Financial Analysis Report: Dick Smith Holdings and Woolworths

This report provides a comprehensive financial analysis of Dick Smith Holdings Limited, focusing on its acquisition by Woolworths. The analysis covers the company's fundraising activities in 2013, sales figures, stock inventories, and accounting policies. It also examines issues of low transparency and poor corporate governance, the appointment of operational individuals, the company's status in meeting creditor obligations, and the roles and responsibilities of directors. The report utilizes accounting tools and techniques to assess the financial decisions made, including the selling of old inventories and asset valuation. It emphasizes the importance of adhering to IAS and IFRS guidelines for preparing financial statements and highlights the significance of corporate governance in achieving better results. The report aims to provide stakeholders with insights into the company's financial position and investment decisions. The report also touches on the financial statements, balance sheets, and the relevant data sets, following the guidelines issued by IAS and IFRS, which facilitate the framework under which all the preparation of such statements will be done. The report also examines the corporate governance practices and the use of accounting standards to ensure transparency and accountability in financial reporting.

ACCOUNTING

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................1
1. Fundraising of organisation in 2013 and its prospectus.....................................................1
2. Sales figures, stock inventories as well as accounting policies in practice........................4
3. Low transparency and poor corporate governance.............................................................5
4. Appointing various operational individuals.......................................................................7
5. Status of firm in meeting the creditors and liquidation......................................................8
6. Analysing the role of directors and responsibilities...........................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
In the present report there will be discussion based on the accounting techniques as well
as financial tools tot be used by the organisation in better attainment of the operational goals.
Hence, the present report, Dick Smith Holding Limited and the acquisition from Woolworths
will be studies and analysed by the researchers. Thus, it can be said the managers of the new or
acquiring organisation has made valuable decisions to solve the insolvency problems of such
organisation. They have made the profitable decisions in context with facilitating the fruitful
decisions such as selling of the old inventories as well as valuation of the assets and liabilities.
However, they have made the profitable decisions for the organisation as well as they have
highlights various duties and responsibilities of directors to make the better execution of work
and workforce. Thus, for the preparation of financial statemented, balance sheet and the relevant
data set there is need to follow the guidelines issued by IAS and IFRS. Hence, these standards
facilitate the framework under which all te preparation of such statements will be done. There
can e use of various kinds of tools and techniques to execute the better corporate governance
which in turn helps the managers in having batter results. Thus, such reports or informations will
be utilised by the stakeholders which are disclosed in the accounting statements. They will be
profitable in making the better investment decisions.

INTRODUCTION
Accounting tools and techniques are used to make better financial decisions for business
professionals as well as investment decisions for stakeholders. In the present assessment, the
research based on Dick Smith and its collaboration with Woolworths limited. There will be use
of various accounting techniques which describes firm's consolidation, liquidation as well as
financial position. These will be fruitful for the organisation in making the better operational
decisions. Hence, A part from accounting there will be discussion based on the group's activity
and various methods to be used to make better corporate communication as well as problem
solving. However, with the help of various legislations and accounting standards the researchers
will be benefited about gaining the knowledge relevant with accounting and its framework.
1. Fundraising of organisation in 2013 and its prospectus
There has been various operation held when acquistion of Dick smith to Woolworths was
happening (Dick Smith is the Greatest Private Equity Heist of All Time, 2017). There has been
various changes made by this organisation in context with improving the operational activities of
such industry.
Business combination:
a. Transfer of consideration
Interpretation: On the basis of above listed table, there has been calculation based
acquisition of Dick smith to Woolworths limited on the date of November 2012. The company
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has been sold to Woolworths on the payments of $115m with paying upfront of $20m. The
working capital of that year was $21028 as well as the cash balance paid for $50000.
