Prepare a financial statements report for Australian Securities Exchange (ASX)

Requirements

Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the websites of your selected companies. Then go to the Investor Relations section of each company’s website. This section may be called, “Investors”, “Shareholder Information” or a similar name. In this section, download the latest annual reports for the years 2018-2019, 2019-2020, and 2020-2021. Do not use the companies’ interim financial statements or their concise financial statements.

Please read the financial statements (balance sheet, income statement, statement of changes in owner’s equity, cash flow statement) and the relevant footnotes of your selected companies’ financial statements carefully. Use the information in the financial statements of your selected companies to prepare a report to address the following questions:

a) What are the tax expenses shown in the latest financial statements of the two selected companies?

b) Calculate the effective tax rates for the two selected companies. The effective tax rate is calculated as (income tax expense/earnings before tax). Which company has the higher effective tax rate?

c) Comment on deferred tax assets/liabilities that are reported in the balance sheet articulating the possible reasons why they have been recorded.

d) Was there any increase or decrease in deferred tax assets or deferred tax liabilities reported by each of your selected companies?

e) Calculate the cash tax amount for both companies using the accounting tax amount (the tax expense based on the accounting standards), changes in deferred tax assets, and changes in deferred tax liabilities.

f) Calculate the cash tax rate for both companies. Which company has higher cash tax rate? (Please do your own research to familiarise yourself with how to calculate cash tax rate).

g) Why is the cash tax rate different from the accounting tax rate?

Please note that some aspects of companies’ treatment of tax can be very complicated. It is expected that you will do your own research in the area and use your findings to support your answers. When an external information source is used, it is essential for you to cite the source in in-text citation and include the source in your reference list.

Report Structure

The report should consist of the following components:

1) Introduction – A brief description of the selected companies and an overview of what you discussed in this report.

2) Main Body – The main body should address the requirements for each case company separately.

3) Conclusion – No recommendation is needed.

4) Reference List – All references cited in the main body must be included in the reference list. References from Wikipedia should not be used.