Good luck with your studies!
STEP 1
My Ideas
The explanation of cash and the 2 possible
categories is very well written, again providing a great example that all
students can relate to. I believe this has in ground the financial and
operational concept into my mind and allowed me to continue to grasp what is
contained further on within the chapter.
My Questions
My Reflections
Continuing reading, I find that this could
provide some tax benefit as they are now paying higher interest, therefore
reducing the company’s profits. I imagine that dramatic increases to NFO cannot
occur year after year otherwise the company will get to a point where their
debt to equity ratio will be at dangerous levels.
A profit margin of 66.9%, that is quite
high although with the use of some analysis techniques, taking more than just
profits into consideration, it can be seen that Ryman Healthcare has a low ATO
of just 0.35 times, therefore displaying that Ryman Healthcare is not quite as
efficient as it would first seem.
I am interested to know why and how this is
a benefit to their operations.
Economic Profit seems to be a logical
concept. Using capital investment to increase the value of the firm. This is
what I would hope that all companies are trying to achieve, is this not the
core value of running a business no matter how big or how small. After reading
that some companies actually borrow money to pay dividends, these dividends can
definitely not be used to measure the current value of the firm as this is a
false indicator.
My Reactions
I like the idea of ‘active learning’.
Rather than just reading about restating financial statements, I am looking
forward to actually doing the process with the real financial statements of my
company. Active learning is a much better concept in the long run as I am
certainly a person who learns by doing.
This was an in-depth chapter that will
benefit from the hands-on approach that ASS#2 will provide. It is a chapter
that deserves to be read carefully, more than once and given time to settle and
become clear.
STEP 2
Please refer to spreadsheet.
My thoughts on the process
Firstly, overwhelming. Secondly, let’s get
started …
Statement
of Movements in Equity
I am unsure of the entry “Exchange
differences on translation of foreign operations” contained on the Statement of
Movements in Equity and whether this should be classed as financial or
operational. I have chosen to class it as operational as it is related to the
interaction with the product sale/purchase, and both firms involved.
Statement
of Financial Position
Taking into consideration the size and
depth of operations of Cardno Limited, a minimal cash balance is displayed on Cardno’s
balance sheet therefore I believe the full amount to be an operating asset.
Cardno would require cash between projects as I imagine that their quoting and
planning phase for new and upcoming projects can be quite time consuming and labour
intensive before the first payment is made by a customer who accepts their
tender for a project.
Statement
of Financial Performance
Whilst working through restating the
Statement of Financial Performance it takes me a lot of time reading through
notes and comparing Ryman Healthcare statements with my own. I find it helpful
that there is a clear example to follow. I also realized that I need to consult
the notes of my Annual Reports as there is simply an entry titled ‘Revenue’. I
have read through the notes and broken revenue down into its operating and
financial components.
I believe ‘Royalties’ to be an Operating
Expense because it relates to a product.
The Corporate Tax Rate for Australia
remains unchanged at 30%. Quite high in comparison to some countries although
seems average overall.
I finished (well I thought I had finished)
restating my Statement of Financial Performance only to be heartbroken that my
totals were incorrect. After watching
the section of our lecture that explains the process and some further reading,
all of which did not correct my issue, I started to sift back through each
entry one-by-one only to find I had missed the inclusion of ‘Other Expenses’.
This entry evaded me, it has no Note to explain what other expenses may be
included with this entry therefore I have grouped it under Operating Expenses
assuming it to be an accumulation of trivial expenses that relate to everyday
business. If it were in relation to
financial transactions, I think this would have been noted.
MY REFLECTIONS
Although not an active participant in
forums as I found I could not contribute anything that hadn’t already been
said, I did find some previous discussions useful.
I have completed the task and I completely
agree with your statement that “most people find it to be an interesting and
challenging learning task”. I certainly did. There were a lot of down moments,
shortly followed by ah ha moments. I
think each ah ha moment brought with
it a greater understanding of the process and a great deal of self-satisfaction
that I have completed a task that at first look, seemed like a mission
impossible.
Step 3
Identifying 3 products or services that
Cardno delivers was not an easy task. Cardno does not do just one or two
things, they are like the Superman of service companies, it seems that no task
is too big or too small for them to handle.
Each project that Cardno undertakes is specific to the client, therefore
would involve an in-depth planning and pricing system. Each project
differs per the clients requirements.
Therefore from their website, I chose 3 previous
projects that Cardno have been involved in within Queensland and have assumed
what I think could be a realistic price.
|
|
Gold
Coast Rapid Transit Project
$million
|
Gateway
Upgrade Duplication Project
$million
|
Street
Tree Survey and Data Capture
$million
|
|
Selling Price
|
30
|
187.5
|
4
|
|
Variable Cost
|
27
|
178.125
|
3.4
|
|
Contribution Margin
|
3
|
9.375
|
0.6
|
Gold Coast Rapid Transit Project
Cardno formed part of the major design team for the Gold Coast Rapid
Transit Project (the Gold Coast tram service). Their initial involvement was to
provide consulting services including landscaping, design and traffic
management planning. Cardno’s services were also expanded to include
engineering services, 12D modelling, fire engineering plus much more. Cardno
also acted as managing consultant for various sub-consultants.
The project began in May 2011 with stage one completed in 2014. The
aim of the project is to provide transport for the 2018 Commonwealth Games.
I have based my pricing
structure on the fact that Cardno provided some very specialist services over a
3 year period, I used a 10% contribution margin.
Having recently holidayed at the Gold Coast and taking my family on
the tram, I am now interested to know that my company played a major role in
such a fantastic project.
Gateway Upgrade Duplication Project
I thought I would continue
with my recent holiday experiences, my kids were in augh of such a huge bridge
– especially the fact that there were 2!
