內(nèi)容課件分析e1 interpretation of financial statement

AppraisalofInterpretationoffinancial1 Ratioysismayhighlightunusualresultsorclarifytrends,enablingvarioususersofaccountstomakeinformeddecisionsrelatingtothe Forratiostobeuseful,comparisonsmustbemade-onayeartoyearbasis,orbetweencompanies.Ontheirowntheyareuselessforanysensibledecisionmaking.22Categoriesof--Investors’2.12.1Returnoncapitalemployed(ROCE) NCL+EBIT=Profitbeforeinterestandtax.ItisoftenreferredtooperatingCapital NCL+ TotalassetslesscurrentliabilitiesGrossprofitmargin Gross Operatingprofitmargin= Netassetturnover NCL+2.22.2Currentratio CurrentCurrentQuickratio(oracidtest)=Currentassets-CurrentInventoryturnoverdays=Inventories ×365daysCostofReceivablescollectionperiod=Trade ×365daysCreditPayablespaymentperiod Tradepayables ×365days*Creditpurchases2.32.3Debt/equity= Debt/(debt+equity)= NCL+Interestcover Interesthighergearing:riskierbusinessitmustmeetthesedebtrepaymentsorwouldfacelowergearing:beabletosecuredebtcoverinterestpaymentsfromoperatingDividendyield=Dividendper ShareDividendcover= DividendperPrice/Earnings(P/E)ratio Share方法。該體系是以權(quán)益凈利率為，以總資產(chǎn)凈利率和權(quán)益乘數(shù)為分解關(guān)指標(biāo)間的相互關(guān)系。杜邦體系最初因杜邦公司成功應(yīng)用而得名。 數(shù)（或者說1元總資產(chǎn)支持的營業(yè)收入），它評價的是3LimitationsofinterpretationComparisonwithanentity'spreviousperiodfinancialInflationwhencomparingtopreviousComparisonwithasimilarentity/industry arkDifferentaccountingpolicieswhencomparingtodifferentcompaniese.g.ROCEhigherifusecostmodelsforassetsYearendfiguresnotDifferentcompaniesinthesamebusinessmayhavedifferentriskprofilesorspecificfactorsaffectingthem,makingindustrycomparisonslessmeaningfulEx-2019/12Q4Management’sintentandmotivationwillofteninfluenceaccountinginformation.However,corporatefinancialstatementsnecessarilydependonestimatesandjudgement.Financialstatementsareintendedtobecomparablebuttheir ysismaynotbethemostaccuratewaytojudgetheperformanceofany .Thislackofcomparabilitymaybeduetodifferentaccounting choicesordeliberatemanipulation.Discussthereasonswhyanentitymaychooseaparticular whereanInternationalFinancialReportingStandardallowsanaccounting choiceandwhetherfaithfulrepresentationandcomparabilityareaffectedbysuchchoices.(6WhereanIFRSstandardallowsanentityanaccountingchoice,thenthefinancialstatementswillbeinfluencedandaffectedbythatchoice.Management’sintentandmotivationwillinfluenceaccountinginformation.Theaccounting chosencanbedrivenbyself-interest,byawishto isetheinterestsofshareholders,orbyawishtoprovideinformation.WherethereisflexibilitywhenapplyingtheIFRSstandard,Entitiesmayusethefinancialchoicestoincreaseearnings,andmanipulateaccountingfiguresinordertoinfluencecontractualeswhichdependontheaccountingfiguresreported.Accountingchoicesexisttoprovidecompanieswhichoperateunderdifferentbusinessmodelswiththeoptionofutilisinganaccountingmethodwhichbestrepresentstheiroperations.AnyaccountingchoiceinIFRSstandardsshouldstillresultinthefinancialstatementsbeingfaithfullyrepresented.Afaithfulrepresentationmeansthattothe umextentpossible,thefinancialstatementsarecomplete,neutraland fromerror.Afaithfulrepresentationisaffectedbythelevelofmeasurementuncertaintyinthefinancialstatements.Comparabilityisoneofthefourqualitativecharacteristicswhichenhancestheusefulnessofinformation.Thusaccountinginformationwouldbemoreusefulifitcanbecomparedwithsimilarinformationfromotherentities,orfromthesameentity.However,itisextremelydifficultforentitiestohave‘comparable’financialinformation.ComparabilityiscrucialtoimprovefinancialreportingqualitybutitcanbearguedthatcomparabilityismademoredifficultbythefactthattheBoardallowsentitiestochoosebetweenalternativemeasurementbases.Environmental,economic,political,cultural,operationaldifferencescouldbesolvedwiththeexistenceofaccountingchoicesinthestandards,butthesechoicescouldbeatthecostofcomparability,especiallyifthereareinternalorexternalfactorsinfluencingthereliabledisclosureofanitem.Afaithfulrepresentationmightleadtocomparability,becauseitshouldreflectthecharacteristicsoftheassetorliability.Link:ChangesinaccountingThesameaccountingpoliciesareusuallyadoptedfromperiodtoperiod,toallowusersto