The Accounting Case Template (ACT) is a web tool I designed that allows instructors to quickly build an introductory financial accounting case assignment. A variety of options are provided from which the instructor can choose, allowing the instructor to quickly build a case assignment customized for his/her specific course. It takes about two minutes to go through the customization options. After making your choices, you will click the Download button and will receive a Word document of 8 – 10 pages in length. This Word document contains all case criteria and instructions for your students. You can review and edit the Word document further if needed.
Basic contents of case assignment
In the case assignment generated by the ACT, students work in two- or three-person teams or as individuals. Each team picks an industry in which the members of the team are interested and two companies within that selected industry. The case assignment provides detailed, step-by-step instructions for students. In general, students find information in each company’s Form 10-K, calculate ratios, and analyze the results over the class term. Students will make oral presentations and/or submit written papers, again depending on case options selected by the instructor.
Customization options for the case assignment include topics, written presentation, oral presentation, grading rubrics, Form 10-K location instructions, and several other items.
I have used this case assignment in both introductory financial accounting and in an MBA financial accounting class. Students have provided positive feedback about the assignment and the knowledge they gained from it.
Excel Check Figures file available
Also available by request is an Excel Check Figures file. In this workbook, you enter key data from the students’ Form 10-Ks into one worksheet. Ratios and other calculations are automatically generated for you to use to compare to student submissions.
Advantages of using the Accounting Case Template
The advantages of using the Accounting Case Template as compared to using one case for all students include:
- Students are more engaged and interested since they select an industry and companies in which they have interest.
- In-class presentations are interesting because every student/group is presenting on a different industry and companies.
- Plagiarism is reduced because each student/group is working on a different set of companies. The Form 10-Ks are updated each year, so older cases cannot be used for current assignments.
- Grading time is reduced by using the Excel Check Figures file. You can quickly calculate the ratios that students should have in their papers by filling in information from the Form 10-K.
You can access the Accounting Case Template at https://accountingcasetemplate.com/ at no cost. I hope you find it useful. As with other content of my blog, you are free to use and adapt the case assignment as you wish for your own classroom. You cannot publish it or use it for commercial purposes.
Thanks to Dr. Linda Zucca at Kent State University for sharing her original two-page case assignment with me. I used that idea to build this Accounting Case Template.
Thanks also to Nicholas Tietz for building the Accounting Case Template software/website.
UNIT: MAA261 FINANCIAL ACCOUNTING ASSIGNMENT 1 INTERPRETATION AND ASSESSMENT OF CASH FLOW STATEMENT INFORMATION STUDENT NAME: THAO THI THANH PHAN (TAYLOR PHAN) ID NUMBER: 213536902 DUE DAY: SUNDAY 16TH AUGUST 2015, 11:30PM 1 PART A: TASK TO BE COMPLETED INDIVIDUAL 1. Introduction – the background details of the company SANTOS Ltd. is one of large global companies that supplies energy to households, businesses and major industries in both Australia and Asia (Santos Limited 2014). The Australian energy company operated in 1954, then it keeps motivating as a leading independent oil and gas producer in Australia, Indonesia, Vietnam and Papua New Guinea (Santos Limited 2014). Santos aims to develop the long term value of shareholders base on a portfolio of high quality liquefied natural gas (LNG), pipeline gas and oil assets (Santos Limited 2014). 