HOLMES INSTITUTE
FACULTY OF
HIGHER EDUCATION
Assessment Details and Submission Guidelines
Trimester T2 2020
Unit Code HI5020
Unit Title Corporate Accounting
Assessment Type Individual Assignment
Assessment Title Issues in Cash Flow Statement
Purpose of the assessment (with ULO
Mapping) This assignment aims at developing a clear understanding of students about income statement and cash flows statement; and use of cash flow statement to comprehend different key business decisions taken by the management. They will have to consult relevant literature and demonstrate understanding of key concepts. As part of their assignment, they will also conduct an empirical analysis on cash flow statement. (ULO 1, 2, 4, 5, 6)
Weight 40 % of the total assessments (Written assignment 30 % + Presentation 10 percent)
Total Marks Written assignment 30 marks + Presentation 10 marks
Word limit 3,000 words ± 500 words
Due Date Assignment submission: Final Submission of individual Assignment: 11:59 pm Wednesday 23rd Sep, Week 10
Late submission incurs penalties of five (5) % of the assessment value per calendar day unless an extension and/or special consideration has been granted by the lecturer prior to the assessment deadline
Submission Guidelines • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page.
• The assignment must be in MS Word format, no spacing, 12-pt Arial font and 2 cm margins on all four sides of your page with appropriate section headings and page numbers.
• Reference sources must be cited in the text of the report, and listed appropriately at the end in a reference list using Harvard referencing style.
Assignment Specifications Assessment task:
Part A
Review the existing literature to critically examine the relative information content of the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful?
Part B
Download the annual financial reports of BHP Ltd, Santos Ltd, and Funtastic Ltd for the year 2019, 2018 and 2017. Examine the consolidated Cash Flow Statements for each companies across three years. Answer the following questions about each of the three cash-flow statements.
1. For each companies [except mentioned otherwise as in c), g) and i) below], across three years on the Statement of Cash Flows discuss:
a) What are the major sources of cash for each firm? What are the major uses of cash for each firm?
b) What was the trend in cash flow from (continuing) operations for each firm?
c) Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question using only the Cash flow statement for BHP Limited).
d) Was the firm able to generate enough cash from operations to pay for all of its capital expenditures?
e) Did the cash flow from operations cover the dividend payment made by the firm
(if any)?
f) If the firm has generated excess cash from operations, how did the firm invest the excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends?
g) Did the firm use the working capital (current asset and current liability) accounts other than cash and cash equivalents as sources of cash, or uses of cash? (Answer this question using only the Cash flow statement for BHP Limited).
h) What other major items affected cash flows for each firm?
i) What was the trend in capital expenditures for each firm?
j) What was the trend in dividends (if any) for each firm?
k) What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for each firm?
l) What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited).
2. Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows, and your answers in (1) above.
3. If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why.
Assignment Structure should be as the following:
Abstract - One paragraph
List of Content
Introduction
Body of the assignment with detailed answer on each of the required tasks
Summary/Conclusion
List of references
Instruction for video presentation:
Based on your written assignment, you will have to make a summary video presentation ranging for 10 minutes. Your presentation should explain the assignment tasks and your key findings. You will have to upload the presentation in YouTube and submit the YouTube link in the blackboard so that the marker can watch and mark your presentation. Your assignment will be marked based on the following criteria:
Presentation Style (3 marks) Content (4 marks) Clarity of the presentation ((3 marks)
Excellent 3-2.5 4-3 3-2.5
Very good 2.5-1.75 3-2.5 2.5-1.75
Good 1.75-1.5 2.5-2.00 1.75-1.5
Satisfactory 1.5-1.00 2.00-1.00 1.5-1.00
Unsatisfactory 1.00-0 1.00-0 1.00-0
Marking criteria
Marking criteria Weighting
Abstract 1%
List of content & overall presentation of the assignment 1%
Introduction 1%
Do the relevant research to critically examine the relative information content of the income statement and the statement of cash flows. Why do investors find both income statement and statement of cash flows useful? 5%
What are the major sources of cash for each firm? What are the major uses of cash for each firm? 1%
What was the trend in cash flow from (continuing) operations for each firm? 1%
Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question using only the Cash flow statement for BHP Limited). 1%
Was the firm able to generate enough cash from operations to pay for all of its capital expenditures? 1%
Did the cash flow from operations cover the dividend payment made by the firm (if any)? 1%
If the firm has generated excess cash from operations, how did the firm invest the excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends? 1%
Did the firm use the working capital (current asset and current liability) accounts other than cash and cash equivalents as sources of cash, or uses of cash? (Answer this question using only the Cash flow statement for BHP Limited). 2%
What other major items affected cash flows? 1%
What was the trend in capital expenditures for each firm? 1%
What was the trend in dividends (if any) for each firm? 1%
What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt)? 1%
What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited). 1%
Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows. 5%
If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why. 2%
Conclusion 1%
References 1%
Total in Written Assignment 30%
Video presentation 10%
Total 40 %
Academic Integrity
Holmes Institute is committed to ensuring and upholding Academic Integrity, as Academic Integrity is integral to maintaining academic quality and the reputation of Holmes’ graduates. Accordingly, all assessment tasks need to comply with academic integrity guidelines. Table 1 identifies the six categories of Academic Integrity breaches. If you have any questions about Academic Integrity issues related to your assessment tasks, please consult your lecturer or tutor for relevant referencing guidelines and support resources. Many of these resources can also be found through the Study Sills link on Blackboard.
