Corporate Accounting Practices of Telstra, TPG Telecom, and Speedcast

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Assignment Title: Corporate Accounting
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Word count: 3000
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Executive summary:
Accounting practices of corporate entities are highly supportive to recognize the financial
strength and wellness of entity. In the current report, accounting practices of three large
companies Telstra corporations Ltd, TPG telecom Ltd, and Speedcast International Ltd are
evaluated to obtain relevant information about selected companies. For example, cash flow
statements of the company are evaluated to identify the areas which are generating good cash for
the organization and to remove the factors which are consuming cash resources unnecessary.
Understanding these aspects will ensure well-managed utilization of cash resources. Analysis of
financial information that is disclosed in financial reports is a popular way among external
shareholders to determinate investment suitability of company. Similarly, managing authority
and shareholders adopts the financial reports to evaluate the firm’s wellness. Study of this report
will help the learner to get sufficient skills of financial analysis.
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Table of Contents
Introduction......................................................................................................................................4
Equity and Liabilties:.......................................................................................................................5
1):.................................................................................................................................................5
2):.................................................................................................................................................5
3):.................................................................................................................................................6
Cash-flow statements:......................................................................................................................7
4):.................................................................................................................................................7
5):.................................................................................................................................................8
6):...............................................................................................................................................10
Comprehensive statement:.............................................................................................................11
7):...............................................................................................................................................11
8):...............................................................................................................................................12
Conclusion:....................................................................................................................................25
References:....................................................................................................................................26
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Introduction
In this report, accounting assumptions, accounting methods and financial information of the three
selected companies are going to be evaluated to obtain relevant information and conclusion
about the monetary conditions of the company. For the preparation of the report, financial
statements of three ASX companies Telstra, TPG Telecom and Speedcast Ltd are going to be
evaluated so that descriptive knowledge about the corporate accounting methods and procedures
can be gathered. It will assist to identify and remove problematic issues which are not
appropriate in the financial accounting of corporate companies.
Telstra Ltd:
Originally the company was founded in 1975 and holds the space of largest telecommunication
company in Australia. With the support of more than 150 subsidiary companies and 32000
employees, it is providing data, telephone, network and network services to wider population and
government sectors.
TPG Telecom Ltd
It is a telecommunication company which is engaged in the services of interest service.
Originally the company was formed in 1986 as Peripherals Group and in 2015, it becomes third
largest internet service provider of Australia. Through the help of more than 5000 employees and
1300000 subscribers, the company is dedicated to delivering most quality services in the market.
Speedcast Ltd
Originally the company was formed in 1999 and completely acquired by the Asiasat in 2007.
After this acquisition, huge technology updates were made by the management and satellite
communication services were launched. Currently, the service area of the company is covering
world-wide customers and more than 1200 employees are focused to improve the
telecommunication services regularly.
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Equity and Liabilities:
1):
Telstra Ltd Speedcast Ltd TPG Telecom Ltd
Ordinary capital of $ 4421,
retained earnings of 10225 and
reserves of (-105) are shown
in the equity statement of
2017. From the comparative
analysis, the amount of equity
capital was $ 5198 in 2015
and 5167 in 2016. Buyback
and share cancellation
activities are looking main
reason for the reduction in
equity balances (Telstra,
2016).
Ordinary equity contributed
equity, accumulated losses and
other reserves are publicized
by the company in equity
section. The balance of
accumulated losses was $
56487 in 2015 which reached
to $ 60464 in 2017. In 2016,
reserve balance was $ (13915)
and it became positive in 2017
with the balance of $ 1190
(Speedcast, 2017).
Retained earnings of 681, 963
and 409 were shown in the
balance sheet of the company
during the year 2017, 2016
and 2015 respectively. The
balance of reserve funds was $
76.5 in 2015, $ 41.2 in 2016
and (18.1) in 2017. Reduction
in reserves but continuous
improvement in retained
earnings is indicating that
there is no threat to financial
solidness.
2):
Telstra Ltd Speedcast Ltd TPG Telecom Ltd
Debts of Telstra are classified
in two wider classes and, bank
borrowings of $ 1496 in 2016,
2655 in 2017) and financial
liabilities of (214 in 2016, 286
in 2017) were shown by the
company in financial reports
A market loan of 99354,
finance lease of 21 and
derivatives instruments of $ 6
were shown by the company
in the financial disclosures of
2015. From the comparative
analysis, market borrowings of
the company reached to $
Loan from institutions, short-
term bank borrowings, and
derivative instruments are
reported in the financial
disclosures of TGP.
Comparative analysis of
reports is elucidating that short
term borrowings are
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(Telstra, 2016). Institutional
borrowing of 14138 was
recorded in 2015 and there is
no significant alteration in the
balance of such long term
loan.