2. Analysis of Cash Position from 2013-2014 (Santos Limited 2014) According to the income statement in 2013 and 2014, the net loss attributable to owner of Santos Ltd. was $935 million which decreases $1451 million comparedto in 2013. They lose in impairment of non-current assets ( net impairment loss on exploration and evaluation increased $1164 million, and on oil and gas assets increased $ 1154 million). Moreover, the total comprehensive income in 2014 less than $1626 million in 2013. All of above affects the different amount total comprehensive income/ loss for the period; and the net other comprehensive income to be reclassified to profit in subsequent periods in 2014 is less than in 2013 ($ 161 million). As a result, total equity in 2014 decreased $799 million. In the statement of financial position, the increase in Exploration And Evaluation Assets was $2590 million that increases in non-current assets. In the other side, Interest – Bearing Loans And Borrowings went up $2343 millon; and Provisions was up$ 388 million while total equity is down $799 million. That means Santos plans to invest and motivate in long term. 2 3. Cash Flow Management (Santos Limited 2014) Table 1 ANALYSING THE CASH FLOW AND LIQUIDITY RATIOS Operating 2014 2013 increase $2154 million Comments Cash receipt from customers Activities increase $673 million. Cash payment to suppliers and employment Investing Increase $808 million. Activities CASH Financing FLOW Activities increase $437 million. Main reason: Change in oil and gas assets went up $680 million Increase $633 million. Main reason: Drawdown of borrowing is up $735 million. Change in non-current asset and liability accounts and record as investing and financial act. Free cash Increase $168 million. flow Free Increase in the amount of free cash flow made a growth in earnings is on cash flow ratio 0.75:1 0.75:1 the horizon for Santos Ltd. In both years, the free cash flow to operating cash flow ratios are about 75%, which is a very high, beneficial relationship for the company. 3 Working $119 million $352 million Decrease $233 million. 1.06 : 1 1.20 : 1 Santos had current assets of $1.20 capital WORKIN value Working G capital ratio (2013) and $ 1.06 (2014) for every $ of CAPITAL current liabilities. In 2014, the current ratio decreases compared to in 2013, so the capacity to meet short term financial commitments is worse than in Quick ratio 0.83:1 0.96:1 2013. In both years, the quick asset ratios are less than 1, which means that it is necessary to sell inventory in order to let current liabilities can met from current assets. Cash ratio 0.40:1 0.37:1 All ratios are below 1, which means Santos needs more than just its cash reserves to pay off its current debt, as well as Santos only has enough cash and equivalents to pay off 40% (in 2014) and 37% ( in 2013) of its current Operating cash 0.95 0.94 flow has generated less cash in the period ratio than it needs to pay off its short term Earnings per liabilities. The both ratios are less than 1, Santos (95.6) 53.3 liabilities. Huge decrease: 148.9 cents share attributable 4 to the equity holders (cent) 4. Conclusion – After analysing and comparing the annual financial reports between in 2013 and 2014, there are both advantages and disadvantages in investment. Advantages: Santos is known as a global company with sustainable and large capital. Its gross profit increased in 2014 compare to in 2013. Santos is investing in oil and gas assets to develop its non-current assets. It may be a signal for the motiving in long term in the future. Generally, the amount of cash flow in the three activities all go up. Disadvantages: By focusing on developing non-current assets, Santos has increased non- current liability and decrease the total equity. The lack of capital happened due to investing heavily on oil and gas assets. Moreover, there was a loss in income at the end of 2014; even the net cash used in investing activities in both 2 years is all huge negative amounts. The ratios above seem to be negative signals in the Santos’s financial situation. The company had a lack of cash to cover its debts; and current ratio is not high much and decreased in 2014. Last but not least, the earnings per share went down deeply. It looks like a good chance to buy its share, but nothing is sure the share price will go up. 5 6 PART B: TASK TO BE COMPLETED AS A GROUP A COMPARIOSION OF THE LIQUIDITY AND CASH FLOW MANAGEMENT OF THE FOUR COMPANIES: Table 2 A COMPARIOSION OF THE LIQUIDITY AND CASH FLOW MANAGEMENT OF THE FOUR COMPANIES: 7 Comment: Firstly, the most important to invest in a company is that the investors or shareholder have to look at how much they gain for their investment. Base on the earning per share in 2013 and 2014 of each company, while JB HI-FI