Academic Integrity breaches are a serious offence punishable by penalties that may range from deduction of marks, failure of the assessment task or unit involved, suspension of course enrolment, or cancellation of course enrolment.
Table 1: Six categories of Academic Integrity breaches
Plagiarism Reproducing the work of someone else without attribution. When a student submits their own work on multiple occasions this is known as self-plagiarism.
Collusion Working with one or more other individuals to complete an assignment, in a way that is not authorised.
Copying Reproducing and submitting the work of another student, with or without their knowledge. If a student fails to take reasonable precautions to prevent their own original work from being copied, this may also be considered an offence.
Impersonation Falsely presenting oneself, or engaging someone else to present as oneself, in an in-person examination.
Contract cheating Contracting a third party to complete an assessment task, generally in exchange for money or other manner of payment.
Data fabrication and falsification Manipulating or inventing data with the intent of supporting false conclusions, including manipulating images.
Source: INQAAHE, 2020
Marking Rubric
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
Abstract /1 Apply your judgement
List of content & overall presentation of the assignment /1 Apply your judgement
Introduction /1 Apply your judgement
Do the relevant research to critically examine the relative information content of income statement and statement of cash flows. Why do investors find both income statement and statement of cash flows useful?
/5 Demonstrate outstanding knowledge beyond requirements on the topic.
Extensive relevant research Independent and in-depth analysis.
Issues and factors are presented and analyzed in a logical manner.
Broad and credible sources of references have been cited using proper referencing style. Demonstrate very good knowledge on the topic.
Substantial relevant research.
Issues are discussed adequately based on sufficient research.
Adequate references in proper referencing style. Demonstrate good knowledge on the topic.
Adequate relevant research.
Discussed the issue based on some research and facts. Scopes for improvement remain.
Adequate references in proper referencing style. Demonstrate basic knowledge on the topic.
Some relevant research.
Meet the requirements but with limited information and discussion.
Limited references. Demonstrate poor knowledge on the topic.
Limited and/or no relevant research.
The answers do not meet the basic requirement as no
factual discussion is provided.
No reference.
What are the major sources of cash for each firm? What are the major uses of cash for each firm? /1 Major sources of cash and major uses of cash are identified and discussed in detail. Major sources of cash and uses of cash are identified.
Detailed discussion is provided with minor errors. Major sources of cash and uses of cash are identified with minor errors.
Basic discussions are attempted with minor errors. Major sources of cash and uses of cash are identified with material errors.
Basic discussions are attempted with material errors. No clear attempt is made to identify the major sources of cash and uses of cash.
No discussion is provided.
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
What was the trend in cash flow from
(continuing) operations for each firm? /1 Trends in the cash flows from continuing operations are identified and discussed adequately.
Demonstrate outstanding knowledge beyond requirements on the topic.
Independent and in-depth analysis.
Issues and factors are presented and analysed in a logical manner. Trends in the cash flows from continuing operations are identified.
Discussion is not comprehensive.
Demonstrate very good knowledge on the topic.
Issues are discussed adequately based on sufficient research. Trends in the cash flows from continuing operations are identified with minor errors.
Basic discussion has been provided with minor errors.
Demonstrate good knowledge on the topic. Trends in the cash flows from continuing operations are identified with material errors.
No discussion is provided.
Demonstrate basic knowledge on the topic.
Meet the requirements but with limited information and discussion. No realistic attempt is made to identify the trend.
No discussion is provided.