432213 in 2017 which is
indicating about the increment
of leverage conditions.
increasing every year but long
term debts were $ 1350 in
2016 and reduced to 872.4 in
2017 (TPG, 2016).
3):
Comparative analysis:
Company
Debt/
equity 2015 2016 2017
Telstra Ltd
D 25935 27379 27573
E 14510 15907 14560
Speedcast Ltd
D 162569 446796 651947
E 27243 290253 306121
TPG Telecom Ltd
D 650.6 1991.8 1511.7
E 1003.2 1774.1 2394.6
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Cash-flow statements:
4):
Telstra Ltd
A grant from government, supplier and customer net and income tax are the part of operating
activities that were reported in the cash flow statements of Telstra. In 2016, net cash flow from
operating activities was $ 8133 but abridged to $ 7775 in 2017. Grant of $ 182 and $ 235 was
received from the government in 2016 and 2017. $ 4279 and $ 2207 were spent by the company
on investing events and many new subsidiary companies and fixed assets were purchased during
this period (Telstra, 2017). A negative result from financing activities was received by the
company ($ -3777 in 2016 and $ -6104) due to dividend and loan repayment events.
Speedcast Ltd:
Operational cash management practices of the company are improving continuously because net
cash inflow from operating activities was $ 17923 in 2015, $ 27047 in 2016 and $ 79059 in
2017. From the investment transactions, it is outlined that $ 84697 were paid in 2016 for the
acquisition of new businesses and the same spending reached to $ 477891 in 2017.
TPG Telecom Ltd
Cash flow statements of the company are presenting that net cash flow from operating events
was $ 381.1 in 2015 and 620.4 in 2016. Net inflow from operating events was reached to $ 722.7
in 2017 which is concluding that operational efforts are good and generating good liquidity for
the organizational betterment. The net balance of cash outflow was $ 1488.6 in 2016, $ 457.1 in
2017 and 265.6 in 2015 (TPG, 2017). The situation is proving that cash outflow from investing
events was very high in 2016 because $ 1151.3 were spend to acquire new subsidiary businesses.
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5):
Three-year class comparison:
Speedcast
Ltd
Operating
events
Investing
Events
Financing
Events
2017 79059 -96674 47857
2016 27302 -529519 524222
2015 17923 -69177 55812
2016-17 -61136 27497 7955
2015-16 -9379 460342 -468410
2015-17 -51757 -432845 476365
TPG Telecom
Ltd
Operating
events
Investing
Events
Financing
Events
2017 722.7 -457.1 -258.6
2016 620.4 -1488.6 884
2015 381.9 -265.6 -116.9
2015-16 -238.5 1223 -1000.9
2016-17 -340.8 191.5 141.7
2015-17 -102.3 -1031.5 1142.6
Telstra Ltd Operating Investing Financing
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events Events Events
2017 7775 -5466 3496
2016 8133 -4391 -2207
2015 8311 -6206 -5692
2015-17 358 1075 -10518
2015-16 178 -1815 -3485
2016-17 358 -740 -14003
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6):
Telstra Ltd Cash flow analysis is stating that customer receipts, supplier payments and
business purchase transactions are mainly disclosed in three-year cash-flow
statements. It is found that the application of cash funds in controlled and
liquidity conditions are good in the entity (Telstra, 2017).
Speedcast Ltd From a comparative examination, it is found that good cash inflows are going to
be generated from operating events and expected conditions of liquidity are
good (Speedcast, 2017).
TPG Ltd From the comparative analysis, TGP Ltd is focused to improve the basic service
structure so large amount spent in 2016 to acquire new subsidiary companies.
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Comprehensive statement:
7):
Telstra Ltd:
Reserves of equity instruments, cash hedging reserve, actuarial losses, and gains are shown by
the company in a comprehensive statement. From the overall valuation, the comprehensive gain
was $ 4788 in 2016 and increased to $ 5627 in 2017.
TPG Telecom Ltd
Exchange loss, cash flow hedges and alteration in assets fair value are shown by the company in
comprehensive disclosures. Reclassified profit on saleable assets was $ 62.4 in 2016 and
decreased to $ 34.3 in 2017.
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Speedcast Ltd
Loss of $ 13052 and income of 13176 has been reported in the comprehensive report of
Speedcast Ltd. Due to alteration in interest rates, a cash flow hedge of $ 1054 was recorded by
the company during the year 2017.
8):
From the above discussion, it is understandable that items of comprehensive reports are not
related to operational activities and not related to any real transaction. For example, loss due to
exchange difference or gain from alteration in a fair amount of assets is not a business
transaction. As per IFRS 1, financial statements like income report, financial position report,
cash flow reports and more are required to be made in the prescribed format (ACCA, 2019).
Basic accounting assumption refers that only real, relevant and monetary items are eligible to be
included in the income statement. Thus, terms of the comprehensive report are not admirable in
profit statement.
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