Consideration Payments is for $24000 which in turn balance the total consideration of funds that
would be transfer is for $115208.
b. Assets and Liabilities on the date of acquisition:
Interpretation: As per the above listed balance sheet of Dick Smith Holdings Limited on
the date of acquisition there has been valuation of the organisation's assets and liabilities which
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were in context with having information about valuation of firm. On the year ended for 2012, the
cash balance was $12m trade receivable as $29m as well as inventories are $312m. Hence, Plant
and equipments, deferred tax is amounted as $64679 and $42292 respectively. However, in
context with acquiring the company the discount lies on the acquisition is for $145848.
Interpretation: On the basis of above mentioned table, the total current assets and fixed
assets of firm were analysed, which will helpful in knowing the ability of such organisation in
meeting the debts as well as securing the reserves for it. Thus, it brings the total assets of
organisation is for the year 2014 and 2013 are $45171 and $344345 respectively. It describes that
te organisation has gained ability to generate the favourable amount of profit which in turn to be
utilise for assets maximisation, which in turn helpful for the future requirements.
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Interpretation: On the basis of above listed Cash flow statement of Dick Smith Holding
Limited for the year 2014 and 2013 were to be compared as there has been drastic change in the
operational activities. Hence, the organisation has inflows in 2014 for $1316364 which is
$426001 more than the previous year. It indicates that, firm is running over the favourable phase
and has the better revenue gathering. Hence, it can be said the acquisition of the entity works and
they have generated the favourable amount of profit from the external environment. Further, it
would be said that the organisation has make the investments for 54005 in the 2014 and 81083 in
2013.
Hence, the main prospectus behind fund raising is that, the acquisition of Dick Smith is
fruitful that, they can be able to make better investments in various operations. Thus, firstly
Woolworths has acquired the possible part of financials which are need to be developed and raise
such as assets or liabilities (Givoly, Hayn and Katz, 2017). Thus, it will be fruitful for them in
masking payments to creditors or debtors of organisation. Hence, they have sold out maximum
of the inventories in market as well as focus on not to restocking such assets again.
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2. Sales figures, stock inventories as well as accounting policies in practice
Sales figure: It denotes as the ability of firm in meeting the demands of the consumer on
the required time as well as giving them the adequate satisfaction. Thus, such accounting method
as well as the results will help managers to make profitable judgement whether to increase in
production or to raise the prices of commodities (Hedges and et.al., 2016). Hence, as per the
analysis based on profit generation of Dick Smith in recent years it can be said they organisation
has the favourable demand in the market as well as they can be able to make the profitable
investments in the future.
Stock inventories: The first step was taken by Woolworths professional is to sold out all
the old inventories which gives the sudden bull in revenue generation of such Dick Smith
Holdings Limited. Thus, storage of inventories will be non profitable as well as it be devalued or
may result in decrease of demand (Keay, 2016). Thus, it can be said that the right decision was
made by accounting professionals of Woolworths which have helped the entity in better growth.
Accounting policies: IAS has facilitated the legal framework for preparing the financial
reporting which in turn helps accountants or auditors to present such data set in adequate manner.
Thus, main motive is to have standards in the accounting techniques is to help the various
stakeholders as well as professional to analyse the reports of various MNCs across the globe
(Capkun, Collins and Jeanjean, 2016). Hence, it will be analysed that, the use of such accounting
standards, which are very profitable for industries in having adequate informations relevant to
transactions held in operating year. There will be fix methods or techniques for measuring
depreciation, revenue recognition, capital structure, assets and liabilities, interest as well as
outstanding measurement of various income and expenditures.
3. Low transparency and poor corporate governance
Corporate governance: For better run in the organisational aspect there is ned to develop
the better problem solving techniques which in turn helps the managers to create the favourable
solutions. However, if there is better communication and operational activities in the firm that
these will be fruitful for directors to make better decisions. Thus, there is need to make the
favourable sharing of problems, informations each departmental head and organising meetings to
make the beneficial decision (Keay, 2016). However, for the better corporate governance Dick
Smith Holding Limited need to make the profitable decisions which in turn helps them in
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generating large numbers of stakeholders as well managing the internal operational activities of
such business.
