Also remember to use ONESOURCE (Dunn and Bradstreet) and DO NOT waste time calculating your own ratios… the emphasis is on interpretation. Go beyond definitions an theory and tell me what they mean for the company you have been chosen and the types of decisions that stakeholders will be making. What are the implications!!!
To access ONESOURCE:
Go to the CSU library website: http://library.csu.edu.au/
Click on the journal databases link
Find Onesource under “O” or “business” – name has changed to Dunn and Bradstreet.
Good luck
1. use news items and reference them eg…. Qantas shortselling – maybe we are prepared from a drop in share price. – what is causing drop in share price – reflect on the industry trends…news of 2 airlines returning…. Economic pressures? Costs of fuel?
2. Identify the stakeholders for THIS COMPANY be specific…. and how items on the balance sheet etc help make their decisions… what type of decisions….
Eg:The income statement of RDK plays a key role in the decision making. Managers and stakeholders use it to communicate the business’ revenues, expenses and net income (or net loss) for a reporting period. As RDK earns income by selling products inventory (goods) to customers during an accounting period, the reporting of the number, type and price of products sold by RDK helps the business owners and managers make plans, control business expenses and evaluate business performance. The analysis of the income statement provides information on where the business can improve and identify where mistakes have been made. Corrective action can then take place.
Use the COGS and Sales figures %%% from video on interact topic 3 notes to explain this.
3. Use vertical analysis to explain the reliance of the coy on certain assets, liabilities etc… eg how are the activities of the firm financed…. Equity or debt… what classes of equity are significant what are the impicaitons of this.
4. Measurement of key assets….. historical costs, fair value, replacement value etc
Relate to accounting conventions/concepts…… but make sure that you are talking about the actual assets from fin statements – be specific and draw examples
Pgs 659 of text onwards:
Going concern convention
Relevance – can be predictive and be able to be confirmed
Faithful representation – substance over form – free from bias and errors –
Both Relevance and Faithful Representation are enhanced by:
Comparability and onsistency
Verifiability
Timeliness
Understandable
PAGE 84 of Qantas 2014 fin statements Notes item 13: Assets held for sale…. Note on FV as FV is an active market
Notes pg 77 Aircraft report depreciation and amortisation. – go to the item and we find the cost (historical cost) and then the adjustments – principle of conservatism, faithful representation, comparability etc.
5. Analysis of both income statement and balance sheet
– INDEPTH analysis of ratios: – 2 of each
– must include comparison through time – IDENTIFY TRENDS
– must include comparison to another firm – eg British Airways – make sure you use percentages to take into account the size differences.
REFERENCE
15 marks for presentation – eye contact…. Clear…understandable…. Write legibly. – ENGAGING – smile… setting….aids.
Materiality –
Conservatism – eg use of historical costs, writing off assets
Cost – Benefit – gathering and reporting info the benefits should exceed costs.