Demonstrate poor knowledge on the topic.
Compare and contrast the cash flow from operations with the net profit after tax in income statement. Explain in detail the major reasons for the difference between these two figures. (Answer this question using only the
Cash flow statement for BHP Limited). /1 Shows a complete comprehension of the relationship between net income and cash flows from operations.
The reasons for the differences
between these two figures are identified and discussed in detail. The relationship between net income and cash flows from operations are explained.
The reasons for the differences between these two figures are identified and discussed with minor errors. The relationship between net income and cash flows from operations are explained.
Identification of the reasons of the differences between these two figures contains material errors. A reasonable attempt is made to identify the relationship between net income and cash flows from operations.
A reasonable attempt is made to identify the reasons of the differences between these two figures but fail to completely grasp the issue.
Errors are identified in the answer. A poor attempt is made to explain the relationship between net income and cash flows from operations.
Was the firm able to generate enough cash /1 Identify all cash flows from operation with specific Identify all cash flows from operation with specific Identify all cash flows from operation with specific A reasonable attempt is made to identify cash flows from operation No reasonable attempt is made to identify cash flows from operation with specific
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
from operations to pay for all of its capital expenditures? mention of whether it is positive or negative.
Identify all capital expenditures and synthesise the adequacy of cash flows from operations to cash required for capital expenditures. mention of whether it is positive or negative.
Identify all capital expenditures.
Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures. mention of whether it is positive or negative.
Identify most capital expenditures.
Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures. with specific mention of whether it is positive or negative.
Identify some capital expenditures.
Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.
Some errors are identified in the answer. mention of whether it is positive or negative.
Fail to identify most capital expenditures.
Unable to explain whether the adequacy of cash flows from operations is adequate for cash required for capital expenditures.
Material errors are identified in the answer.
Did the cash flow from operations cover the dividend payment made by the firm (if any)? /1 Clearly demonstrate the sources of fund used for and dividend.
Demonstrate outstanding knowledge beyond requirements on the topic. Demonstrate the sources of fund used dividend.
Minor errors.
Demonstrate very good knowledge on the topic. Address the question but unable to clearly indicate whether the cash flows from operations were enough for dividend payment.
Demonstrate good knowledge on the topic. Answer the question correctly with a simple
“yes” or “No” answer.
No discussion is provided.
Demonstrate basic knowledge on the topic. Incorrectly answered the question with a simple “yes” or “No” answer.
No discussion is provided.
Demonstrate poor knowledge on the topic.
If the firm has generated excess cash from operations, how did the firm invest the excess cash? If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends? /1 Clearly identify and explain whether the firm has generated excess cash flows.
Present a good discussion on free cash flows and uses of excess cash flows. Identify and explain whether the firm has generated excess cash flows.
Present a reasonable discussion on the concept of free cash flows and uses of excess cash flows. Identify and explain whether the firm has generated excess cash flows.
Present a discussion on the concept of free cash flows and uses of excess cash flows with errors. Identify and explain whether the firm has generated excess cash flows with some errors.
No discussion is made about free cash flows.
Incorrectly identify and explain whether the firm has generated excess cash flows.
No discussion is made about free cash flows.
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
The discussion on uses of excess cash flows is unclear. No discussion or incorrect discussion is made on uses of excess cash flows.
Did the firm use the working capital (current asset and current liability) accounts other than cash and cash equivalents as sources of cash, or uses of cash? (Answer this question using only the Cash flow statement for BHP Limited). /2 Demonstrate a clear understanding of how changes in current assets and current liabilities can be source of fund and/or uses of fund.
Correctly explain whether the firm has used working capital items as sources of operating cash flows or uses of operating cash flows. Present a good discussion on whether the firm has used current
assets and current
liabilities as sources of fund or uses of fund.
Present an item-wise discussion on each current assets and current liability items with minor errors. Present a reasonable discussion on whether the firm has used current assets and current
liabilities as sources of fund or uses of fund.
Present an item-wise discussion on each current assets and current liability items with material errors. Present a discussion on whether the firm has used current
assets and current
liabilities as sources of fund or uses of fund with minor errors.
Unable to present a proper discussion on each current assets and current liability items. Present an incorrect discussion on whether the firm has used current assets and current liabilities as sources of fund or uses of fund.
Unable to present a proper discussion on each current assets and current liability items.
What other major items affected cash flows? /1 Cash flows from sources other than operating activities are identified.
Cash flows from investing activities and financing activities are identified and explained in detail.