 Accounting professionals in the firm need to identify the suitable source from where they
can fetch the authenticated data or information.
 Gathering information relevant to inflows and outflows as well as several transactions
made in the assessment year.
 They need to make correct analysis of such informations and then present simplex
disclosure of the accounts which can easily understood by stakeholders of firm.
 If the organisation is suffering from any loss then they analyse loopholes of operational
performance as well as the find ways to lower down costs over such activities.
 For the better control over financial ability of organisation there is need to make auditing
of such accounts of timely basis as well as took necessary steps to solve such obstacles.
 For the academic talent the accounting professionals need to have various skills such as
they must be well versed with excel as well as have the basic knowledge of accounting.
 They must have knowledge related to accounting tools and techniques such as
calculations for depreciation, amortization, revenue recognition accruals etc. They must acquire the talent to solve such numeric problems with authenticated logic as
well as in an organised manner.
Transparency in presenting Financial Reports: To present a data set there is need to
have various skills in context with good disclosure of such accounts. There is need to generate
the favourable informations from the sources as well as it must be authenticate (Banerjee and
Humphery-Jenner, 2016). However, nowadays professionals have started using the Sustainability
reporting techniques which in turn attract the numbers of investors. Basically, these are the
requirements of stakeholders in context with having the better knowledge related with the
organisation as well as they see the profitability in organisation whether to invest or not. Hence,
there will be several techniques which are need to be understand or acquired by professionals:
 There must be use of examples and comparison between present and past years which
will helps the stakeholders in analysing the growth of organisation in such years.
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 The presentation must be perfect and well designed which will easily understand by users
of such statements.
 If an accountant find any loopholes while presenting report than there must be
arrangement of the discussion as well as meeting in context with solving such problems.
 There must be proper entry of each transactions as well as opening, closing entries and
carrying forward entries.
4. Appointing various operational individuals
Liquidator: There has been appointment of and professional which helps the organisation
in gaining the better knowledge of all the relevant legislations, laws and regulations that are need
to be followed while presenting the financial reports (Cook and Cowden, 2017). Various
accounting standards and legislations are in force as to make better accounting in organisational
affairs. Thus, these rule and regulations is beneficial for having the rapid growth of industries.
There has been use of several accounting techniques such as IAS 33.411. IFRS2 2.44, SIC3
700.25, GAAP4 etc. are the main legislature of fixing the adequate manners of presenting and
annual report by accountants from various industries.
Administrator: Appointment of a person who will be able to make the proper execution
of the work as well as control the operational activities in firm. It makes the better assessment of
accounting techniques which are need to be followed by business in preparing the disclosure of
financial statements (Capkun, Collins and Jeanjean, 2016). There has been implementation of
several rules and responsibilities of firm in context with generating the favourable numbers of
stakeholders, so there is need to appoint the best suitable individuals for each piece of work.
Administration would be done by various internal bodies in an organisation such as Managers,
Directors, Executive directors, departmental heads, Supervisors, Employers, Governess as well
as Chair person of such industry.
Receiver: The generated information will be used by various receivers such as investors,
shareholders, managerial heads, operational heads as well as consumers to the industry (Samaha
and Khlif, 2016). Thus, such generated informations will be fruitful for the investors in context
1 International accounting standard
2 International financial reporting standards
3 Standing Interpretations committee interpretation
4 Generally Accepted accounting principles
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with making the better judgements, investment decisions as well as increasing efficiency of
entity as well as workforce.
