How does the direct method of cash flow statement

Assignment Help Managerial Accounting

Reference no: EM133693288

Purpose of the assessment: This assignment aims to understand different classes of assets and liabilities reported by companies and the measurement basis used for each class of assets. It also seeks to develop an understanding of students on different items reported as other comprehensive and their significance (ULO 1, 3, 4, 5). Students are then required to examine the measurement, accounting treatment and disclosure of asset retirement/environmental rehabilitation obligations in detail.

Assignment Specifications

Select the latest annual report of an ASX-listed company. From the annual report, complete the following tasks:

Question 1: Briefly introduce the selected publicly listed company and provide an overview of the industry in which the company operates.

Question 2: How does the direct method of cash flow statement differ from the indirect method of cash flow statement?

Question 3: Break down the operating activities section of the cash flow statement. Identify the major sources and uses of cash within operating activities and assess the company's ability to generate positive cash flow from its core operations.

Question 4: Examine the investing activities section of the cash flow statement, discuss the significant investment decisions or divestitures made by the company and evaluate how these investing activities contribute to the company's strategic objectives.

Question 5: Explore the financing activities section of the cash flow statement, identify any debt issuances or repayments, stock repurchases, or dividend payments and Assess the impact of financing activities on the company's capital structure and shareholder value.

Question 6: Calculate and analyze key cash flow ratios such as the operating cash flow ratio, free cash flow, and cash flow to debt ratios and discuss the significance of these ratios in assessing the company's financial stability and liquidity.

Question 7: Compare the cash flow performance of the selected company over two (2) years, current and previous years and highlight and discuss any differences or similarities in cash flow patterns and financial strategies.

Assessment Structure

Introduction of the company:
Briefly introduce the selected publicly listed company and provide an overview of the company's industry.
Cash flow statement analysis
Analyze the cash flow statement for the most recent fiscal year.
Identify and explain the three main sections of the cash flow statement: operating activities, investing activities, and financing activities.
Direct and indirect method of cash flow statement?
How does the direct method of cash flow statement differ from the indirect method of cash flow statement?
Operating cash flow
Break down the operating activities section of the cash flow statement
Identify the major sources and uses of cash within operating activities
Assess the company's ability to generate positive cash flow from its core operations.
Investing activities:
Examine the investing activities section of the cash flow statement.
Discuss the significant investment decisions or divestitures made by the company
Evaluate how these investing activities contribute to the company's strategic objectives
Financing activities
Explore the financing activities section of the cash flow statement
Identify any debt issuances or repayments, stock repurchases, or dividend payments.
Assess the impact of financing activities on the company's capital structure and shareholder value.
Cash flow ratios
Calculate and analyze key cash flow ratios such as the operating cash flow ratio, free cash flow, and cash flow to debt ratio.
Discuss the significance of these ratios in assessing the company's financial stability and liquidity.
Comparative analysis
Compare the cash flow performance of the selected company over two years, as well as current and previous years, and highlight and discuss any differences or similarities in cash flow patterns and financial strategies.
Conclusion

Reference no: EM133693288

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