Demonstrate a comprehensive understanding of the topic. Cash flows from sources other than operating activities are identified.
Cash flows from investing activities and financing activities are identified and explained with minor errors.
Demonstrate a very good understanding of the topic. Cash flows from sources other than operating activities are identified with minor errors.
Cash flows from investing activities and cash flows from financing activities are separately identified and explained with material errors. Cash flows from sources other than operating activities are identified with material errors.
Cash flows from investing activities and cash flows from financing activities are not separately identified and explained.
Meet the requirements but with limited information and discussion. Demonstrate poor knowledge on the topic.
No reasonable discussion is provided on cash flows from sources other than operating activities.
The answers do not meet the basic requirement as no
factual discussion is provided.
Page
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
What was the trend in capital expenditures for each firm? /1 Trend in capital expenditures for each of the three firms is correctly identified and discussed comprehensively. Trend in capital expenditures for each of the three firms is correctly identified.
A good level of discussion is provided. Trend in capital expenditures for each of the three firms is correctly identified but not well discussed. Trend in capital expenditures for each of
the three firms is correctly identified.
No discussion on the trend is provided. Trend in capital expenditures for each of the three firms is not correctly identified.
No discussion on the trend is provided.
What was the trend in dividends (if any) for each firm? /1 Trend in dividends for each of the three firms is correctly identified and discussed comprehensively. Trend in dividends for each
of the three firms is correctly identified.
A good level of discussion is provided. Trend in dividends for each of the three firms is correctly identified but not well discussed. Trend in dividends for each of the three firms is correctly identified.
No discussion on the trend is provided. Trend in dividends for each of the three firms is not correctly identified.
No discussion on the trend is provided.
What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term debt) for each firm? /1 Trend in net borrowing for each of the three firms is correctly identified and discussed comprehensively. Trend in net borrowing for each of the three firms is correctly identified.
A good level of discussion is provided. Trend in net borrowing for each of the three firms is correctly identified but not well discussed. Trend in net borrowing for each of the three firms is correctly identified.
No discussion on the trend is provided. Trend in net borrowing for each of the three firms is not correctly identified.
No discussion on the trend is provided.
What was the trend in working capital accounts? (Answer this question using only the Cash flow statement for BHP Limited). /1 Trend in working capital is correctly identified and discussed comprehensively.
Item-wise discussion is provided Trend in the working capital is correctly identified.
A good level of discussion is provided on each item. Trend in the working capital is correctly identified.
The trend is not discussed item-wise. Trend in the working capital is correctly identified.
No discussion on the trend is provided. Trend in the working capital is not correctly identified.
No discussion on the trend is provided.
Critically evaluate the financial strength of each of the three companies based on the evidence presented in the Statement of Cash Flows. /5 The financial situations of all three companies are comprehensively discussed
Logical and accurate conclusion is drawn based on the discussion. A very good discussion is provided on the financial situations of all three companies.
The financial situations of all three companies are discussed with scopes for improvement.
Attempt to draw a conclusion but The financial situations of all three companies are discussed but most of the discussion is basic and scattered.
The financial situations of all three companies are discussed.
The discussions are not logically linked.
Page
Questions Marks Excellent Very Good Good Satisfactory Unsatisfactory
Demonstrate outstanding knowledge beyond requirements on the topic.
Issues and facts are presented and analyzed in a logical manner. Logical conclusion is drawn based on the discussion.
Demonstrate very good knowledge on the topic.
Issues are discussed adequately based on sufficient research. it is not logically and factually sound.
Demonstrate of good knowledge on the topic.
Discuss the issues based on some research and facts with scopes for improvement. The discussions are not logically linked.
Demonstrate basic knowledge on the topic.
Meet the requirements but with limited information and discussion. Demonstrate poor knowledge on the topic.
The answers do not meet the basic requirement as no
factual discussion is provided.
If you are asked to evaluate these three companies for lending purposes, which of the three companies you will select for lending? Explain Why. /2 Make a clear and accurate selection highlighting the reason for the selection.
Discussion is based on facts and figures. Make a clear and accurate selection.
A good level of discussion is provided on the selection. Make a clear and accurate selection.
A basic discussion is provided on the reasons for selection. Make a clear and accurate selection.
No discussion is provided on the reason for the selection. The selection is inaccurate.
No reasonable discussion is provided on the reason for the selection.
Conclusion /1 Apply your judgement
References /1 Apply your judgement
Total in Written assignment /30
Video presentation /10
Total /40