5. Status of firm in meeting the creditors and liquidation
Creditors re receivership:The purpose of such reporting techniques will help the
organisation in analysing the financial statement, balance sheet as well as cash flow statement of
an entity. Thus, financial statement of an industry consists of the various kinds of income and
expenditure which in turn helps the users to know the profitability of it. Hence, balance sheet of
the firm provide the necessary informations about the current status of them as well as capacity
of firm in making the new investments (Givoly, Hayn and Katz, 2017). However, cash flows of
the organisation helps in analysing the overall transaction held on the monetary basis like inflows
and outflows for various operations. Thus, such information will be use by stakeholders in
context with analysing the strength of such firm as well as their dividend paying capacity.
Liquidation: The motive of having the better framework for presenting or preparing the
financial statement of a firm. There is need of undertaking the methods or techniques of
preparing such data set with the help of IAS and IFRS. Thus, these are the two standards which
facilitates the actual method or manner under which the professionals of firms will prepare such
reports (Cook and Cowden, 2017). Hence, with the help of these techniques the firm will
benefited in getting the international investors because such a framework in universally accepted
and easily understandable by all individuals.
6. Analysing the role of directors and responsibilities
There has been various roles and duties of a director in the organisation. Thus, they have
to know their importance in entity as to make the proper execution of the firm's operational
performances (Keay, 2016). They need to adopt various problem solving techniques which helps
to overcome the insolvency. There has been assessment of various roles such as:
 If the insolvency attacks, directors need to be more conscious and sound mined towards
understanding the reasons for such losses.
 They need to monitor the financial position of the organisation in context with having the
proper governance of all the transactions held in firm.
 They need to seek all the possible ways or opportunities which will be fruitful for
business in overcoming the situations.
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 They need to analyse the creditability of firm as well as numbers of shareholders need to
be paid (Dick Smith collapses into voluntary administration, 2017).
 If there is any problem related with the organisational structure then the firm need to
make the possible changes such as restructure the operational activities.
CONCLUSION
On the basis of above discussed various tools and techniques as well as responsibilities of
directors describes that, there is need to adopt profitable techniques for preparing financial
statements. However, the present scenario was based on Dick Smith Holdings Limited was
merged in Woolworths Limited as well as the necessary steps to be take by them as to make the
fruitful develop of such organisation. Thus, managers of merging companies has decided to sold
out the stored inventories as well as valuation of assets or liabilities of such firm. Hence, it can
be said that, director of such organisation need understand their duties and responsibilities as to
meet the goals as well as profitable liquidity.
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REFERENCES
Books and Journals
Banerjee, S. and Humphery-Jenner, M., 2016. Directors’ duties of care and the value of auditing.
Finance Research Letters. 19. pp.1-14.
Capkun, V., Collins, D. and Jeanjean, T., 2016. The effect of IAS/IFRS adoption on earnings
management (smoothing): a closer look at competing explanations. Journal of Accounting
and Public Policy. 35(4). pp.352-394.
Cook, D. and Cowden, M., 2017. Liquidator's remuneration: Good news for insolvency
professionals. LSJ: Law Society of NSW Journal. (33). p.78.
Givoly, D., Hayn, C. and Katz, S., 2017. The changing relevance of accounting information to
debt holders over time. Review of Accounting Studies. 22(1). pp.64-108.
Hedges, J., and et.al., 2016. The policy and practice of enforcement of directors' duties by
statutory agencies in Australia: An empirical analysis. Melb. UL Rev. 40. p.905.
Keay, A., 2016. Wider representation on company boards and directors’ duties. International
Banking and Financial Law, p.530.
Samaha, K. and Khlif, H., 2016. Compliance with IAS/IFRS and its Determinants: A Meta-
Analysis. Journal of Accounting, Business & Management. 23(1).
Online
Dick Smith is the Greatest Private Equity Heist of All Time. 2017. [Online]. [Available
through] :<https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-
heist-of-all-time/>. [Accessed on 16th October. 2017].
Dick Smith collapses into voluntary administration. 2017. [Online]. [Available
through] :<https://www.smartcompany.com.au/finance/dick-smith-collapses-into-
voluntary-administration/>. [Accessed on 16th October. 2017].
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