Qantas' Cashflow Essay: Operating, Investing, And Financing Activities. (70 Characters)

(i) Doing the assignment on three years annual report for your company and doing appropriate comparison
(ii) Insightful description of each item of your firm’s cash flows statement –indicating a degree of understanding of what each item is
(iii)Insightful explanation of changes in each item of the cash flows statement
(iv)Insightful explanation of each item of Other Comprehensive Income Statement

(v) Clear description of your firm’s income tax expense
(vi)Insightful explanation of whether, and if so why, your firms’ income tax expense differs from the corporate tax rate times the accounting income
(vii)Explanation of why the income tax expense shown in the income statement is different from income tax shown in the cash flow statement
(viii) Understanding of deferred tax assets and deferred tax liabilities and why they have changed over the previous year.
(ix)Convincing evidence (if needed, class by presentation) that the student was sufficiently and appropriately involved in preparing the assignment.

Operating Activities of Qantas

The Cashflow statement of Qantas is segregated in three different segments, which contains financing activities, investing activities, and operating activities. The identified activities mainly help in understanding the cash outflow and inflow of the organisation during the fiscal year. The operating activities mainly comprises interest received, interest paid, divided received, income tax paid, cash generated from operations, cash payments to employees for redundancies and related costs and cash payments to employees for Wage Freeze bonus and Record Results bonus. In addition, cash flow from investing activities comprises purchase of PPEI (Property, Plant, Equipment, and Intangible assets), net loan repayments, proceeds from PPEI disposals and aircraft operating lease financing. Furthermore, the financing activities that is included in the statement is payments for share buyback, capital return, treasury shares, borrowings, repayment of borrowings, and dividends paid (Investor.qantas.com, 2018).

The operating activities of Qantas has mainly improved over time, where during 2015 the overall values of the operating activities was at the levels of 2,492 million. In addition, the vales have charged using 2017, where the values have inclined to 2,704 million, which indicates the positive attributes of the organisation. Moreover, the value of investing activities has future deteriorated in 2017, as compared to 2015. This indicates the excessive investment conducted by the company to secure future performance. On the other hand, the cash flow from investing activities has mainly improved from -1,218 million in 2015 to -854 million in 2017. This mainly reflects the decline in cash outflow of the organisation during the period of three fiscal years in financing activities. However, the overall decline in net cash flow decrease in 2017 is witnessed by the company due to the excessive decline in its cash inflow (Investor.qantas.com, 2018).

The items reported in comprehensive measure mainly indicate the income or losses, which could be incurred by the company in near term. The other comprehensive income value mainly contains the following components for Qantas Airways.

• Effective portion of changes in fair value of cash flow hedges, net of tax
• Transfer of hedge reserve to the Consolidated Income Statement, net of tax
• Recognition of effective cash flow hedges on capitalised assets, net of tax
• Net changes in hedge reserve for time value of options, net of tax
• Foreign currency translation of controlled entities
• Foreign currency translation of investments accounted for under the equity method
• Share of other comprehensive income/(loss) of investments accounted for under the equity method
• Defined benefit actuarial gains/(losses), net of tax (qantas.com, 2018).

The components of other comprehensive income comprise expenses, which might have an impact on the operations of the organisation. In addition, the Effective portion of changes in fair value of cash flow hedges, net of tax, Transfer of hedge reserve to the Consolidated Income Statement, net of tax, Recognition of effective cash flow hedges on capitalised assets, net of tax, Net changes in hedge reserve for time value of options, net of tax, Foreign currency translation of controlled entities, Foreign currency translation of investments accounted for under the equity method, Share of other comprehensive income/(loss) of investments accounted for under the equity method, Defined benefit actuarial gains/(losses), net of tax.

Investing Activities of Qantas

The components of other comprehensive income statement are mainly not reported in the income statement, as the overall activities is not achieved. The income and expenses has not been incurred by the company, which is relevantly not realised by the organisation during the fiscal year. Moreover, net of tax expenses and income for the organisation mainly minimises the level of cash outflow incurred by the company. Furthermore, the components in the comprehensive income is not the primary activity of the organisation (Wahlen, Baginski and Bradshaw, 2014).

After evaluating the annual report of Qantas Airways the overall tax expense incurred by the company during the fiscal year of 2017 is mainly at the levels of 328 million.

The calculation of the actual tax expenses and tax rate is relevantly different in case for the organisation, where the actual tax expense is not at the level of 30%, which is considered the corporate tax rate. In addition, from the evaluation the overall tax rate that can be calculated from the overall calculation is at the levels of 27.7%.

The overall deferred tax assets value of Qantas Airways is main null during the 2017 fiscal year, while the deferred liabilities of the company amounts to 353 million during the fiscal year. The increment in overall deferred tax liability mainly indicates the relevant tax, which the company is liable to pay to the government. Hence, the tax liability increases the overall value of liabilities of the organisation (Grant, 2016).

From the evaluation of overall annual report, Qantas Airways does not have any kind of current tax liabilities or current tax receivable involved in their annual report, which could be disclosed in the balance sheet. Moreover, the income tax payable of the organisation is mainly not same as the income tax expenses incurred by the organisation. The company has overall tax payable has increased over time, which is directly increasing the level of liability of the organisation (Rose, 2017).

The difference in overall income tax expenses and income tax paid is relevantly higher, which could be identified from the financial statement of the Qantas Airways. The income tax expense is at the levels of 328 million, while the overall income tax paid is at the levels of 4 million. The difference in overall income tax expenses and income tax paid is due to the cash paid on taxes by the organisation during the fiscal year.

Financing Activities of Qantas

The tax treatment is mainly identified to be an interesting part, which helps in understanding the level of evaluation that needs to be conducted by the organisation during the fiscal year. The increment in the values of the organisation is mainly at the levels of tax treatment, which might help in understanding the level of valuation, which could be generated from operations. the adequate tax treatment might help in improving the level of excessive cash outflows that could be conducted on certain income tax payment of the organisation (Lodhia, 2015).

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