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HA2032 Corporate And Financial Accounting 9

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In this assignment, students will critically analyse the different aspects of financial statements, including the application of different sources of authority and the accounting standards for corporate disclosure and for the financial reporting function. Furthermore, students will demonstrate their understanding of the different sources of funds, capital structure and provide a detailed analysis of the financial statements of an Australian publically listed company for two consecutive financial periods. Students will research and provide details of the different disclosure requirements for both listed and non-listed entities.

Assessment Task:

Part A

Students will need to access the ASX website ( and select a company in any industry section. Students will need to download the latest Annual report for that selected company.

Based on the selected company’s annual financial statements and related notes, students will need to prepare a business report addressing the requirements listed below. It is also a requirement to attach the main financial statements and the related notes which address the requirements below in your report.

  1. Discuss and provide an analysis of items in the statement of cash flow and identify item(s) which relate to the balance sheet.
  2. Explain the company’s performance based on Earnings per Share (EPS) and provide EPS calculations for the last two consecutive periods.
  3. Discuss whether EPS is a useful performance indicator for the company.
  4. Explain how the material movements in the statement of changes in equity is reflected and reported in the statement of cash flows.
  5. Discuss the items recorded as Non-Current Liabilities, including the related notes and provide an explanation of the material movements of each item.
  6. Based on the capital structure of the company selected, discuss the potential advantages and disadvantages of each source of capital.

Part B

Students will need to research and discuss the disclosure requirements for publically listed companies in the financial statements in comparison to other non-listed companies. Students will also need to discuss the benefit(s) of disclosing comparative information in the annual financial reports to users, including key decision makers or external users, such as investors. (Note - one page is recommended to answer this section).




The report is prepared to address different requirements by referring to the financial report of selected company listed on ASX. A detailed analysis of the financial statements for two consecutive financial periods have been presented. Amor limited has been chosen to critically evaluate the different aspects of the financial statements. Report demonstrate the understanding of the capital structure and different sources of funds used by the entity. In addition to this, the next section of report demonstrates the comparison between the disclosure requirements of publically listed and non-listed company. Amcor limited is a leading brand involved in the production and development of responsible packaging for pharmaceutical, beverage, home and personal care, medical and other products ( 2020). Financial statement preparation is done by complying with the AASB (Australian accounting standard board) and also with US GAAP after the acquisition of Bemis by the reporting entity.

Discussion: Part A

Analysis of the cash flow statement items and identifying items relating to the balance sheet:

The cash flow statement of the company is segregated into cash flow from operating activities, cash flow from financing activities and cash flow from investing activities. Items reported under operating activities involves net periodic benefit cost, depreciation, amortization and impairment, dividend income tax, measurement gain on subsidiary purchase, net foreign exchange loss or gain, deferred income tax and changes in operating liabilities and assets that relates to the item in the balance sheet. Net cash used in the financing activities include effect of exchange rate and increase and decrease in the cash equivalent. On other hand, net cash used in investing activities involves cash flow from financing activities, treasury share purchase, forward contract settlement, payment of dividend, repayment of lease liabilities, proceed from issuing of shares and from long term debt and net borrowings. It is observed that net cash from operating activities has declined in current year to 776.1 million compared to previous year 871.4 million. Net cash provided by investing activities in year 2019 is recorded at 10.2 million as against the amount used in the previous year at 241.9 million. Furthermore, net cash used in the financing activities has increased from 542.7 million to 764.9 million ( 2020).

The items of the cash flow statement relating to the balance sheet of Amcor limited includes trade receivables, inventories, trade payable, prepaid expenses, other current liabilities, employee benefit obligations, non-controlling interest and accrued employee cost, for all of which is reported under current liabilities and current assets section. Other items reported under current assets is cash and cash equivalent.


Evaluating the performance of company based on earnings per share and depicting its computation:

Earnings per share is computed by Amcor limited using the two class method where it is assumed that all the net income of the company earned  is distributed to each class of share as dividends, for computing the net income per share for each class of share (Ullah et al. 2019).  

