Analysis Of Financial Statements: Bega Cheese Limited

Cash Flows Statement

The report has been prepared to measure and identify the accounting process of an organization, Bega cheese limited. This report explains that what standards of accounting have been followed by the company. It focuses on the annual report of the company and other relevant websites and newspaper to identify the financial performance of the company and the changes which are requisite to maintain the performance and the position of the company. This report measures the accounting policies, accounting standards, disclosure concept, position, materiality etc concepts of the company to measure the performance and the changes of the company.

In the report, an Australian company, Bega cheese limited has been evaluated to measure the performance of the company on the basis of the Australian accounting board, accounting standards etc. The main approach of the report is to evaluate that how the companies record and measure their financial activities and the accounting figures in the annual report and final financial statement of the company.

Bega cheese limited is operating its activities and the business under the daily industry of Australia. The company is based in an Australian town, Bega. The company was founded by the agriculture cooperative society. The main operations of the company are to process the dairy products and sell those products in the market. It has been founded in 1899 and has been registered in the Australian stock exchange in 2011 (Home, 2018). The company is among the largest dairy firms in Australian market. The revenue of the company is also increasing rapidly from last few years. Annual report (2017) of the company explains that the company has followed Australian accounting rules, standards and the regulations to maintain the performance of the company.

Every listed company is always requisite to prepare the annual report and the final financial statements at the end of the year so that the investors of the company and other related parties of the company could measure the performance and the position of the company. Bega cheese limited has also announced the annual report which contains the all the final financial statement of the company.

The cash flow statement position of Bega cheese have been evaluated on the basis of the various activities which has impacted on the overall cash position of the company, the study on the cash flow statement of the company expresses that the total cash flow of the company has been improved by a great level in the year of 2017 from last year.

Other Comprehensive Income Statement

The net cash flow of the company has been impacted by various operating, investing and financing activities of the company. Cash flow statement of the company measures and explains that the company has lowered the investments in various new projects and the equipment as well as company has sold them in the market which has improve d the cash inflow of the company.

Further, it has been identified that the company has raised the capital from the debt issues which has also helped the company to improve the cash position. In addition, the repayment of old debts has also been done by the company which improved the cash outflow of the company. But the overall performance indicates about better cash inflow position of the company (Ho, 2017).

It explains that the position of the company has become more impressive in the current year in context with the 2016.

The cash flow statement of Bega cheese has been compared with the cash flow statement of 2015 and 2016 to measure and identify the performance of the company in the market. the various cash flow activities of the company, includes operating cash flow position, investing cash flow position and the financing cash flow position of the company has been measured and it has been found that the cash position of the company has been changed by a great level.

The cash flow statement of Bega cheese limited explains that the investing activities of the company was deriving the negative cash flows to Bega cheese limited from last 2 years. However, in the current year, the changes into the property, plant and equipment has improved the cash position of the company. The current cash flow from investing activities of the company are $ 1,51,257 thousands (Gorry et al, 2017).

In addition, the financing activities of the company has been evaluated and it has been found that the net cash position of the company has been improved due to the debt issuance. It explains that the net cash position of the company is quite better from 2015 and 2016 in 2017. It also explains that the free cash flow of the company also explaining about better position of the company.

(Morningstar, 2018)

Comprehensive income statement is a part of main income statement of the company. It is prepared by the companies separately from the income statement of the company because of relevancy and accuracy factors. The comprehensive income statement of Bega cheese has been evaluated and it has been found that the net profit of the company was $ 1,98,038 thousands in 2017. However, some comprehensive income statement items have been enhanced it by $ 481 thousands.

Accounting for Corporate Income Tax

The company has reported changes in the total asset’s fair value and the cash flow hedges of the company. These changes have enhanced the overall performance of income statement of Bega cheese limited.

The main items in the comprehensive income statement of Bega cheese limited is changes in the total asset’s fair value and the cash flow hedges. Both of these items are not related to the company directly. It only incurs due to the changes in the economical position and the market position (Morris, 2017). These items may enhance the cash flow position of the company

It explains that those items which are not related with the any revenues of the company are reported by the company in the comprehensive income statement.

The main reasons behind not adding the compressive income statement items in the income statement of the company is these items do not have any connection with the total revenues of the company. These items might enhance the profitability level but it does not have any connection with the activities and the operations of the company (Home, 2018). Thus, these items are not added by Bega cheese limited in the income statement of the annual report of the company.  

Tax expenses of Bega cheese limited has been evaluated on the basis of the income statement of the company and it has been measured that the tax expenses of the company is $ 59,290 thousand in 2017. The total tax expenses of the company have been improved from $ 11,121 thousand to $ 59,290 thousand. It explains that the company has not followed the proper tax planning strategies and due to it, the overall tax expenses of the company have been improved.

