ACCT11059 Accounting, Learning & Online Communication
ASS#2
ASSIGNMENT STAGE 2 (ASS#2): RESTATED FINANCIAL
STATEMENTS & RATIOS
DUE: 11.00am Monday Week 13 – Review Week
Step 1: to be completed by 11.00am Monday Week 6
Step 2: to be completed by 11.00am Monday Week 8
Steps 3 & 4: to be completed by 11.00am Monday Week 9
Step 5: to be completed by 11.00am Monday Week 10
Step 6: to be completed by 11.00am Monday Week 11
Please submit your Step 1 in Moodle in the ASS#2 Step 1 section.
Please submit your Step 2 in Moodle in the ASS#2 Step 2 section.
Please submit your Steps 3 & 4 in Moodle in the ASS#2 Steps 3 & 4 section.
Please submit your Step 5 in Moodle in the ASS#2 Step 5 section.
Please submit your Step 6 in Moodle in the ASS#2 Step 6 section.
Please submit your Steps 7, 8, 9 & 10 in Moodle in the ASS#2 Steps 7-10 section.
Here is a link to the 2022 Academic Calendar.
Estimated (max.) time required: 45 – 51 hours
This assignment is the second stage of your major assignment for this unit. It is made up
of ten steps.
Step 1: Due 11.00am Monday Week 6 (5 marks)
Step 1 involves you writing down some of your ideas, reflections and reactions to reading
Chapter 4 ‘Analysing Financial Statements’ in the Study Guide.
Read Chapter 4 (‘Analysing Financial Statements’) in the Study Guide.
Read it like you would a novel or any book, actively seeking to engage with the
author and to understand what you are reading. What is the author trying to say? Let
the author take you on a journey. Go with him and see what you think of some of
the key ideas and concepts being discussed.
And while you do this, note down key concepts that occur to you. That’s right; just
write them down as you go along. Also, include any questions that occur to you as
you are reading. What do you find confusing, difficult to understand or believe,
boring, exciting or surprising? Include some of your key concepts and questions
(KCQs) in your Step 1.
Your personal engagement with the reading is what I am interested in. I am
interested in your reactions, understanding, and questions from the readings. Use
the words “I” and “me”. Different people will have different reactions to the
readings. Tell me what your reactions are. This is what I am interested in. Do not tell
me what you think I might want to hear. Be genuine and honest in your reactions to
the readings. Give us something of yourself in your Step 1.
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Please submit this step as a Word document.
Please allow 4 – 4½ hours to complete this step (if you have English as your second
language, you may need to increase this time).
Step 2: Due 11.00am Monday Week 8 (5 marks)
Step 2 involves you writing down some of your ideas, reflections and reactions to reading
Chapter 6 ‘Understanding Key Cost Relationships’ in the Study Guide.
Read Chapter 6 (‘Understanding Key Cost Relationships’) in the Study Guide.
Read it like you would a novel or any book, actively seeking to engage with the
author and to understand what you are reading. What is the author trying to say? Let
the author take you on a journey. Go with him and see what you think of some of
the key ideas and concepts being discussed.
And while you do this, note down key concepts that occur to you. That’s right; just
write them down as you go along. Also, include any questions that occur to you as
you are reading. What do you find confusing, difficult to understand or believe,
boring, exciting or surprising? Include some of your key concepts and questions
(KCQs) in your Step 2.
Your personal engagement with the reading is what I am interested in.
Please submit this step as a Word document.
Please allow 4 – 4½ hours to complete this step (if you have English as your second
language, you may need to increase this time).
Step 3: Due 11.00am Monday Week 9 (16 marks)
Step 3 involves you restating your firm’s financial statements.
Go to the ‘Restated Financial Statements’ tab in your firm’s spreadsheet. This is where
you will prepare your firm’s restated financial statements. You will need to make sure
you restate your firm’s financial statements for the most recent four (4) years.
Restating your firm’s financial statements simply involves you reorganising the way your
firm’s financial statements are set out. ‘Restating’ financial statements can also
sometimes refer to adjusting a firm’s financial statements after balance date to allow for
changes that occur after balance date (such as a change in the way some items are
accounted for). We are not talking about this type of ‘restating’ a firm’s financial
statements. Our task of restating our firm’s financial statements involves moving around
different items in a firm’s financial statements; and to do this we will need to
understand what each item is. This is the purpose for us in doing this: to help us look
carefully at each item in our firm’s financial statements and to develop some initial
understanding about each item.