Basic earnings per share declined from 0.50 in year 2018 to 0.36 in year 2019 and the effect on the value of earning per share is due to the after tax impact of the non-recurring items. There has been decrease in the net income attributable to the shareholders by 25.2% and increase in the diluted weighted average number of shares outstanding by 1.9%. The decline in earnings per share in the current year is attributable to the falling profitability level of the company ( 2020).

Evaluating earnings per share as the useful performance indicator:

Earnings per share (EPS) represents that portion of the profit of the company allocated to the outstanding share of the stock. It is believed by many analysts that one of the important tool to assess the stock market price is earnings per share. Moreover, it is also perceived that the earnings of the company improves continuously when there is a consistent improvement in the figures of EPS. Nonetheless, it is important to remember that computation of EPS is done using historical data that cannot always predict the future appropriately. Also, when comparing the figures of EPS of difference companies, significant differences might exist. Comparing the performance of companies using EPS is more valuable when the companies within the same industry is compared rather than comparing the company’s performance in different industry (Ribeiro et al. 2017). Therefore, it can be inferred that EPS should be used as decision making tool along with some other performance measures.


Explaining any material movement in statement of changes in equity and its reflection in the cash flow statement:

It is identified from the statement of changes in equity that the purchase of treasury shares value declined to 21.8 million from 39.1 million in year 2019. This change in purchase of treasury shares is reflected in the statement of cash flow under the section of financing activities. Total amount of dividend declared in the equity statement has increased from 526.9 million in year 2018 to 679.7 in year 2019 and this is reflected in the cash flow statement that marked an increase in the amount of total dividend paid under the section of investing activities. Share based compensation expense has reduced from 18.4 in year 2019 to 15.4 in year 2018 which is reflected under the section of operating activities indicating a fall in the compensation value. The net contribution of non-controlling interest is reflected under the investing activity marking an increase in value whereas the equity statement indicated an increase in value to 0.9 in 2019 from 0.1 in year 2018. Year 2019 marks the acquisition of Bemis Company Inc worth 5229.6, of which the total amount of cash acquired via such acquisition is reflected in the cash flow statement under the section investing activities and the acquired amount is required at 335.5 million. The settlement of forward contract of the treasury shares in the equity statement records a declining value from 39 million to 25.1 million ( 2020). This changes in value of settlement of forward contract is reflected under the section of net cash used in financing activities and marked a falling from in year 2019 to 28.2 from 39 in year 2018. In addition to this, one of the important component of statement of changes in equity which is reflected in the cash flow statement is net income.  A decline in the net income from 586.6 million in year 2018 to 437.4 million in year 2018 is exactly reflected in the cash flow statement. The statement of changes in equity discloses the figure of net amount of shares issued of 11.6 million and the issuance of shares is reflected in the form of proceeds generated from issuing share under the section net cash used in financing activities and the amount is recorded at 28.2 million ( 2020). It is therefore observed that some of the changes in the components of the statement of equity is reflected in the cash flow statement of Amcor limited.

Identifying the items recorded under noncurrent liabilities and explaining the material movement of each of them:

The items reported under the section of non-current liabilities of the balance sheet of Amcor limited includes long term debt minus current portion, employee benefit obligation, deferred tax liabilities and other noncurrent liabilities. Value of long term debt has increased by considerable figures from 2690.4 million in year 2018 to 5309.0 million in year 2019. It is also observed that the figure of deferred tax liabilities increased to 1011.7 million in year 2019 from 147.5 in year 2018. There is an increase in the value of employee benefit obligation to 386.8 million in year 2019 from 286.3 in year 2018. Furthermore, other noncurrent liabilities also reported increasing figure from 182.7 in 2018 to 241 in year 2019. From the figures disclosed, it is observed that all the components of non-current liabilities increased in the current financial year. Increase in long term debt is attributable to in amount if bank loans borrowed, issuing of commercial paper and US dollar notes due 2019, 2021 and 2026 and interest rate swap adjustments ( 2020).