ysetrendsovertimeinprofit,cashflowsandfinancialposition.Changesinaccounting willthereforeberareandshouldbemadeonlyif:ThechangeisrequiredbyanIFRS;Thechangewillresultinamoreappropriatepresentationofeventsortransactionsinthefinancialstatementsoftheentity,providingmorereliableandrelevantinformation.Pilotpaper2Q4Pilotpaper2Q4Asaresultofrisingpropertyprices,Kikipurchasedfivebuildingsduringthecurrentperiodinordertobenefitfromfurthercapitalappreciation.Kikihasneverownedaninvestmentpropertybefore.InaccordancewithIAS40InvestmentProperty,thedirectorsareawarethattheycanmeasurethebuildingsusingeitherthefairvaluemodelorthecostmodel.However,theyareconcernedabouttheimpactthatthischoicewillhaveonthe ysisofKiki’sfinancialperformance,positionandcashflowsbycurrentandpotentialinvestors.Discussthepotentialimpactwhichthischoiceinaccounting willhaveon ysisofKiki’sfinancialstatements.Youranswershouldrefertokeyfinancialperformanceratios.(11marks)Professionalmarkswillbeawardedinpart(b)forclarityandqualityofAnswerInvestmentInaccordancewithIAS40InvestmentProperties,thebuildingsshouldbeinitiallymeasuredatcost.InvestmentIfthecostmodelisapplied,thenthebuildingswillberecognisedatcostlessaccumulateddepreciationandimpairmentlosses.Ifthefairvaluemodelisapplied,thenthebuildingswillberemeasuredtofairvalueateachreportingdate.Gainsandlossesonremeasurementarerecognisedinthestatementofprofitorloss.Nodepreciationischarged.StatementoffinancialAssumingthatpropertypricesrise,thefairvaluemodelwillleadtoanincreaseinreportedassetsonthestatementoffinancialposition.Incontrast,investmentpropertymeasuredusingthecostmodelisdepreciated,whichreducesitscarryingamount.ThismeansthatthefairvaluemodelmaymakeKikiappearmoreasset-rich.Somestakeholdersmay ceimportanceonanentity’sassetbase,asitcanbeusedassecurityforobtainingnewfinance.However,reportinghigherassetscansometimesbeperceivednegatively.Forexample,assetturnoverratioswilldeteriorate,andsoKikimayappearlessefficient.Ifassetsincrease,thenequityalsoincreases.Assuch,thefairvaluemodelmayleadtoKikireportingamoreoptimisticgearingratio.Thismayreducetheperceptionofrisk,encouragingfurtherinvestment.StatementofprofitorIntimesofrisingprices,theuseofthefairvaluemodelwillleadtogainsbeingreportedinthestatementofprofitorloss.Thiswillincreaseprofitsfortheperiod.Incontrast,thedepreciationchargedunderthecostmodelwillreduceprofitsfortheperiod.Therefore,earningspershare,akeyStatementofprofitorHowever,itshouldbenotedthatfairvaluesarevolatile.Insomeyears,fairvaluegainsmaybemuchlargerthaninotheryears.Ifpropertypricesdecline,thenthefairvaluemodelwillresultinlosses.Assuch,reportedprofitsaresubjecttomorevolatilityifthefairvaluemodelisadopted.Thismayincreasestakeholders’perceptionofrisk.Incontrast,thedepreciationexpenserecordedinaccordancewiththecostmodelwillbemuchmorepredictable,meaningthatinvestorswillbebetterabletopredictKiki’sfutureresults.Manyentitiesnowpresentalternativeperformancemeasures(APMs),suchasEBITDA(earningsbeforeinterest,tax,depreciationandamortisation).Otherentitiespresent‘underlyingprofit’indicators,whichstripouttheimpactofnon-operatingornon-recurringgainsorlosses(suchastheremeasurementofinvestmentproperties).AlthoughtheuseofAPMshasbeencriticised,Kikimayconsiderthemtobeusefulinhel investorstoassessunderlyingbusinessperformancethroughtheeyesofmanagementandtoeliminatetheimpactofcertainaccounting Statementofcash choiceshavenoimpactontheoperating,investingorfinancingcashflowsreportedinthestatementofcashflows.Itshouldbenotedthatentitiesusingthecostmodelforinvestmentpropertiesarerequiredtodisclosethefairvalue.Suchdisclosuresenablebettercomparisonstobedrawnbetweenentitieswhichaccountforinvestmentpropertyunderdifferent2019/062019/06Previousleasingstandardshavebeencriticisedaboutthelackofinformationtheyrequiredtobedisclosedonleasingtransactions.TheseconcernswereusuallyexpressedbyinvestorsandsoIFRS16Leaseswasissuedinresponsetothesecriticisms.DiscusssomeofthekeychangestofinancialstatementswhichinvestorswillseewhencompaniesapplythelesseeaccountingrequirementsinIFRS16.