ACCT 2060 Introductory Accounting Assignment - Semester 2, 2011
This assignment is designed to get you to locate the Annual Reports for a company and become familiar with the contents of an Annual Report, particularly the financial statements and the notes to the financial statements. While we have looked at very basic formats of the financial statements, the financial statements for a company contain a little more detail and information on some items you may not have been introduced to yet. Pay particular attention to the information provided in the notes to the financial statements as you will find a lot of useful information in them that may help with some of the questions.
REQUIRED:
You are required to obtain the 2010 Annual Report of answer the questions that follow in Part A and Part B.
Blackmores Limited
and then
PART A THE COMPANY (8 x 1 = 8 marks)
Question 1 Describe the companys principal operating activities. Question 2 An auditing firm will have received remuneration for their services. What services did the auditing firm provide for this company in 2010? Question 3 Using the 2010 Annual Report, identify the number of the note that deals with Significant Accounting Policies and identify the method of depreciation the company uses to depreciate property, plant and equipment. What is the underlying assumption of this method in relation to the usefulness of property, plant and equipment? Question 4 The annual report contains a number of reports with only some of these being financial reports. Name all of the financial reports in the 2010 annual report shown for this company in their annual report. Question 5 Directors of the company will often own shares in the company as well. Identify the name of the chairman of the board of directors and identify the number of shares the chairman held in the company at the end of their 2010 financial year (financial year ends June 30, 2010). Question 6 Describe the purpose of the external auditors report. Question 7 With reference to the consolidated entity: What is the total amount of revenue and other income in 2010? What are the two revenue items? What is the other income comprised of? (You must refer to the relevant note to find the answer to this.) Question 8 Again with reference to the consolidated entity: What is the amount of cash receipts from customers in 2010? Why does this amount differ from the 2010 sales figure?
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PART B - ANALYSIS OF FINANCIAL INFORMATION (12 marks)
Question 1 (4 marks) Using the consolidated figures for Blackmores Ltd, calculate the following ratios for the years 2009 and 2010. Ratios are to be shown at one decimal place. You must show all your workings. (Where no workings are shown you will receive zero for this section): i. ii. iii. iv. Question 2 Current ratio Acid test ratio Gearing ratio Interest cover ratio (2 marks)
You have been provided with the following information about another company, Company X, in the same industry as Blackmores Ltd: COMPANY X Ratio Current ratio Acid test ratio Gearing ratio Interest cover ratio (times) 2010 2.1 1.2 1.2 10.9 2009 1.8 1.5 0.8 13.1
Using the information above and the calculations in Part B Question 1, you are required to analyse the liquidity and financial gearing (leverage) of Blackmores Ltd and Company X by providing: (a) a description of the movement in each of the ratios for Blackmores Ltd; (b) a description of the movement in each of the ratios for Company X; (c) an explanation of what each of these ratios tell you about Blackmores Ltd; (d) an explanation of what each of these ratios tell you about Company X; Question 3 (2 marks)
Assume you are considering becoming a creditor for Blackmores Ltd or Company X (from Part B Question 2 above). That is, you will only be providing credit to one of them. Explain which company you would prefer to provide goods to on credit and why you have chosen this company. You may consider both financial and non-financial information in making this decision. Question 4 (4 marks)
Prepare a table similar to the table below. Complete the table by inserting information from Blackmores financial statements (consolidated figures). Calculate each item as a percentage (%) of sales revenue. Financial Item Sales Total expenses Promotional and other rebates Raw materials and consumables used Employee benefits expense Selling and marketing expenses Net profit attributable to equity holders of the parent
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2010 ($)
% 100.0
2009 ($)
% 100.0
Refer to the table above to explain the performance of Blackmores in 2010 compared to 2009.
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OTHER IMPORTANT INFORMATION
Format and Presentation: The assignment needs to be presented and formatted according to the guidelines shown in this semesters Course Guide. You need to ensure that the numeric answers you provide are accurate. For example, some figures are shown in thousands while others are not; showing an answer as $102 instead of $102,000 will result in a mark of zero for such a question as there is obviously quite a difference between these two figures. Also ensure that you read each question carefully as some questions will ask for a figure for a particular year and for either the Group (Consolidated) Financial Reports or the Parent Entity (Company). Referencing: As you will be using a companys Annual Report as the basis for answering many of the questions asked in this assignment, you need to ensure that you acknowledge this in your assignment. In fact, any sources that you use need to be acknowledged in order to avoid plagiarism. Information on referencing can be found in the Guidelines for Referencing and Presentation at the RMIT website using the following address: (http://www.rmit.edu.au/bus/students). A copy can also be found on the Blackboard under the Course Documents folder. From the Blackboard site there is also an online referencing resource that you might find useful. It can be found by following these links: External Links / Study and Learning Centre / Study Skills/Referencing/Referencing for Business Students. In-Text Referencing and the Reference List: Sources of information must be cited both in the body of the text (in-text referencing) and the end of the assignment (reference list). Failure to do so will result in penalties. Remember that when referencing an Annual Report it is a corporate document that does not have a particular author but it will still require referencing any time you use information from it. Any other documents or books or other references you use will also require referencing. Penalties Regarding Referencing: No in-text referencing deduct 1.5 marks Some in-text referencing only deduct 1 mark No reference list deduct 1.5 marks Incomplete reference list deduct 1 mark Policy on Late Submissions: The policy on late submissions can be found in the current semesters course guide.
ASSIGNMENT TOTAL 20 Marks
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