HI5020 Corporate Accounting Individual Assignment 2 2020

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.

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HI5020 Corporate Accounting Individual Assignment 2 2020

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).

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HI5020 Corporate Accounting Individual Assignment 2 2020

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%

Page 4 of 11

HI5020 Corporate Accounting Individual Assignment 2 2020

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 %

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HI5020 Corporate Accounting Individual Assignment 2 2020

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

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HI5020 Corporate Accounting Individual Assignment 2 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.

Page 7 of 11

HI5020 Corporate Accounting Individual Assignment 2 2020

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

Page 8 of 11

HI5020 Corporate Accounting Individual Assignment 2 2020

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.

Page 9 of 11

HI5020 Corporate Accounting Individual Assignment 2 2020

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.

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HI5020 Corporate Accounting Individual Assignment 2 2020

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.

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HI5020 Corporate Accounting Individual Assignment 2 2020

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