Restate your firm’s financial statements based on material covered in Chapter 4
(Sections 4.2 & 4.3) in the Study Guide. See the videos on Restating the Statement of
Changes in Equity, Restating the Balance Sheet and Restating the Income Statement.
These are also available in the Videos section in the Orientation tile in Moodle. These
have some great tips on how to restate your firm’s financial statements. You may see
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items in your firm’s financial statements such as non-controlling interests; investments
in associates; futures, options, hedges or derivatives; deferred tax; or movements in
foreign currency translation reserves. You may wonder what these are and whether
they relate to your firm’s operating or financial activities. I encourage you to discuss
with other students any issues you (and they) may face in restating your firm’s financial
statements. Also, participate in the discussion forums, on MS Teams and on Facebook
with others in the unit and comment on each other’s blogs.
You can also search (by key words) our unit Facebook page. Most questions you have
are likely to have already been discussed on our unit Facebook page, which has been
used in our unit for many years. This is a great way to find answers to your questions.
Post on your blog your comments and responses to restating your firm’s financial
statements. How did you find this learning task? Did you find it frustrating, confusing or
enlightening? And what exactly do you feel you have learnt, or not learnt, about your
firm and its financial statements from restating its financial statements?
Restating the financial statements of a firm can become quite time consuming and, at
times, a little frustrating, especially when you do it for the first time. Indeed, you may
feel this may be quite an understatement when you are in the middle of restating your
firm’s financial statements. However, ‘all’ you will be doing will be moving around the
various items in your firm’s financial statements, for example moving your firm’s assets
from current assets and non-current assets to operating assets and financial assets. Still
all the same items; just thoughtfully put under different headings.
Restating your firm’s financial statements will support you to look at each item in your
firm’s financial statements. Most people usually find it to be an interesting and
challenging learning task as we are further introduced to our firm’s financial statements.
There are great exemplars for all the assessments of Danielle Bradley and Natasha
Boath, past students in our unit. These are available in the Feedback section on Moodle.
You can check out their ‘ASS#2 Steps 3 and 4’ (Word file) and their Excel files which may
give you some ideas about how you could approach your Step 3. Please note: some
aspects of the assessments may have changed.
Include in your assignment (as a Word document) a commentary on any issues or
concerns you had in restating your firm’s financial statements and the results of your
discussions with other students. Also, submit your firm’s spreadsheet with your
restated financial statements included.
Please allow about 12 – 13 hours to complete this step.
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Step 4: Due 11.00am Monday Week 9 (3 marks)
Step 4 involves you providing (and receiving) feedback to three other students in our unit
on their draft ASS#2 Step 3. If you wish, these can be the same students you provided
feedback to in ASS#1.
The main benefit of Step 4 is in giving quality and thoughtful feedback to others in our
unit. The process of thinking about the feedback you give to others will help you greatly
with your own assignment as you think about what the assignment requires and how
others have addressed these requirements for their own companies.
Prior to 5.00pm Friday Week 7, please:
•
post draft work of your ASS#2 Step 3 on your blog; and
•
provide a link to your blog on the Draft ASS#2 Step 3 forum (and on MS Teams
and/or our unit Facebook page, if you wish). Post a comment that your draft
ASS#2 Step 3 is ready for student feedback and, if you wish, specific areas where
you would value feedback.
Prior to 5.00pm Thursday Week 8, please ensure you have provided quality feedback to
at least three other students, using the Peer Feedback Sheet for ASS#2 Step 4 (see
below).
Include the feedback you have given at least three other students in the unit in your
Step 4.
Also, comment in your Step 4 whether you found feedback from other students useful
and why this was, or was not, the case. You can include in your discussion both how
useful (or not) you found feedback you received from other students through your
interactions with them f2f, on discussion forums, Facebook, MS Teams, on our blogs and
through other means.
Please submit this step as a Word document.
Please allow 2 – 2½ hours to complete this step.
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PEER FEEDBACK SHEET: ASS#2 Step 4
Feedback From:
Feedback To:
.
My Comments
Step 3
Restated Statement of Changes in Equity
Restated Balance Sheet
Restated Income Statement
Commentary and discussion with others
(Note: You may wish to give some comments
on their Excel spreadsheet)
Step 4
Individual feedback with other students
Overall ASS#2 Steps 3 & 4
Note: Please use this sheet as a guide.
