Description
Quantitative Analysis:
Refer to FGL’s June 30, 2013, financial reports to complete the following:
Calculate the accounting equation at the beginning and end of the year and the changes between the beginning and end of the year.
Identify the changes in the company’s equity during 2013.
Compare the value of the main asset to total equity.
Outline the “other” item that makes up comprehensive income.
Outline the largest expenses on the income statement. Compare them to the cash, debtors, creditors, and inventory balances.
Identify the total revenue and net profit attributable to members of FGL and earnings before interest and tax (EBIT).
Outline the three major reconciliation items
Qualitative Analysis:
In a report, based on the results of your quantitative analysis, discuss the following items:
Speculate on why there were changes in the company’s equity during 2013.
Your conclusion from the comparison of the main asset to total equity.
Why it is important to segregate comprehensive income on the income statement?.
Comment on the comparison of the largest expenses to the cash, debtors, creditor, and inventory balances.
Compare the net profit with the net cash flows from operating activities. Which amount is larger? Is this normal?
Examine the Reconciliation of Cash Flows from Operations with the net profit after tax (NPAT). Discuss how the three major reconciliation items changed. Comment on the changes discovered in the cash flow/profit reconciliation amounts.
Outline the changes that have occurred in the company’s financing activities. State your opinion on the appropriateness of the quantum of the dividends paid to shareholders.
State what investment activity FGL undertook in 2013. Was there a net investment or a divestment?
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Forge Group Ltd.
Forge Group Ltd
Table 1. Timeline of Forge Group Ltd (FGL)
Date
June 27, 2007
June 30, 2008
June 30, 2009
April 6, 2010
June 30, 2010
June 30, 2012
June 30, 2012
January 13, 2012
March 6, 2013
March 26, 2013
May 17, 2013
June 3, 2013
July 2, 2013
June 30, 2013
Closing Market
$0.56
$0.78
$0.43
$2.96
$2.66
$5.46
$4.37
$5.25
$6.98
$6.05
$4.09
August 29, 2013
September 2, 2013
September 12, 2013
September 19, 2013
October 7, 2013
November 4, 2013
November 5, 2013
November 28, 2013
$4.18
November 28, 2013
$0.69
November 28, 2013
December 4, 2013
$0.69
December 17, 2013
January 10, 2014
January 14, 2014
January 24, 2014
January 28, 2014
February 10, 2014
February 11, 2014
$1.25
$1.02
$0.90
$0.92
Ltd (FGL)
Major Announcement/Change
FGL listed on Australian Stock Exchange
Global Financial Crisis impact
Clough purchases 10.5 million shares for 13% ownership
FGL purchases 100% of CTEC Pty Ltd for $32.26 million
Peak share price
Clough sells FGL shares at $6.05 ($187 million, 35% of FGL)
FGL awarded major contract (Dugald Rover)
FGL acquires Taggart Global (U.S. company) at $43 million
FGL awarded major contract (TAN Burrup plant)
Annual Report released NPAT at $63 million, equity at $213.5 million, dividend
at $0.14 per share
$1.47 billion joint venture with Duro Felguera announced (value to Forge is $830
million – order book now at $2.1 billion)
FGL awarded major contract (Yandicooogina for Rio Tinto – $100 million
contract)
FGL major contract terminated (Dugald River)
FGL declares $50 million in major contracts in U.S. and Australia since June 1,
2013
Trading halt
ANZ Bank (major financier) appoints KordaMentha to review books
FGL Market Announcement:
–ANZ Bank supports and negotiates new finance facilities
–Considering equity capital raising
–Identifies underperforming assets (i.e., CTEC projects)
–Negotiates agreements with customers and sub-contractors
–Normal operations for other parts of business
FGL Market Announcement:
-$127 profit write down on two large contracts (Diamantina Power Station and
West Angelas Power Station; $45 million to complete both projects)
–Challenging liquidity period (net cash flow Nov. and Dec.)
–ANZ Bank continued support with some adjustment to finance facilities
–Business as usual
Trading halt lifted
FGL Market Announcement:
– In response to ASX query, indicated became aware of problems with
Diamantina Power Station and West Angelas Power Station projects in late
Sept. with margin erosions due to cost overruns and delays causing the profit
down-grade. Costing analysis during Oct. and Nov. led to requested trading halt
and profit downgrade in Nov.
FGL awarded major $40 million contract in North American coal sector
Trading halt until January 14, 2014
Trading halt until January 28, 2014
Trading ceases
Board appoints administrators, and secured creditors appoint receivers.
