HI5020 Corporate Accounting: Woolworths vs. Ingham Analysis

This report provides a comparative financial analysis of Woolworths and Ingham Group Limited, two publicly listed companies on the Australian Securities Exchange (ASX). The analysis examines key financial statements, including the owners' equity, cash flow statements, and comprehensive income statements of both companies. The report highlights the differences in their financial positions, such as Woolworths' stronger equity position compared to Ingham. It also delves into the cash flow from operating, investing, and financing activities, revealing differences in their financial strategies. Furthermore, the report calculates and compares the effective tax rates for both companies and discusses the accounting treatment of corporate income tax. The conclusion states that Woolworths reflects better financial health. The report is based on the 2017 and 2018 annual reports of the two companies, and it utilizes financial ratios and accounting principles to assess their performance. The report also includes a section on the accounting for corporate income-related tax and a conclusion summarizing the findings.

HI5020 CORPORATE
ACCOUNTING

INTRODUCTION
Woolworths a major player when it comes to
retail business and has its business scattered
immensely.
Ingham Group Limited is a poultry producer
and has its business located in Australia and
New Zealand

OWNERS’ EQUITY
 The net equity of Woolworths stood at
$10,849 million in comparison to $9876 that
was in the year 2017.
 The contributed equity of Woolworths has
also increased because it had issued new
shares under the scheme of reinvestment
and long-term incentives of employees
(Woolworths limited, 2017).
 changes in retained earnings and non-
controlling interests can be due to increment
in the total profits despite payment of
dividend in such year

Ingham
 Total Equity capital of Inghams Group Limited
for the year ending 2018 was $261m and
was $ 216.50m in the year ending 2017
(Ingham, 2017)
 Increase in contributed equity
 Other Reserves have decreased due to share
based payment expenses and other
comprehensive losses

BETTER OF THE TWO
 Woolworths Ltd is in a better situation when
compared to the latter specially when it
comes to their debt and equity position
because Woolworths has more equity funds
(Woolworths limited, 2017)
 the company’s overall investments have also
witnessed an increment
 relied more on debt finances instead of
relying more upon equity-based finances

CASH FLOW STATEMENT
Woolworths
 cash flow from operating activities
deteriorated in comparison to the last year
because of enormous payments being made
 cash flow from investing activities
purchases and had attained fewer returns from
its sale of Property, Plant, and Equipments
(Woolworths limited, 2017).
 cash flow from financing activities
inadequate payment of outstanding debt
obligations in the year when compared to the
last tenure

Inghams Group Limited
Cash flow from operating activities - increased
in comparison to last year as a net effect of
receipts from customers, receipt from
interest etc (Inghams, 2017)
Cash flow from Investing Activities - decreased
considerably since last year.
Cash flow from Financing activities – outflow
comprises of includes repayment of
borrowings, dividends paid and interest and
finance charges paid.

COMPREHENSIVE INCOME STATEMENTS
Woolworths disclosure
 company’s equity reserves
 The movements in the company’s fair value
of cash flow hedges and income tax
 translation of foreign currencies and income
tax (Woolworths limited, 2017).
For Inghams Group Limited
 changes in fair value of cash flow hedges and
income tax
 Exchange differences on translation of
Foreign Currency operations

ACCOUNTING FOR CORPORATE INCOME
RELATED TAX
For Woolworths - disclosed its income tax costs in
the consolidated P/L account.
 The costs have been depicted by the company
at an amount of $718 million
 the expenses of tax of the company in relation
to all discontinued activities reported at $74
million for the present tenure (Woolworths
limited, 2017).
For Ingham
 The tax expenses shown in the consolidated
profit or loss account are $36.80m.
 In the last year these expenses were $ 18.10 m.

CALCULATION OF EFFECTIVE TAX RATE:
Woolworths
 the effective rate of tax in this phase comes
at $718/$2394*100 that concludes the
amount to be at 30%.
Inghams Group Limited-
 Income Tax Expenses as shown in Income
Statement- $ 36.80 m
 Profit before tax as shown in Income
Statement - $151.40m
 Effective Tax Rate= $36.80m/ $ 151.40m
*100= 24%

CASH TAX
Cash tax is paid to the government bodies and
must form part in the income tax return of
companies (Berk, Demarzo & Stangeland,
2015).
Amount are used by every stakeholders of the
company for their own benefits so that
organizational performance can be attained
(Arnold, 2010).

CONCLUSION
Woolsworth Group Limited reflects better
financial health as compared to Inghams
The parameters and the fundamentals of
Woolworths is formidable
Hence, the better among the two is
Woolworths.