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Step 5: Due 11.00am Monday Week 10 (5 marks)
Step 5 involves you writing down some of your ideas, reflections and reactions to reading
Chapter 7 ‘Budget for the Short Term’ in the Study Guide.
Read Chapter 7 (‘Budget for the Short Term’) in the Study Guide.
Read it like you would a novel or any book, actively seeking to engage with the
author and to understand what you are reading. What is the author trying to say? Let
the author take you on a journey. Go with him and see what you think of some of
the key ideas and concepts being discussed.
And while you do this, note down key concepts that occur to you. That’s right; just
write them down as you go along. Also, include any questions that occur to you as
you are reading. What do you find confusing, difficult to understand or believe,
boring, exciting or surprising? Include some of your key concepts and questions
(KCQs) in your Step 5.
Your personal engagement with the reading is what we are interested in.
Please submit this step as a Word document.
Please allow 4 – 4½ hours to complete this step (if you have English as your second
language, you may need to increase this time).
Step 6: Due 11.00am Monday Week 11 (5 marks)
Step 6 involves you writing down some of your ideas, reflections and reactions to reading
Chapter 8 ‘We Have Got to Make Some Decisions’ in the Study Guide.
Read Chapter 8 (‘We Have Got to Make Some Decisions’) in the Study Guide.
Read it like you would a novel or any book, actively seeking to engage with the
author and to understand what you are reading. What is the author trying to say? Let
the author take you on a journey. Go with him and see what you think of some of
the key ideas and concepts being discussed.
And while you do this, note down key concepts that occur to you. That’s right; just
write them down as you go along. Also, include any questions that occur to you as
you are reading. What do you find confusing, difficult to understand or believe,
boring, exciting or surprising? Include some of your key concepts and questions
(KCQs) in your Step 6.
Your personal engagement with the reading is what we are interested in.
Please submit this step as a Word document.
Please allow 4 – 4½ hours to complete Step 6 (if you have English as your second
language, you may need to increase this time).
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Step 7: (5 marks)
Step 7 involves you identifying three products or services of your firm and
estimating/guessing their selling price and variable cost. You will also comment on the
contribution margins you calculate as well as identify constraints and briefly comment
on them. Remember, do not spend too long on Step 7.
Identify three products or services of your firm. For each product or service, estimate (or
guess) their selling price and variable cost and then calculate their contribution margin.
See Section 6.4 in Chapter 6 of the Study Guide for guidance on what are variable costs
and contribution margins. You might also like to see Section 8.2 in Chapter 8 of the
Study Guide. See also the video on Contribution Margins (which is also available in the
Videos section in the Orientation tile in Moodle).
If you have trouble easily identifying three specific products or services of your firm,
quickly make some assumptions about what specific products/services your firm might
have. You will also likely need to guess the selling price and variable cost of each
product/service. Try to make your assumptions reasonably realistic. You can also discuss
with others in our unit; everyone will be facing the same need to identify their firm’s
products and their selling price and variable costs. And if you are finding it particularly
difficult for your firm, you can contact the unit co-ordinator Martin Turner at
m.turner@cqu.edu.au.
Discuss why the contribution margins for each of your firm’s three products/services
might differ or be similar. Why might your firm produce a range of products/services
with different contribution margins? Why not only produce the product/service with the
highest contribution margin?
Many companies can face constraints on their capacity to produce products or services.
For Ryman Healthcare, one constraint might include being able to find and purchase
suitable sites for new retirement villages. As most people who go into retirement
villages go into villages within 10 kilometres of their previous home, Ryman Healthcare
needs to find large, level sites for retirement villages in suburban areas where there are
a significant number of older people.
Identify (or guess) one or more resource constraints your firm may face, and perhaps
any market constraints you feel may impinge on your firm.
In what ways might these constraints be relevant when deciding whether (and how
much) of the three products or services of your firm that you have identified, your firm
should produce and sell?
Please submit this step as a Word document.
Please allow 2 – 2½ hours to complete this step.
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Step 8: (18 marks)
Step 8 involves you calculating some ratios for your firm (and its economic profit) and
assessing its business performance.
Ratio Analysis
Go to the ‘Ratios’ tab in your firm’s spreadsheet. In this worksheet is a list of ratios. Please
calculate these ratios for your firm.
