HI5020 Corporate Accounting And Assignment

HI5020 Corporate Accounting And Assignment

HI5020 Corporate Accounting And Assignment

Question:

From your companies’ financial statements, list each item of equity reported and write your understanding of each item. Discuss any changes in each item of equity for your firms over last three years articulating the reasons for the change.
From your companies’ financial statements, list each item of liability reported and write your understanding of each item. Discuss any changes in each item of liabilityfor your firms over last three years articulating the reasons for the change.

Answer:

Introduction

The analysis of the various medical and health care services of the various companies operating in the Australia were analysed for the company. The various parts of the financial report and the components of the equity and liabilities of the companies were discussed and the reason behind the changes in the value of the same were taken into consideration for analysis. The changes in the cash flow statement of the company and the trend followed by the companies in the three years of times frame was also discussed (Nib.com.au 2018). The evaluation of the other comprehensive income statement of the company and a comparative analysis of the various items of the health care companies were discussed. The analysis of the accounting for the corporate income tax rate and the effective tax rate for the company was determined. The effective tax rate and the cash tax rate for the company thereby analysing the various aspect of the taxation was taken into consideration. On an overall basis the complete description of the above three companies were provided in various financial aspects (Catão and Milesi-Ferretti 2014).

Equity And Liability

  1. Changes in Equity: The Changes in equity could be well attributed to the various components of the equity, which are in the financial statement of the company. Common Stock, Retained Earnings and Other Comprehensive Income are some of the common items that were reported by the companies(Mourik 2014). The changes in Equity level was attributed and analysed for the three-year trend period and relevant analysis was discussed in the same context.
  • Common Stock: The common stock for the NIB Health Funds has remained the same in the year 2016 and 2017 and has changed consistently in the year 2018. The common stock for the company increased in the year 2018. The common stock for the Medibank Ltd Company has remained the same showing that the company has not increased the equity base financing for the company in the trend period. The common stock for the QBE Insurance Group ltd. has remained almost the same for the company but has fallen slightly reflecting that the company have buy backed the shares of the company(Braun, Schmeiser and Siegel 2014).
  • Retained Earnings: The retained earnings for the NIB Health Fund Company has increased from the year 2016 and 2017 and the same has consistently decreased consistently in the year 2018(Nguyen 2016). The fall could be attributed to the buyback that is done by the company by utilizing the retained profits of the company.  The retained earnings of the Medibank Company has increased consistently with the rising profitability and retention ratio of the company. The retained earnings of the NIB Holdings Ltd Company has also increased for the company with the increasing profitability of the company (Prampolini and Morini 2017).
  1. Changes in Liability: The various components of the liability that were reported by the company were the Short Term Debt, Long Term Debt, Unearned Premiums and Deferred Income Taxes(Campbell, Galpin and Johnson 2016).
  • Unearned Premium: The changes in the unearned premium represents the contingent liability of the companies. The unearned premium for the QBE Insurance Group Ltd has fallen consistently for the company in the three years of period. The unearned premium for the Medibank Ltd has increased for the company in the trend period reflecting the company is collecting fees and charges in advances from customers for the services that the company will be providing. The unearned premium for the NIB Holding Company also increased for the company in the trend period as same as the Medibank Company reflecting the contingent liability that is recognized in the financial statement of the company.
  • Deferred Income Taxes: Thedeferred income taxes for the company changed frequently for the companies in the financial year 2016-2018. The deferred income tax for the QBE Insurance Company decreased slightly in the trend period representing a reducing liability in the deferred taxes for the company.  The Deferred income tax for the Medibank Company increased from the year 2016-17 with the increasing profitability of the company. Discuss any changes in each item of equity for your firms over last three years articulating the reasons for the change.. The changes in the deferred income taxes could be well attributed to the changing depreciation method, recognition of revenues and valuation of the inventory for the company.
  • Changes in Debt and Equity: The change in the debt and equity for the companies was evaluated by assessing the changes in the financing source of the companies.
Debt and Equity Position of Firm (2016)
Particulars QBE Ltd Medibank Ltd NIB Ltd
Debt 4815220 1687500 151867
Equity 14378593 1578700 387651
Debt and Equity Position of Firm (2017)
Particulars QBE Ltd Medibank Ltd NIB Ltd
Debt 4787175 1742700 151700
Equity 14212272 1719800 428600
Debt and Equity Position of Firm (2018)
Particulars QBE Ltd Medibank Ltd NIB Ltd
Debt 4626923 1715700 229500
Equity 11357692 1829200 557800
Debt and Equity Position of Firm (2016)
Particulars QBE Ltd Medibank Ltd NIB Ltd
Debt 25.09% 51.67% 28.15%
Equity 74.91% 48.33% 71.85%
Total 100% 100% 100%

The debt and equity position shows the effect of the company on the financials of the company and the implication thereby on the overall capital structure of the company. The debt position in the company shows the overall effect of the financial risk of the company in contrast to the total capital structure of the company. Thus, it is optimal for the companies that they maintain an optimal debt to equity ratio for the company.

Cash Flow Statement

  1. The Cash flow statement for the company is broadly divided into three broad categories as cash flows from operating, investing and financing activities. The Operating activities shows the operating activities conducted by the company on a cash basis. The investing activity shows the purchase or sales of fixed assets for the company. The financing activities shows the amount and sources of financing activity done by the company(Robinson et al. 2015). The Cash flow analysis for the respective company was done for the three year trend period and the relevant analysis in regard to the same were taken into consideration for the companies.
  2. Comparative Analysis
Particulars (2018) QBE Ltd Medibank Ltd NIB Ltd
Cash Flow from Operating Activities 172 408.3 233.8
Cash Flow from Investment Activity 297 -190.8 -182
Cash Flow from Financing Activity -721 342 75
Particulars (2017) QBE Ltd Medibank Ltd NIB Ltd
Cash Flow from Operating Activities 559 393.4 171.7
Cash Flow from Investment Activity 158 75.9 -61
Cash Flow from Financing Activity -555 313.4 -80.8
Particulars (2016) QBE Ltd Medibank Ltd NIB Ltd
Cash Flow from Operating Activities -16 352.3 148.4
Cash Flow from Investment Activity -555 -38.6 -211.8
Cash Flow from Financing Activity -388 -283.7 30.5
  1. The Cash flow activities of the companies were evaluated by taking the changes in the operating, investing and financing activities of the company. The cash flow from operating activity for the QBE Ltd Company has been volatile and changing frequently reflecting volatile operations of the company. The operating activities of the Medibank Company at the same time has remained sustainable. Investment and financing activities for the company at the same time has remained sustainable for the above three companies and not much material changes were seen(Lin et al. 2015).

Other Comprehensive Income Statement

  • The items that were reported in the comprehensive income statement of

Medibank Ltd:

  • Revaluation of Land and Buildings
  • Actuarial Gain/Loss on Retirement Benefit Obligation(Medibank.com.au 2018).

QBE Insurance Group Ltd:

  • Net Movement in Foreign Currency Translation Reserves
  • Net Movement in Cash Flow Hedges
  • Gain/Loss on re-measurement of Super Annuity Plan.

HI5020 Corporate Accounting And Assignment