It is suggested to the company to look over the taxation strategies again and make better decision about the position of the company.

The above explanation explains that the total tax expenses of the company are $ 59,290 thousand in 2017. However, the net profit of the company is $ 1,98,038. The annual report explains that the total corporate tax of Australian market is 30% and thus the taxation amount of the company should be $ 59,411, and the actual taxation amount is $ 59,290.

It explains that the non deductable expenses have impacted on the actual taxation amount of the company. There are few expenses of the company which are not counted while calculating the taxation amount (AASB 112, 2018). Thus, the taxation amount of the company has been lowered.

Deferred tax liabilities and assets impact on the balance sheet of the company. These figures explain that the extra activities, economical changes, industry factors etc have impacted on the liabilities and assets of the company due to which the taxation amount has been affected. These amounts are considered by the company as deferred tax assets and liabilities of the company (Li and Tran, 2016).

And the annual report of the company explains that the deferred tax assets and the deferred tax liabilities of the company are $ 19,170 thousand and $ 16,172 thousand. It briefs that the tax assets and tax liability of the company has been improved.

The main reason behind these improvements is changes into the intangible price, share issue cost, fair value of derivatives etc.

Further, the current tax assets and the income tax payable of the company have been measured. It has been found from the annual report (2017) of the company that the current tax liability  and assets of the company is $ 63,911 thousand and $ 4959 thousand which has been improved from the last year.

The income tax payable amount is not same as the income tax amount. The main reason behind these differences is the amount stated in the cash flow statement of the company. Only that amount is recorded in the balance sheet which has not been paid or has been paid in the advance.

The income tax expenses of the company are $ 198,038 thousands and the income tax amount in the cash flow statement of the company is $ 10,727 thousand. It briefs that the amount shown in both the statements are different as both the figure explains about the different amount, income statement figures explain about the total tax expenses of the company in a particular period while the cash flow statement explains about the total amount which has been paid by the company in a particular period not matter that the amount links to which year (Robinson, Stomberg and Towery, 2015).

The study explains that the entire study was quite interesting is to be done. Various new standards and the accounting report process has been found in the study and it has been measured that the an accountant is always required to focus on the various factors while preparing the annual report.

The surprising factor of the report was various taxation figures and all the taxation figures have been explained by the company in the notes to accounts and the footnotes to measure the derivation of the figures.

The confusing and difficult part of the report was evaluation on various figures and analyzing on all those factors.

However, the entire study was quite interesting and it has helped to enhance the knowledge by a great level.

Conclusion:

To conclude, the Bega cheese has reported and measured all the accounting figures of the basis of the AASB rules, the taxation amount has been measured by the company on the basis of the ASSB 112 rules. The overall accounting process of the company is impressive.

References:

AASB 112. 2018. John Wiley. [online]. Available at: https://www.johnwiley.com.au/highered/aas2e/content029/fact_sheets/AASB112_ch08.pdf (accessed 27/5/18).

Annual report. 2017. Bega Cheese. [online]. Available at: https://s3-ap-southeast-2.amazonaws.com/begaweb-website-begacheese/wp-content/uploads/2017/08/23104857/2017-Bega-Annual-Report.pdf (accessed 27/5/18).

Gorry, A., Hassett, K.A., Hubbard, R.G. and Mathur, A., 2017. The response of deferred executive compensation to changes in tax rates. Journal of Public Economics, 151, pp.28-40.

Ho, A.T., 2017. Tax-deferred saving accounts: Heterogeneity and policy reforms. European Economic Review, 97, pp.26-41.

Home. 2018. AASB. [online]. Available at: https://www.aasb.gov.au/ (accessed 27/5/18).

Home. 2018. Bega Cheese. [online]. Available at: https://www.begacheese.com.au/ (accessed 27/5/18).

Li, E.X. and Tran, A.V., 2016. An Empirical Analysis of the Tax Burden of Mining Firms versus Non-Mining Firms in Australia. Austl. Tax F., 31, p.167.

Morningstar. 2018. Bega Cheese. [online]. Available at: https://financials.morningstar.com/cash-flow/cf.html?t=BGA&region=aus&culture=en-US (accessed 27/5/18).

Morris, J.L., 2017. Classification of Deferred Tax Assets and Deferred Tax Liabilities: An Evaluation of FASB’s Attempt at Standards Simplication. Journal of Accounting and Finance, 17(8), pp.198-208.

Robinson, L.A., Stomberg, B. and Towery, E.M., 2015. One size does not fit all: How the uniform rules of FIN 48 affect the relevance of income tax accounting. The Accounting Review, 91(4), pp.1195-121

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