ACCT11059 USING ACCOUNTING FOR DECISION MAKING

TUTORIAL: WEEK 5

ANALYSING FINANCIAL STATEMENTS

In this weeks tutorial you will have the opportunity to review Week 5 of our course Analysing Financial
Statements, to work on your Assignment (ASS#2) and to also write one multiple choice question for
PeerWise along with a solution. After the tutorial, you can enter your question onto PeerWise. Please only
enter questions you have written. Do not try to enter questions other people have written.
Please bring to your tutorial a hard copy of your firms balance sheet and income statement. Bringing just
a hard copy of your firms balance sheet and income statement without the footnotes would be sufficient
(although, if you do this, it would be best if you can to bring a soft copy on your laptop with your firms full
financial statements including footnotes, so you could refer to these during the tutorial if needed).
Please come to your tutorial prepared to discuss the following questions:
Q1: What questions do you have about your ASS#2?

Q2: Restating your firms balance sheet:
(a) Put an O (for operating) or an F (for financial) next to each item in your firms balance sheet.
Come to your tutorial with any questions you have about doing this for different items in your
firms balance sheet.
(b) How do you think you should treat cash (and/or bank overdraft) in your firms balance sheet?
(c) What questions do you have about restating your firms balance sheet?

Q3: Restating your firms income statement:
(a) Put an O (for operating) or an F (for financial) next to each item of revenue and expenses in
your firms income statement. Come to your tutorial with any questions you have about
different items in your firms income statement.
(b) What questions do you have about including any other comprehensive income or dirty surplus
identified in your restated statement of changes in equity into your restated income statement?
(c) Calculate the tax benefit for your firm of its financial activities (Tax benefit = Net interest expense
x tax rate of the firm):
a. What is the net interest expense of your firm?
b. What is your firms tax rate?
(d) What questions do you have about allocating tax to the operating and financial components of
your firms income statement? This is usually the most difficult step in restating a firms income
statement. It involves increasing the tax expense you deduct from your operating income by
the amount of the tax benefit, and correspondingly reducing your net financial expenses (NFE) by
the tax benefit to get net financial expense (NFE) after tax.
(e) What is your firms comprehensive operating income after tax (OI)?
(f) What questions do you have about restating your firms income statement?

Q3: Write one multiple choice question for PeerWise on a sheet of paper, along with its solution.




Martin Turner Course Co-ordinator