got high earning per share (cent) and increased 10.69 cents per share, Spotless and Santos got loss per share. A net earnings per share increases the value of the firm, which typically increases the value of the stock and vice versa. Secondly, the liquidity ratio shows the higher in percentage, the better in the finance of a company. All of the working capital ratios of the four companies are above 1, which means all of them had ability to pay off their debt in short term, especially is JB- HIFI Ltd. ( 1.64:1). However, the quick ratio and cash ratio of JB- HIFI was not high much compared to the others. Finally, based on the free cash flow ratio of each company, only Santos got the positive amount. The others struggled with their cash flow to run their business, however, JB-HIFI looked better than Caltex and Spotless. COMPARE THE MACROECONOMIC FACTORS: When investors want to invest in a company, it is important to look at the effects of the four main macroeconomic factors that are GDP, unemployment rate, inflation rate and consumer confident rate. When the GDP growth rate in 2014 (0.9%) (Trading Economics 2015) compares to the profit margin of the four companies in 2014 (Spotless Ltd.: 4.1%, Caltex Ltd.: 0.09%, Santos Ltd.: -23.16% and JB HI FI Ltd: 3.689%), only Spotless Ltd and JB HI 8 Fi Ltd are closely linked to the GDP growth. When GDP changes, this is likely to impact corporate profits, which will then impact stock capitalization. The unemployment rate in Australia increased 0.7 % (Trading Economics 2015) in 2014 compared to in 2013, it might a good signal for the companies to reduce their expenses when the company able to hire employees with a cheaper wage. Both inflation rates in 2013 and 2014 are 2.5 % (Australian Bureau of Statistics 2015) that look like above an average percentage during the past 10 years. The high inflation makes a company’s returns tend to be overstated. Consumer confidence rate was going up during a long time until 2014 which means Australians tend to saving more than investing. A decline in consumer expectations can be a leading indicator of slowing economic activity. CONCLUSION: Based on both the financial factors and macroeconomic factors above, our group suggests JB-HIFI as the best suit to invest. Although Santos Ltd. had better cash flow, working capital and liquidity ratios than the others, Santos got huge loss in earning per share in 2014 due to the company invest to much in the long term. The macroeconomic environment in 2014 is not good enough to stand the investment in long term. Therefore, JB-HIFI is the best choice between them to get the gain from its profit and be safe in the macroeconomic factors. 9 PART C: TEAM EVALUATION Miku, Kerry , Ana and me who study the same tutorial class form a group to work the assignment. There is not a leader in our group; we supported each other with respect to achieve the goal. Each member had finished part A individually with the help of the other members to analyse the financial situation of the four companies which were given by tutor. Then, we had completed part B together. We made a plan thoroughly and set up the goal before we started the research. We were willing in choosing the company which each person refers to work. Each member has a good knowledge foundation to be able to work well together. We communicated and discussed upon a mutual respect every time when we met up. Thereby, we had gotten useful ideas from each person and completed the assignment as a group. We have not only learned useful knowledge from the assignment but also from each other member. 10 MAA261 – Financial Accounting Action Plan Template Purpose: To create a plan for the development of the group assessment item. Directions: 1. During your Team’s first meeting or communication, develop one goal that your Team would like to achieve as a result of participating in this assessment activity. 2. Using this form as a template, develop an Action Plan for your team. 3. Distribute copies of the Action Plan to all team members. 4. Keep copies handy to bring to meetings to review and update regularly. 