Financial Statement Analysis (FNCE5006) Assessment 1: Exercise (20%)

The purpose of this assessment is to check on the understanding of the basic concepts of financial statements we have covered in the first 4 weeks. This is an individual assessment.

This assessment represents 20% of the overall mark for the unit. Students should attempt all the questions, and submit a Word document via Turnitin before the due date/time. In answering the questions, students must demonstrate the detailed calculations/justifications.

I would also remind you of your obligations under the University rules on academic integrity; if you are unsure of your responsibilities then please check the relevant section of the Curtin website: http://academicintegrity.curtin.edu.au/.

To answer Questions 1 and 2, students need to download and analyse Coless 2024 annual report.

Question 1

Assume that you are analysing the financial statements of Coles for the year 2024.

• Where can you find the information to examine its operational performance?

• How would you comment on the operational performance of Coles for the year 2024?

• What more information do you need, to draw a reasonable conclusion about the performance of the firm?

• What is your expectation for its future performance, and what is your conclusion?

[1+2+2+1=6 marks]

Question 2

What information can you obtain from the MD&A section in Coless 2024 Annual Report? How can it help you evaluate the performance of Telstra?

[1+1=2 marks]

Question 3

During 2024, a firms inventory account included the following transactions:

The inventory at the end of 2023 was 500 units at $47 per unit. Sales for the year were 5,000 units at the price of $65. Compute the gross profit for the year under FIFO and LIFO respectively.

[2+2=4 marks]

Question 4

Calculate the companys basic and diluted EPS for the year ended 30 June 2024 using the information below.

[2+2=4 marks]

• of shares outstanding on 01 July 2023 1,200 million

• of shares issued on 01 January 2024 500 million

• of shares repurchased on 01 March 2024 (100) million

• of shares outstanding on 30 June 2024 1,600 million

• The company does not pay any dividends to the common shareholders in the year ended 30 June 2024;

• The company has 4 million shares of preferred stock outstanding for the entire year which are each convertible into 40 shares of common stock. There is no preferred dividend paid during the year. The company does not have other potentially dilutive security.

• The company reported a net income of $440 million.

Question 5

ABC Company reported a net income of 45 million for the year ended 30th June 2024. The company had a weighted average of 60 million shares of common stock outstanding. In addition, the company has only one potentially dilutive security: a total number of 500,000 convertible bonds with a face value of $100 each and a coupon rate of 6%. Each convertible bond can be converted into 10 common shares. Assume a tax rate of 30%.

Calculate ABCs basic and diluted EPS.

[2+2=4 marks]

Please complete this assessment in accordance with the following marking rubrics.

Rubrics for Assessment 1-Assignment