ACC5502 Accounting and Financial Management
Due date: 28th May 2015
This Assignment is designed to give you an opportunity:
• demonstrate applied knowledge of the accounting regulatory environment and the accounting and finance processes, systems, concepts and techniques used globally in business practice (Objective 1)
• apply financial statement analysis, management accounting concepts and finance frameworks to changing global and economic conditions and to help assess the impact on organisational systems (Objective 2)
• apply and use financial statement analysis, management accounting concepts and finance frameworks with other evidence to provide solutions to real world problems (Objective 4)
• appreciate ethical frameworks and codes of practice and their application to accounting and finance outcomes to help comprehend and address complex ethical dilemmas (Objective 5)
Market Investment Co is an investment company. The company has major investments in several Australian public companies, one of which is Santos Limited, an Australian resource company with activities in the gas, oil and resources industry. The accountant of the Market Investment Co has approached you to provide a financial analysis of Santos Ltd.
You access the Santos 2013 Annual Report from the following website:
You are required to provide a written report to the accountant of Market Investment Company. Your advice should address the following:
1. A brief discussion of the various regulatory influences on external reporting for public companies in Australia;
2. A brief discussion of what is meant by the term “corporate governance”. Include in your discussion the various regulatory influences on public companies in Australia in relation to corporate governance. Also provide your opinion as to the possible strengths and weakness of corporate governance at Santos Ltd;
3. Using the information contained in the financial statements of Santos Ltd, calculate the following ratios for the years 2013 and 2012:
• Profitability – Net Profit Margin; Gross Profit %; Return on Assets; Earnings per Share
• Efficiency – Accounts Receivable Turnover; Inventory Turnover
• Short-Term Solvency – Current Ratio; Acid Test; Cash Flow from Operations to Liabilities
• Long-Term Solvency – Debt to Equity; Debt to Total Assets; Cash Flow from Operations to Total Liabilities
• Market Based – Price Earnings; Dividend Yield
4. Comment on trends revealed by the ratios calculated in (3) above. Use the headings Profitability, Efficiency, Short-term Solvency, Long-term Solvency and Market Based. Where possible, relate the changes observed in these ratios to events in the business environment in general as discussed in (5) below.
5. Discuss two (2) recent events which have recently occurred in the business environment which may have impacted on/or will impact on results of Santos Ltd in general. Where possible support your argument with newspaper articles or other references e.g. extracts from reports from the gas and resources industry.
6. Briefly discuss any possible limitations your analysis presents.
1. A report style assignment is required. Choose a report structure, with the use of appropriate headings you deem to be of a professional standard. There is no prescribed structure.
2. Full referencing is required in accordance with the USQ preferred Harvard Referencing style.
3. There is no specified word length for this assignment. However, be as concise and efficient in your writing as possible. You should not need any more than five to six 1.5 spaced A4 pages (12 point font) to answer this question (not including appendices).
4. Attach the detailed workings of your calculations as an Appendix to your report. Provide a table summarizing the ratios in the body of your report.
5. You should note that this assignment is based on Topics 7 - 12.
6. Assignment extensions will be granted if needed due to medical or personal reasons. Generally extensions will be granted for one week. If an extension of more than two weeks is required then a different assignment will be given. This is because marked assignments and solutions cannot be released until all assignments have been received. It is unfair on other students to delay the return of their marked assignments unduly.
7. The assignment is to be submitted electronically. Details on how to submit the assignment will be provided at a later date. File types allowed include doc and docx. Only one file will be accepted. If more than one file is uploaded, only the first file listed will be marked.