5. Use this Action Plan to help you with your Evaluation of Teamwork. Team Member Details Student Name Miku Ogawa Jinju Ye (Kerry) Taylor Phan Sopheakrachana Prum (Ana) Email address firstname.lastname@example.org email@example.com firstname.lastname@example.org email@example.com Contact number 0499573096 0420375880 0404011907 0452345775 Team Goal: Our team goals are understanding companies’ cash flow correctly to choose the best company of the four companies which are given and communicating well within the group to corporate each other and share information effectively. Team Member Activity Timeline Additional Examples could include: By When? Comments * first draft of response (Day/Month) * communicate with team *provide feedback Kerry * final response *Send to email the financial 29 / 07 I was let our accounting team to confirm our companies to our group and get 4 companies. group members. 11 Miku, Kerry, Taylor, Ana *Choose company for each person. 04 / 08 *Set team goal Miku – Spotless Kerry – JB-HIFI Taylor – Santos Ana - Caltex Miku *Joined a Blackboard Collaborate 10 / 08 session Asked questions which came up in the group chats. Miku, Kerry, *Write the PART A individually and Taylor, Ana discuss to fix it on meeting. 11 / 08 Every member almost finished the part A and then we discussed it and added more information. Every member gave suggestions to fix it again each other. Kerry, Ana *Write the question 1 in PART B and discuss to fix it on meeting. 13 / 08 Ana help Kerry to collect all information and write the summaries of it. Kerry wrote the question 1 in PART B and made a table of 12 information to understand easily. Miku and Taylor gave the suggestion to fix it. Taylor, Miku *Write the question 2 in PART B 13 / 08 and discuss to fix it. Taylor looked for the relationships between macroeconomic factors and the ratio. Miku looked for all data of macroeconomic factors and calculated profit margin of each company. They write the question 2 in PART B. Kerry and Ana gave the suggestion to fix it. Miku, Kerry, *Write the question 3 in PART B. 14 / 08 Write down the 13 Taylor, Ana (conclusion part) question 3 in PART B in the library together. Miku, Kerry, *Write the PART C individually. 14 / 08 Taylor, Ana Write down the PART 3 individually (evaluation our working). Ana *Make an evidence for our working 14 / 08 Screen captures all our evidence for (Facebook message and Vibe). working. Kerry *Write down action plan template. 14 / 08 Write down this action plan template with our plan. Miku help kerry to fix and add this action plan template on 14 / 08 Miku, Kerry Final check all PART B (group) and 14 / 08 add more information specifically. Before 14 / 08, our group members almost finished their part, however, miku and kerry did final check. Kerry, Miku *Make a reference list. 14 / 08 Make all reference list for our group assignment. 14 Miku, Kerry, Check everything before Taylor, Ana submission. 15 / 08 Check our working before submission. EVIDENCES: 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 V 34 35 36 37 38 39 40 REFERENCE LIST: 1. Caltex Australia 2014, Caltex Australia annual report 2014, retrieved 6 August 2015, http://www.caltex.com.au/InvestorCentre/Documents/2014/2014%20Annual %20Report.pdf 2. Ernst & Young Global Limited 2015, Half year report for the period ended 31 December 2014, retrieved 11th August 2015, <http://www.spotless.com/docs/default-source/investors/appendix-4d-and1h15-financial-report.pdf?sfvrsn=2>. 3. IBIS world 2014, JB Hi-Fi Limited - Premium Company Report Australia, IBIS world, retrieved 8 August 2015, <http://www.ibisworld.com.au/car/default.aspx?entid=9961>. 4. JB Hi-Fi Limited 2014, Preliminary final report for the year ended 30 June 2014, retrieved 9 August 2015, <https://www.jbhifi.com.au/Documents/Annual %20Reports/Preliminary%20Final%20Report_FY14.pdf>. 5. Rate Inflation 2015, Inflation Rate and CPI, retrieved 12th August, <http://www.rateinflation.com/>. 6. Santos Limited 2014 Annual Report 2014, pp. 12, 38, 43, 46, 47, 62, 77- 85, 98-109, 119, 126, date retrieved 08/08/2015, http://www.santosannualreport2014.com.au/ 7. Spotless Group Holdings Limited 2014, Annual Report 2013/2014, retrieved 29th July, 2015, < http://www.spotless.com/docs/default-source/media- releases-and-news-pdf's/scashpotless_annualreport2013-14_v9.pdf? 41 sfvrsn=2>. 8. Trading Economics August 2015, < 2015, Australia Consumer Confidence, retrieved 12th http://www.tradingeconomics.com/australia/consumer- confidence >. 9. Trading Economics 2015, Australia GDP Growth Rate, retrieved 12th August 2015, <http://www.tradingeconomics.com/australia/gdp-growth>. 10. Trading Economics 2015, Australia Unemployment Rate, retrieved 12th August 2015, < http://www.tradingeconomics.com/australia/unemploymentrate >. 42 43