throughout the three years. In the end of this report, evaluation of the tax rate of
these three companies have been assessed to determine which company is imposed high tax
rate and paying high tax to the government. This report has divulged the key financial
information of these three companies and evaluating the possible changes since last three
years.
JB Hi-Fi
Company
Harvey Norman
Company
Flexi
Group
Limited
BUSINESS This company is
indulged in
selling retail sale
of products like
DVD, CD and
video games and
mobile phone
sales business.
This company is
operating in the
bedding,
communication and
device electrical and
furniture business.
.
This
company is
focusing on
the
business
process for
the retail
sale of

products
like DVD,
CD and
video
games and
mobile
phone sales
business
BUSINESS
OPERATION
This business is
focusing on the
shopping center
to offer electronic
services in
Melbourne.
This business is
operating its business
through the franchise
program
It has
several
shopping
center and
having
online
portals to
sell its
products
and
services
through an
online
portal.
OWNERS’ EQUITY
Answer to the question- (i)
LISTING OF ITEMS OF EQUITY
SHAREHOLDERS Common Other Retained Accumulated
other
Total
stockholders

’ EQUITY stock equity earnings comprehensiv
e income ' equity
JB HI-FI LIMITED
44170000
0
3910000
0 463200000 3600000 947600000
HARVEY
NORMAL
LIMITED
38838100
0 199000 233724100
0 185185000 2911006000
Flexi Holding
limited 6124000 491000 2475000 5125224 6124000
Evaluation of the equity items of the all these three companies
Details Description of the equity
Common Stocks It is analysed that common stock is the
components of the stakeholders which is
accompanied with the voting rights. These
Common stocks are traded on the stock
exchange and used by stakeholders to invest
their capital in the particular company.
Ideally, common stocks are divided into
following parts such as preference share and
equity shares (Dyreng, et al. 2017). Equity
shareholders are eligible for the return and
participate in the general meeting for voting
purpose. Preference shareholders are the
shareholders who has preference to take
dividend from the company before the

dividend issued to equity shareholder.
The common stock of these companies
increases with the issue of more equity
capital. In case of Harvey Norman, JB Hi-Fi
Company both share capital has increased
with the increase in the share capital.
Other share capital Other equity share capital is accompanied
with the several options such as share
warrant, share tickets and documents which
are issued in market apart from the equity
share capital. In all three cases, company do
not have other share capital.
Retained earning Retained earnings is associated with the
profit earning profit of company. The
retained earning It is accompanied with
accumulated profit of the company.
In all of these three companies, retained
earnings of company has increased. IN case
of JB HI- FI company 12% increment in
seen in retained earnings since last three
years. Harvey Norman Company has
increased its retained earnings by 15% since
last three year. In case of Flexi Company, it
has increased by 22% since last three years.
Accumulated other comprehensive income It is related to the gain and losses that have
been realised. This comprehensive income
cannot be shown as an integral part of the
profit and loss. However, it is shown under

the separate heading of the accumulated and
comprehensive income. (Miao,, Teoh, &
Zhu2016).
Answer to the question- (ii)
List each item of liability reported and write your understanding of each item.
Liabilities Current
Liabilities
Long
term
debts
Provision
Total non-
current
liabilities
Total
liabilities
JB HI-FI LIMITED 51253510 22545212 551000 3822000 1544100000
HARVEY NORMAL
LIMITED 388000 1800000 21540000 15822200 1666636000
Flexi Holding limited 1088000 930900 481000 979000 1159000
Answer to the question- (iii)
COMPARATIVE ANALYSIS OF DEBT AND EQUITY
The debt and equity of company is capital structure of company. The debt capital is long
term capital of company. The capital structure of these companies are associated with the
long term debt capital and equity capital company. In case of JB Hi-Fi Company, debt to
equity capital has increased by 13% since last three years. It has shown that equity share
capital of company has increased which has also strengthen the debt to equity capital of
company. In case of Harvey Norman Company, debt to equity capital of company has
increased by 18% since last three year. It is analysed that Flexi Company has decreased its

debt to equity ratio by 8% due to the decrease in its equity capital (Mullinova, and
Simonyants, 2016).
Company Total debt Total equity
Debt-equity ratio
FORMULA= Debt
Equity
JB Hi- FI Company 1544100000 947600000 1.62
HARVEY NORMAN
LIMITED 1666636000 2911006000 0.57
Flexi Group Limited 1159000 6124000 .75
This above given table reflects the changes in the debt to equity of company. It is analysed
that Harvey Norman has kept .57 points. However, in case of these three companies, debt to
equity capital of JB Hi-Fi Company is way too high. It is evaluated that Harvey Norman has
lowest debt to equity capital. In case of Flexi group Company, debt to equity has increased
to .75 points which is 20% higher as compared to last year data (Rogoff, 2017).

Changes in Cash Flow Statement
Answer to the question- (iv)
UNDERSTANDING OF THE MAIN ACTIVITIES OF CASH FLOW STATEMENT
AND THE CHANGES IN THE CASH FLOW ACTIVITIES OF VOTH THE
COMPANIES OVER THE PAST YEAR
Cash flow statement of the company is divided into operating, investing and financing
activities. The two tables is shown for the cash flow of these three companies in different
activities.
 It is analyzed that acquisition of the assets in the different property and assets have been
acquired by the company. The cash flow for the acquisition of assets is shown in the
investment activities of these three companies (Epstein, 2018).
 The cash receipt for the sale of land and building is discussed in the investing activities.
 Cash sales to clients will also strengthen the flow of capital in operating activities.
 Payment provided to suppliers will reduce the cash in operating activities.
 Cash received by selling shares will be made in the financial activities of the company
(Warren, & Jones, 2018).
JB HI-FI LIMITED
CASH FLOW STATEMENT
PARTICULARS 2018 ($ IN
000,000)
2017 ($ IN
000,000)
CASH FLOWS USED OR
GENERATED BY THE INVESTING
ACTIVITIES

Payment is done for a business
combination (net basis) - -836.6
Acquisition of plant & equipment -54.4 -49.1
cash receipt for sale of plant &
equipment 0.4 0.2
CASH USED BY INVESTING
ACTIVITIES -54.4 -885.5
percentage of change 93.85%
CASH FLOWS USED OR
GENERATED BY THE OPERATING
ACTIVITIES
Receipt of money from customers 7551.9 6205.5
Payments provided to employees and
suppliers -7130.5 -5908.8
Receipt of interest 0.5 1.7
Payment of interest and other related
finance costs -15 -9.3
Payment of income taxes -114.8 -98.5