Forge Group Ltd
Table 2. Comprehensive Income Statement (in thousands of Australian dollars)
June 30, 2010
June 30, 2011
Revenue
Cost of sales
Changes in inventories of finished goods
$246,169
$421,595
9,696
15,000
Materials, plant, and contractor costs
(125,171)
(211,000)
Employee benefits expense
(79,194)
(157,191)
Depreciation and amortization
(3,218)
(5,159)
Consulting fees
Provision for impairment losses
Other expenses
Other gains and losses
Expenses
(1,628)
(7,132)
537
(304)
(8,043)
40,059
1,023
(716)
307
54,898
3,079
(711)
2,368
Results from Operating Activities
Finance income
Finance costs
Net finance income
Share of profit/(loss) of associates and
jointly controlled entities
Net Profit Before Tax
Income tax expense
Net Profit After Tax
Foreign exchange differences (net of tax)
Total Comprehensive Income
(513)
40,366
(10,915)
29,451
56,753
(17,920)
38,833
(346)
(1,946)
29,105
36,887
n dollars)
June 30, 2012
June 30, 2013
$774,879
$1,054,100
(516,867)
(656,334)
(164,502)
(256,515)
(16,292)
(21,361)
(582)
(5,380)
(12,711)
257
(21,033)
188
64,182
5,698
(2,850)
2,848
93,665
6,939
(4,816)
2,123
3,052
(5,679)
70,082
(20,780)
49,302
90,109
(27,190)
62,919
(310)
1,826
48,992
64,745
Unaudited
January 31,
$520,041
(711,430)
(324,162)
(2,301)
(326,463)
Forge Group Ltd
Table 3. Balance Sheet (in thousands of Australian dollars)
Current Assets
Cash and cash equivalents
Short-term deposits
Trade and other receivables
Inventories and WIP
Current tax assets
Other assets
Noncurrent assets classified as held for
sale
Total Current Assets
Noncurrent Assets
Trade and other receivables
Term deposits
Property, plant, and equipment
Deferred tax assets
Investments accounted for using equity
method
Intangibles
Other assets
Total Noncurrent Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Current tax liabilities
Provisions
Other liabilities
Total Current Liabilities
Noncurrent Liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Investments accounted for using the equity
method
Provisions
Other liabilities
Total Noncurrent Liabilities
Total Liabilities
Net Assets
June 30, 2010
June 30, 2011
51,921
78,285
42,162
14,621
49,542
29,622
2,246
1,574
6,900
117,850
159,023
26,789
1,827
36,577
2,043
15,621
15,637
44,237
162,087
54,257
213,280
52,968
2,789
8,644
525
72,845
3,272
6,387
755
64,926
83,259
4,901
51
308
164
299
3,785
68,711
93,376
5,559
88,818
124,462
Equity
Issued capital
Profit reserve
Reserves
Retained earnings
Total Equity
Number of shares
Share price
42,839
44,294
1,034
49,505
93,376
70,699,487
2.66
(912)
81,080
124,462
81,541,569
5.46
Unaudited
January 31,
2014
June 30, 2012
June 30, 2013
51,091
72,500
196,884
11,331
2,487
90,728
2,748
83,254
150,491
2,535
1,560
(23,415)
334,293
331,316
135,796
7,051
14,260
67,736
4,273
1,424
10,468
71,546
9,124
73,293
15,316
103,279
40,616
2,545
48,243
40,332
144,108
478,401
132,894
464,210
267,169
8,734
8,367
825
219,568
11,139
285,095
299,909
3,970
234,677
9,246
17,453
2,793
14,547
1,067
489
493
489
493
29,981
315,076
163,325
90,467
163,760
299,556
63,731
363,640
1,517
16,107
250,784
213,426
50,667
52,184
415,824
(116,268)
45,430
(1,221)
119,116
163,325
86,169,014
4.37
45,430
62,919
1,471
103,606
213,426
86,169,014
4.20
42,768
(159,036)
(116,268)
86,169,014
Forge Group Ltd
Table 4. Statement of Cash Flows (in thousands of Australian dollars)
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Other revenue
Income taxes paid
Net cash flows provided by operating
activities
Cash Flows from Investing Activities
Payments for property, plant, and equipment
Proceeds from disposal of property, plan, and
equipment
Interest received
Term deposits matured/expired
Amount received from joint ventures
Acquisition of investments or associates
Payment of deferred consideration
Net cash flows provided by/used in financing
activities
Cash Flows from Financing Activities
Proceeds from issue of share capital
Proceeds from borrowings
Repayment of borrowings
Interest paid
Dividends paid
Net cash provided by/used in financing
activities
2010
2011
245,418
(215,240)
943
(670)
431,399
(373,464)
638
(20,390)
$30,451
$38,183
(8,371)
(11,257)
224
6,485
1,023
3,079
(205)
(7,124)
(1,898)
18,907
1,458
(4,131)
(271)
(3,419)
(3,464)
(658)
(7,257)
$11,086
-$9,921
Net increase/decrease in cash and equivalents
34,413
26,364
Cash and equivalents at beginning of year
Effect of exchange rate changes
Cash and equivalents at end of year
17,440
67
51,920
51,921
78,285
2012
2013
744,720
(631,924)
1,176,226
(1,113,073)
(21,537)
(45,231)
$91,259
$17,922
(39,737)
(19,521)
500
869
5,649
(86,760)
7,379
73,545
130
(3,439)
(19,798)
(123,787)
42,604
1,136
23,011
(4,698)
(2,850)
(11,265)
9,152
(9,654)
(4,877)
(15,510)
$5,334
-$20,889
(27,194)
39,637
78,285
51,091
51,091
90,728
Forge Group Ltd
Table 5. Reconciliation (in thousands of Australian dollars)
Profit for the year after tax
Depreciation and amortization
Other noncash differences
Decrease/Increase in trade debtors and
receivables
Decrease/Increase in inventories and WIP
Decrease/Increase in other current assets
Increase in deferred tax assets
Decrease/Increase in trade and payables
Decrease/Increase in current tax liabilities
2010
$29,450
3,217
907
2011
$38,832
5,159
(1,815)
(25,202)
(7,380)
(9,696)
(104)
(779)
21,881
10,649
(15,000)
671
(215)
19,877
(2,311)
Decrease/Increase in deferred tax liabilities
64
Increase in other provisions
64
365
$30,451
$38,183
Net cash inflow from operating activities
2012
$49,302
16,292
(43,488)
2013
$62,919
21,361
28,409
(154,393)
119,258
18,291
(913)
(2,231)
203,417
1,980
(139,160)
927
(4,851)
(37,123)
(10,903)
2,742
(1,727)
260
86
$91,259
$39,196
No specific template provided for Unit 5. Just be sure to label your work and clearly identify your final answers.
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decision making
accounting
finance
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