Discussing the potential advantage and disadvantage of each source of capital:

Capital structure of any entities usually comprised of share capital or equity and debt, which is used to finance it’s all the business activities. The liquidity position of Amcor limited in light of changing conditions of market, funding requirements of debt refinancing, expected future cash flow, cost of capital, acquisition, capital expenditure, sensitivity analysis access to the funding resources and impact of credit ratings is reviewed periodically along with the capital structure of the company ( 2020).

Equity financing and debt financing are the two sources of funding the business activities of Amcor limited. The potential advantages and disadvantages of equity and debt financing are discussed below:

Advantages of equity financing:

There are various benefits of raising money through equity financing which is discussed below:

  • Funding using equity is committed to the business despite any changes in business plan.
  • Equity financing offers a long term source of financing as it is focused on increasing value of the business and future earnings (Gornall and Strebulaev 2018).
  • Since, it does not requires making any fixed payment, the payment burden of the company does not increases.
  • A pledge of collateral is not required by the equity financers and the assets of the business remain unencumbered and remains available to be used as loan security (Huang and Kim 2019).

Disadvantages of equity financing:

  • For equity investors, there is no guarantee or assurance of the business growth, profits and dividends. There also exist uncertainty in the return of investors and they tend to expect higher return from their investment.
  • Equity financing results in investors having control and financing rights in the company. In such scenario, the ownership rights of the individual is diluted and the management decisions cannot be done solely (De Rassenfosse and Fischer 2016).

Advantages of debt financing:

  • Business ownership can be maintained during the dent financing as the business have complete control unlike equity financing. Business is not answerable to their lenders.
  • One of the biggest incentive of debt financing is that the charges and interest fees on the business loan is tax deductible (Le and Phan 2017).
  • Profit retention is also facilitated using debt financing as the business is only obliged to make the payment to the lenders within the agreed frame of time.

Disadvantages of debt financing:

  • Accessibility of loans is difficult as when it comes to lending, banks are conservative and securing debt finance can be difficult for the new business.
  • The credit rating of the business would be affected if they fail to make the timely payment of their loan and also impacts the future possibility of securing loans (Ahmad and Moin 2018).
  • A business might experience shortages of cash flow if it commits to make the regular repayment.

Part B:

Comparing the disclosure requirements of publically listed and non-listed companies:

Companies under the Australian law is categorized into two main category that is public companies and private companies. Public companies can either be listed or non-listed on the stock exchange of Australia. A listed company is obliged to make continuous disclosure of the information that has impact on the value and market price and also so that the investors can have timely and equal access of information. All the publically listed companies are required to make a disclosure to ASX and they are not supposed to make a disclosure of their price sensitive information. A corner stone regulatory requirement for the listed company is to make immediate disclosure of the price sensitive development and events. One of the practical examples of development and event which a listed company should disclose involves a material changes in the financial expectation and forecast, material change in the accounting policy of the company, dividend declaration, proposal to change the company’s auditor and material changes in the rating which the rating agency applies ( 2020). Any information sought by ASX should be immediately provided by the companies in order to prevent or correct the false market. In addition to this, for the purpose of fundraising by the listed companies, the two important disclosure documents required by the company is a transaction specific prospectus and a prospectus ( 2020).  

Unlisted companies are not required to report against the principles and recommendations of the corporate governance of ASX and they are provided with the option of either adopt or not adopt the recommendations. They are subjected to the obligation of making continuous disclosure under section 675 of the Corporation Act. It is required by such entities to provide ASIC (Australian securities and investment commission) with the material information as soon as they become aware of it. Such entities must be satisfied that most of the investors are likely to look for the information available on their websites and the manner of disclosure of information should be notified to the new and existing investors. In accordance with the guidance of good practice in the regulatory guide, disclosure of any material information should be done in a timely fashion on its website. For the member meetings of unlisted companies, it is important to give 21 days’ notice ( 2020).