(6marks)Fora withsignificantoff-balancesheetleases,discussthelikelyimpactthatIFRS16willhavegenerallyonaccountingratiosandparticularlyon:Earningsbeforeinterestandtaxtointerestexpense(interestEarningsbeforeinterestandtaxtocapitalemployed(returnoncapitalDebttoEBITDAearningsbeforeinterest,tax,depreciationandamortisation.(6marks)Professionalmarkswillbeawardedinquestion3bforclarityandqualityofdiscussion.(2marks)IFRS16Leasesintroducesasinglelesseeaccountingmodelandshouldreducethenumberofoff-balancesheetleases.Uponleasecommencement,alesseerecognisesaright-of-useassetandaleaseliability.Afterleasecommencement,alesseemeasurestheright-of-useassetusingacostmodellessaccumulateddepreciationandaccumulatedimpairment.Theleaseliabilityisinitiallymeasuredatthepresentvalueoftheleasepaymentspayableovertheleaseterm,discountedattherateimplicitintheleaseifthatcanbereadilydetermined.Leaseliabilitiesincludeonlyeconomicallyunavoidablepayments.IFRS16requiresalesseetodiscloseleaseliabilitiessepara yfromotherliabilitiesasaseparatelineitem,ortogetherwithothersimilarliabilities,inamannerwhichisrelevanttounderstandingthelessee’sfinancialposition.Alesseewillalsosplitleaseliabilitiesintocurrentandnon-currentportions,basedonthetimingofpayments.Investorswillnolongerhavetoestimatetheassetsandliabilitiesresultingfromoff-balancesheetleaseswhencalculatingratiosasthereshouldbefeweroff-balancesheetleases.IFRS16willresultinmoreinformationaboutleasesbothonthestatementoffinancialpositionandinthenotesandwillprovideamoreaccuratereflectionoftheeconomicsofleases.Investorsshouldbearinmindthatsomesectorsandsomecompanieswillbemoreaffectedthanothers.Asaresult,companieswithpreviousmaterialoff-balancesheetleaseswillreporthigherassetsandfinancialliabilities.Thestandardwillreducecomplexityinfinancialstatementsasitshouldallowcomparisonstobemadebetweenthosecompanieswholeaseassetsandthosewhoborrowtobuyassets.Thecarryingamountofleaseassetswilltypicallyreducemorequicklythanthecarryingamountofleaseliabilities.Thiswillresultinareductioninreportedequityforcompanieswithpreviousmaterialoff-balancesheetleases.Therecognitionofanassetwhichwaspreviouslyunrecognisedwillresultinahigherassetbase,whichwillaffectratiossuchasassetturnover.Therecognitionofaliabilitywhichwaspreviouslyunrecognisedwillresultinhigherfinancialliabilities,whichwillaffectTherecognitionofdepreciationandinterestinsteadofoperatingleaseexpensewillresultinhigheroperatingprofitbecauseinterestistypicallyexcludedfromoperatingexpensesandwillaffectperformanceratios.Similarly,profitmeasureswhichexcludeinterestanddepreciationbutpreviouslyincludedoperatingleaseexpense,suchasEBITDA,willbehigherunderIFRS16.Interestcover:therewillbeanincreaseintheearningsmeasure(i.e.EBITDA)whichwillnotbeproportionatetotheincreaseininterest.ThechangeintheratiowilldependonthecharacteristicsoftheleaseReturnoncapitalemployed:itislikelythatROCEwillbelowerunderIFRS16becausetheincreaseinoperatingprofitisunlikelytobeproportionatetotheincreaseincapitalemployed.DebttoEBITDA:ratioofdebttoEBITDAislikelytobehigherbecausedebtwillincreasebymorethantheincreaseinearnings.Debtwillincreasebecauseofthefactthatleaseliabilitieswillberecognisedonthestatementoffinancialposition.Forcompanieswhichhavematerialoff-balancesheetleases,IFRS16isexpectedtoresultinhigherprofitbeforeinterestbecausea presentstheimplicitinterestinleasepaymentsforformeroff-balancesheetleasesaspartoffinancecosts.Previously,theentireexpenserelatedtooff-balancesheetleaseswasincludedaspartofoperatingexpenses.Thesizeoftheincreaseinoperatingprofit,andfinancecosts,willdependonthesignificanceofleasingactivitiestothe 2019/12Q42019/12GuidanceCoisconsideringthefinancialresultsfortheyearended31December20X6.Theindustry