Analysis Of CSR Limited’s Cash Flow Statement, Other Comprehensive Income Statement, And Tax Accounting In 2017

Overview of the Cash Flow Statement

By evaluating the cash flow statements of the business organisations, it becomes easier to gain an understanding of their inflows as well as outflows(Siew 2015). For this paper, CSR Limited is chosen and each item of its cash flow statement is analysed critically as follows:

The cash flow statement mainly consist of three sections that involves cash flow from investing activities, operating activities, financing activities and net cash as well as cash equivalents. The items that are included in the operating activities involves depreciation, adjustments to net income, liabilities changes, inventory changes, changes in accounts receivable and changes in other operating activities (Sierra?García, Zorio?Grima and García?Benau 2015).  It has been seen that the total cash flow of operating activities has increased in the year 2017 to $264800 from the year 2016 and 2015.

The items that are included in the investment activities are capital expenses, investments and other cash flow from investment activities. It is evident that the total cash used for the investment activities decreased in the year 2016 to -$80800 from $ -45400 in the year 2015 and then decreased to $ -60700 in the year 2017.

In this cash flow statement of CSR limited, financing activities mainly consists of the paid dividends, net borrowings, purchase as well as sale of stocks and other cash flows from the financing activities. There has been rise in total cash used in the financing activities in the year 2017 to $-257900 from the year 2016 and 2015.  

Moreover, the change in cash and cash equivalents amounts to -$ 54000 in the year 2017, $4700 in the year 2016 and $4700 in the year 2015.

In order to carry out the comparative analysis of the cash flow statement of CSR Limited in 2017, the following figure is represented:

The above figure denotes continual rise in cash flows from operating activities in the context of CSR Limited from $ 234300 in 2015 to $ 252200 million in 2016 and to $ 2648000 million in 2017. The primary cause for rise in this section is the increase in amounts from the customers. In addition to this, rise in receipt of interest and dividend could be held accountable for this rise (Paterson 2016).

In relation to cash flows from investing activities, increase in cash outflows could be observed in 2016 as opposed to 2015 from $45400 in 2015 to $80800 in 2016. This is because additional investments are made in order to purchase cash and cash equivalents. However, in 2017, decrease in cash outflows could be identified, which have been to $80800 in 2016 to -$607000 in 2017. This is because investment amounts have been reduced for purchasing plant and equipment (Xu, Davidson and Cheong 2017).

Cash Flow from Operating Activities

For cash flows from financing activities, rising trend is observed in terms of outflows from 2015 to 2017 from -$126800 in 2015 to -$166700 in 2016 and to -$257900 in 2017. This is because additional dividend payments are made over the years coupled with the borrowing repayments. All these reasons could be held accountable for rise in cash outflows from financing activities (Spencer and Webb 2015).

Particular	2017 in $m	2016 in $m	2015 in $m
Net cash flow from operating activities	2,64,800	2,52,200	2,34,300
Net cash flow from investing activities	-60,700	-80,800	-45,400
Net cash flow from financing activities	-2,57,900	-1,66,700	-1,26,800

Certain significant items are reported under the comprehensive income statement in the annual report of CSR Limited in 2017. These items take into account hedge loss or profit in equity, hedge profit transfer to the financial performance statement, difference in exchange in the translations related to foreign operations, variation in the fair value associated with cash flow hedge reserve and benefits obtained from income tax of these items (Taylor & Richardson 2014).

In order to gain an in-depth understanding of the above-stated items reported in the other comprehensive income statement of CSR Limited in 2017, the items that have been found are foreign currency translation reservewhich is used for specific item is to convert the outcomes of the cross-border subsidiaries of the parent organisation to the reporting currency where financial reporting is conducted (Tschopp and Nastanski 2014). This is a significant aspect in the consolidation procedure where the ascertainment of the cross-border currency of the foreign subsidiary is made in the currency for conducting financial reporting process (Jagannathan2017). The Cash flow hedge reserve helps in the exposure formed could be minimised or removed because of the significant variations in asset and liability positions of the corporate entities. Certain risk variations are the primary reasons behind the occurrence of this item such as interest related to debt risk, risk related to interest rate and others (Wong and Joshi 2015).

The basic purpose of CSR Limited in forming the other comprehensive income statement delivers the users with the essential information in relation to the above-mentioned aspects. Thus, this statement provides an overview of transparent and holistic approach of such items. Such causes are not engaged directly in order to derive income (Wahlen, Baginski & Bradshaw 2014).

CSR Limited is obliged to conduct its tax accounting in accordance with the norms of the Australian taxation law (Joubert, Garvie and Parle 2017). In the years 2016 and 2017, the tax rate that could be applied to the organisation is 30%. Based on the statement of financial performance in 2017, the income tax expense reported has been $61.70 million in 2017 and $64.40 million in 2016.

Cash Flow from Investing Activities

The Deferred tax is accounted by the method of balance sheet asset resulting from temporary differences between the tax bases of liabilities and assets and their carrying amount in the financial statements (Warren and Jones 2018). Recognition of deferred tax liabilities are done to the extent that the availability of taxable profit in future is probable against the temporary differences that are deductible. Deferred tax assets have been observed to be $201.20 million in 2017, which were $239.30 million in 2016.

As per the latest annual report of CSR Limited in 2017, it could be found that adequate disclosures have been made regarding deferred tax assets and deferred tax liabilities. Deferred tax assets have been observed to be $201.20 million in 2017, which were $239.30 million in 2016. In 2016, deferred tax liabilities were reported to be $20.90 million, while no such liabilities are realised in the year 2017. The Income tax expenses is the amount that is calculated based on the standard accounting rules and on the amount of tax that is owed by company to tax authorities (Ijiri 2018). Income tax payable is the amount that the company owes in terms of tax based on tax code rules. Until the company makes the payment of tax, the amount of income tax payable appears on the balance sheet section as liability.

According to the latest annual report of CSR Limited, the income tax expense of the organisation has been $61.70 million in 2017, which was $64.40 million in 2016. On the contrary, the disclosed income tax expense in the cash flow statement has been $52.70 million in 2017 as opposed to $14.60 million in 2016. This clearly signifies the difference between the two reported amounts. In this case, it is worth mentioning that the income tax expense recorded in the income statement is the amount incurred in the current taxation year of the organisation and the payment is required to be made in the upcoming year.

On the basis of the analysis of all the disclosed financial information, no surprising or confusing elements could be observed in the tax-related treatment of CSR Limited. This is because the organisation has supplied the necessary justifications and clarifications of the taxation treatment as footnotes in the financial report (Brooks 2015). It can be seen from the above discussion that this enterprise has followed all the basic requirements of the Australian Tax Office (ATO) while estimating different taxes that has been included in the financial statement of the company. CSR Limited needs to incur lower depreciation amount because of the variations in the norms of preparing the income statement.

References

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