When comparing the disclosure requirements of the annual report of the listed and non-listed companies, the former is required to disclose in their statement of corporate governance and to the extent the non-mandatory guidelines of ASX are followed by them and also the disclosure should be made to the extent of which the recommendation guidelines of ASX corporate governance is followed by the company. Non listed entities on other hand have the option of disclosing and not disclosing their corporate governance statement in their annual report. They can choose to adopt the recommendation and principles of corporate governance of ASX. Any material information impacting the valuation and price of securities can be made available on the website of the company unlike listed entities which are mandated to disclose such material information in their annual report ( 2020).


The paper performing the critical analysis of different aspects of the financial statements of Amcor limited outlines the material movement of the items of the various statements provided in the financial report of the company. It is observed that EPS of the company has declined in the current year and using it to measure the performance should be done in combination with other analytical tools to provide the actual picture of the entity. Also, the capital structure of Amcor limited make use of both debt and equity financing. The non-current liabilities items of balance sheet and some common items of the cash flow statement and statement of changes in equity has been analysed for its materiality. In addition to this, there is a distinction between the disclosure requirement of the listed and unlisted public companies.



Ahmad, N. and Moin, Z., 2018. How Capital Structure and Profitability Affect Each Other in Economics. COMPETITION POLICY INTERNATIONAL, 14(1)., 2020. [online] Available at: [Accessed 28 May 2020].

An, Z., Li, D. and Yu, J., 2016. Earnings management, capital structure, and the role of institutional environments. Journal of Banking & Finance, 68, pp.131-152., 2020. Reporting obligations for public companies | ASIC - Australian Securities and Investments Commission . [online] Available at: [Accessed 28 May 2020]., 2020. [online] Available at: [Accessed 28 May 2020].

Chow, Y.P., Muhammad, J., Bany-Ariffin, A.N. and Cheng, F.F., 2018. Macroeconomic uncertainty, corporate governance and corporate capital structure. International Journal of Managerial Finance., 2020. [online] Available at: [Accessed 28 May 2020].

De Rassenfosse, G. and Fischer, T., 2016. Venture debt financing: Determinants of the lending decision. Strategic Entrepreneurship Journal, 10(3), pp.235-256.

Gornall, W. and Strebulaev, I.A., 2018. Financing as a supply chain: The capital structure of banks and borrowers. Journal of Financial Economics, 129(3), pp.510-530.

Hang, M., Geyer-Klingeberg, J., Rathgeber, A.W. and Stöckl, S., 2018. Measurement matters—A meta-study of the determinants of corporate capital structure. The quarterly review of economics and finance, 68, pp.211-225.

Huang, Q. and Kim, R., 2019. Capital structure decisions along the supply chain: Evidence from import competition. Journal of International Business Studies, 50(6), pp.873-894.

International, F., Australia, I., investing, G., business, R., regulation, U. and Australia, F. ,( 2020. Financial reporting in Australia - Austrade . [online] Available at: [Accessed 28 May 2020].

Le, T.P.V. and Phan, T.B.N., 2017. Capital structure and firm performance: Empirical evidence from a small transition country. Research in international business and finance, 42, pp.710-726.

Lewis, C.M. and Tan, Y., 2016. Debt-equity choices, R&D investment and market timing. Journal of financial economics, 119(3), pp.599-610.

Qureshi, M.A., Ahsan, T. and Azid, T., 2017. Equity and debt financing strategies to fuel global business operations during crisis. In Global financial crisis and its ramifications on capital markets (pp. 297-319). Springer, Cham.

Ribeiro, R.B., Pereira, V.S. and Ribeiro, K.C.D.S., 2017. Capital Structure, Internationalization and Countries of Destination of Brazilian Companies: An Analysis of the Upstream-Downstream Hypothesis. BBR. Brazilian Business Review, 14(6), pp.575-591.

Ullah, M., Malik, H.A., Zeb, A. and Rehman, A., 2019. Mediating Role of Capital Structure between Corporate Governance and Risk. Journal of Managerial Sciences, 13(3)., 2020. [online] Available at: [Accessed 28 May 2020].

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