cesgreatrelianceonthereturnonequity(ROE)asanindicatorofhowwella usesshareholders’fundstogenerateaprofit.ReturnonequityGuidanceCo ysesROEinordertounderstandthefundamentaldriversofvaluecreationinthe .ROEiscalculatedas:ReturnonequityNetprofitbeforetaxSales GuidanceCousesyear-endequityandassetstocalculateThefollowinginformationintable1relatestoGuidanceCoforthelasttwoyears:NetprofitbeforeEquityat31SpecialpurposeentityDuringtheyearended31December20X6,GuidanceCostatedthatithadreorganiseditsassetsandsetupaSPE.GuidanceCotransferredpropertytotheSPEatitscarryingamountof$50million,buthadincorrectlychargedrevaluationreserveswiththisamountratherthanshowingthetransferasaninvestmentintheSPE.ThepropertywastheSPE’sonlyasset.However,GuidanceCostillmanagedtheproperty,andanyprofitorlossrelatingtotheassetstheentitywasremitteddirectlytoGuidanceCo.GuidanceCohadnointentionofconsolidatingtheSPE.MiscellaneousGuidanceCohasboughtback25millionsharesof$1for$1·20pershareduringtheyearended31December20X6forcashandcancelledtheshares.Thistransactionwasdeemedtobelegal.GuidanceCoalsoraisedloancapitalforthefirsttimeduringtheyearended31December20X6of$20millioninordertohelpwiththebuy-backof’sGuidanceCohadpurchaseda25%interestinanassociate on1July20X6forcash.Theinvestmenthadcost$15millionandtheassociatehadmadeprofitsof$32millionintheyearto31December20X6.GuidanceCoaccountedforthepurchaseoftheassociatecorrectly.Allofthesemiscellaneoustransactionshavebeenaccountedforinthefinancialinformationfortheyearended31December20X6intable1.Q4(i)DiscusstheusefulnesstoinvestorsoftheROEratioanditscomponentpartsprovidedaboveandcalculatetheseratiosfortheyearsended31December20X5and20X6.Thesecalculationsshouldbebasedupontheinformationprovidedintable1. (5marks)(ii)DiscusstheimpactthatthesettingupoftheSPEandmiscellaneoustransactionshavehadonROEanditscomponentparts.Giventheseconsiderations,adjusttable1andrecalculatetheROEfor20X6therebymakingitmorecomparabletotheROEof20X5. (12marks)Professionalmarkswillbeawardedinquestion4(b)(i)forclarityandqualityofdiscussion. (2marks)(25Answer-(b)Thereturnonequity(ROE)ratiomeasurestherateofreturnwhichtheownersofissuedsharesofa receiveontheirshareholdingsintermsofprofitability.ROEsignifieshowgoodtheisingeneratingprofitontheinvestmentitreceivesfromitsThismetricisespeciallyimportantfromaninvestor’s ,asitcanbeusedtojudgehowefficientlythefirmwillbeabletouseshareholder’sinvestmenttogenerateadditionalrevenues.Thenetprofitmargin(netprofit/sales) lshowmuchprofitamakesoneverydollarofsales.Assetturnover(sales/assets)ratiomeasuresthevalueofa ’ssalesorrevenuesgeneratedrelativetothecarryingamountofitsassets.TheassetturnoverratiocanoftenbeusedasanindicatoroftheefficiencywithwhichaisdeployingitsassetsingeneratingTheequityratioindicatestherelativeproportionthatequityisusedtofinance ’sassets.Theequityratioisagoodindicatorofthelevelofleverageusedbya bymeasuringtheproportionofthetotalassetswhicharefinancedbyshareholders,asopposedtocreditors.NetprofitAssetEquityReturnonAnswer-(b)SettingupofspecialpurposeentityIFRS10ConsolidatedFinancialStatementsstatesthataninvestorcontrolsaSPEwhenitisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeSPEandhastheabilitytoaffectthosereturnsthroughitspowerovertheSPE.AsGuidanceCoobtainstherewardsfromtheassetstransferredandisexposedtotherisks,theSPEshouldbeconsolidatedbyGuidanceCoinitsgroupfinancialstatements.BytransferringtheirassetstoaSPE,theassetturnoverratiowillbesignificantlylarger.However,whenthepropertyisincludedinassetsandthechargeiseliminatedfromrevaluationreserves,theshareholderequitywillincrease.MiscellaneousAmajorconcernaboutusingROEiswhena buysbackitsshares,itdecreasestheequityonthestatementoffinancialpositionandinthecaseofGuidanceCo,itscashandconsequentlyitstotalassets.Asaresult,theperformancemetrics–assetturnoverandROE–willbeaffected.TheROEfigurecouldproduceamisleadingindicatorastohowwella isbeingmanaged.AstheequityportionofROEshrinks,theROEmetricgetslarger.TheROEcalculationcan