Calculate these ratios for the last four (4) years for your firm. Do this by linking back to
the numbers in your firm’s financial statements (in your ‘Financial Statements’
worksheet) or to the numbers in your firm’s restated financial statements (in your
‘Restated Financial Statements’ worksheet). If you are unsure about how to link cells
between worksheets in Excel, see this short video:
Linking Data from Different Excel Sheets and Workbooks
You can also discuss with others in the unit about how to do this; everyone will be facing
the same issue. Also see the video on Ratios (which is also available in the Videos section
on the left-hand side of Moodle).
Once you have calculated these ratios for your firm sit back and have a look at them.
What do these ratios tell you (or not tell you) about your firm? How do you make sense of
them?
Discuss your ratios with other students. How do your firm’s ratios differ to the ratios of
firms of other students? What do your firm’s ratios tell you about how well your firm is
performing? In your blog, include your reflections on your firm’s ratios: what they tell you
(or do not tell you) about the performance of your firm, how they compare to the ratios
of other firms and what new questions the ratios might raise in your mind about your
firm.
Economic profit
Calculate economic profit for your firm for the past four (4) years. Use 8% as your firm’s
cost of capital when calculating your firm’s economic profit (unless you have reasons to
use a different number; if so, clearly state those reasons).
The key drivers of your firm’s past economic profit are Return on Net Operating Assets
(RNOA), cost of capital and Net Operating Assets (NOA). The two key accounting drivers
of RNOA are Profit Margin (PM) and Asset Turnover (ATO) (see Study Guide Chapter 4,
Section 4.4).
Comment on what is driving or causing your firm’s economic profit over the past four
years to be at the levels it is. If your firm’s economic profit is negative (or positive), what
is causing it to be negative (or positive)? If it is a large number, what is causing it to be so
large? If it is a small number, what is causing it to be so small? If it changed a lot over the
past three or four years, why did it? If it stayed much the same over the past three or four
years, why was this?
Discuss your thoughts on what is driving your firm’s economic profit with other students.
What similarities or differences are there between the economic profit of your different
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firms? Why is this? What is causing these similarities or differences? What insights have
you gained by ‘breaking into bits’ your firm’s financial statements? What insights have
you not gained? In your blog, include your reflections about your firm’s economic profit.
Include in your assignment your firm’s spreadsheet, including your firm’s ratios and
economic profit that you have calculated, as well as a Word document setting out your
commentary on your firm’s ratios and what is driving your firm’s economic profit.
Please allow about 9 – 10 hours to complete this step.
Step 9: (5 marks)
Step 9 involves you developing a capital investment decision for your firm and completing
a simple analysis of this decision using Payback Period, NPV and IRR.
Develop a capital investment decision for your firm. This decision should involve a choice
between two options and involve you discounting cash flows for between 5 and 10 years.
Please use a required cost of capital of 8% (Tip: This is the discount rate to use).
Calculate the payback period, net present value (NPV) and internal rate of return (IRR) for
each of the two options for your firm that you developed and advise your company which
option it should invest capital in.
Please go to the ‘NPV & IRR’ worksheet and calculate the NPV and IRR for each of the two
capital investment options for your firm in this worksheet, using the NPV and IRR
functions in Excel. See the Capital Budgeting video for guidance. Also, see this short video
for guidance about how to calculate NPV and IRR using Excel:
Calculating IRR (Internal Rate of Return) and NPV (Net Present Value) using Excel
Briefly discuss your thought processes in coming to your recommendation. Also, briefly
discuss the strengths and weaknesses of your analysis.
For example, I have developed a capital investment decision for Ryman Healthcare. This is
shown in the Appendix to this assignment. This is by way of example only. Please do not
use this example in your answer to this step. You need to develop your own capital
investment decision for your firm.
Please allow about 2 – 2½ hours to complete this step.
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Step 10: (3 marks)
Step 10 involves you providing (and receiving) feedback to three other students in our
unit on their draft ASS#2 Steps 7-9. If you wish, these can be the same students you
provided feedback to previously.
The main benefit of Step 10 is in giving quality and thoughtful feedback to others in our
unit. The process of thinking about the feedback you give to others will help you greatly
with your own assignment as you think about what the assignment requires and how
others have addressed these requirements for their own companies.
Prior to 5.00pm Friday Week 11, please:
•
post draft work of your ASS#2 Steps 7-9 on your blog; and
•
provide a link to your blog on the Draft ASS#2 Steps 7-9 Feedback forum (and on
our unit Facebook page, if you wish). Post a comment that your draft ASS#2
Steps 7-9 is ready for student feedback and, if you wish, specific areas where you
would value feedback.
Prior to 5.00pm Thursday Week 12, please ensure you have provided quality feedback
to at least three other students, using the Peer Feedback Sheet for ASS#2 Step 10 (see
below).
Include the feedback you have given to at least three other students in your Step 10.
Also, comment in your Step 10 whether you found feedback from other students useful
and why this was the case. You can include in your discussion both how useful (or not)
you found feedback you received from other students through your interactions with
them f2f, on discussion forums, Facebook, on our blogs and through other means.
Please allow about 2 – 2½ hours to complete Step 10.
Please submit your Steps 7-10 as a Word document and as an Excel spreadsheet.
Note: Late penalties for all steps in ASS#2 (including Steps 1-6) will be calculated based
on the due date for ASS#2 of 11.00am Monday Week 13 – Review Week.
Martin Turner
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PEER FEEDBACK SHEET: ASS#2 Step 10
Feedback From:
Feedback To:
.
My Comments
Step 7
Identify three products or services of your firm
Estimate selling price, variable cost & CM
Commentary – contribution margins
Constraints – identify & commentary
Step 8
Calculation of ratios
Ratios – commentary (blog)
Calculate economic profit
Commentary – drivers of economic profit (blog)
Step 9
Develop capital investment decision for your firm
Calculation of payback period, NPV & IRR
Recommendation & discussion
Overall ASS#2 Steps 7-9
Note:
Please use this sheet as a guide. There is no need to provide feedback on each step. For example, the
person may have little or no draft work completed for one or more of the steps prior to asking for your
feedback.
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Grades will be allocated to Assignment 2 (ASS#2) as follows:
Mark
Step 1
KCQs – Chapter 4
5
Step 2
KCQs – Chapter 6
5
Step 3
Restated Statement of Changes in Equity
2
Restated Balance Sheet
5
Restated Income Statement
6
Commentary and discussion with others
3
16
Step 4
Individual feedback with other students (Steps 3 & 4)
3
Step 5
KCQs – Chapter 7
5
Step 6
KCQs – Chapter 8
5
Step 7
Identify three products or services of your firm
2
Estimate selling price, variable cost & CM
1
Commentary – contribution margins
1
Constraints – identify & commentary
1
5
Step 8
Calculation of ratios
9
Commentary – ratios
4
Calculate economic profit
2
Commentary – drivers of economic profit
3
18
Step 9
Develop capital investment decision for your firm
1
Calculation of payback period, NPV & IRR
3
Recommendation & discussion
1
5
Step 10
Individual feedback with other students (Steps 7 - 9)
TOTAL
3
70
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APPENDIX: Example of a capital investment decision for Ryman Healthcare
I have developed the following capital investment decision for Ryman Healthcare. This is
by way of example only. Please do not use this example in your answer to Step 9.
Ryman Healthcare is considering whether to build new retirement village units at:
Ringwood East Village in Melbourne and Kohimarama Village in Auckland. I assume
Ryman Healthcare is planning to sell to another retirement village operator the Ringwood
East Village in 7 years and the Kohimarama Village in 9 years.
The original cost, the estimated life, residual value and estimate future cash flows of each
investment opportunity are set out in the table below.
Ringwood East
Kohimarama
Village
Village
$125.0m
$90.0m
Estimated life1
7 years
9 years
Residual value2
$200.0m
$175.0m
2023
$12.0m
$10.0m
2024
$12.0m
$10.0m
2025
$15.0m
$15.0m
2026
$15.0m
$20.0m
2027
$15.0m
$23.0m
2028
$18.0m
$25.0m
2029
$20.0m
$25.0m
Original cost
Estimated future cash flows3
2030
$25.0m
2031
$25.0m
1. Estimated life is how long Ryman Healthcare expects to own the new retirement
village.
2. Residual value is the expected cash flow when each retirement village is sold to
another retirement village operator at the end of its ‘Estimated life’.
3. Comprise estimated future cash flows from selling occupancy rights to the
retirement village units each year, and fees from management rights and other
services.
The investment would be made on 31 December 2022. The estimated future cash flows
are expected to be received on 31 December of each year.
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