The first company chosen is Myer holdings which is the company based in the country of Australia. It is a departmental store. The company has a number of store networks which includes in the footprint of about 60 stores in the various different retail locations all across the country. The company has products which includes women wear, men’s wear, miss shop etc. the company has its own women’s wear brand, saas and bide. The company also has the top brands such as TOPSHOP, Seed etc. the subsidiaries of the company includes Myer Pty Ltd, NB Elizabeth Pty Ltd, NB Russell Pty Ltd, Warehouse Solutions Pty Ltd, Myer Group Finance Limited, Myer Group Pty Ltd and Myer Travel Pty Ltd. There are many more activities that are undertaken by the departments store retail business as well and this is done through its subsidiaries (Reuters, 2018).
The second company undertaken for review include Kathmandu Holdings Limited which is the company that has some transnational chain of the retail stores. The company deals in the travel and adventure apparel. The company is also one of the leading retailers of clothing and equipment for the purposes of travelling and also for adventure in the countries of New Zealand, Australia and the UK. The company has about 163 stores all around the globe (Kathmandu Holdings, 2018).
Myer Holdings:
|
Owner’s equity: |
|||||
|
(Amounts in $ in thousands) |
|||||
|
Items |
Figures in the year 2017 |
Figures in the year 2017 |
Understanding |
Change |
Change in % |
|
Contributed equity |
7,39,329.00 |
7,39,338.00 |
Money invested into the company |
could be due to sale of shares of the company |
0.00% |
|
Reserves |
-8,607.00 |
-11,056.00 |
Amounts set aside by the company to meet the future contingencies |
could be due to addition of previous years profit |
-22.15% |
|
Retained earnings |
3,42,146.00 |
3,79,483.00 |
Sum total of all of the amounts set aside in all the previous year |
could be due to previous years profits/(losses) being transferred in this account |
-9.84% |
|
Total |
10,72,868.00 |
11,07,765.00 |
Kathmandu Holdings:
|
Particulars |
2017 |
2016 |
Understanding |
Change |
Change in % |
|
(Amounts in NZ $ in thousands) |
|||||
|
Contributed equity |
2,00,209.00 |
2,00,191.00 |
Money invested into the company |
could be due to no change in the new capital/investment by the shareholders |
0.01% |
|
Retained earnings |
1,49,893.00 |
1,36,033.00 |
Amounts set aside by the company to meet the future contingencies |
could be due to previous years profits/(losses) being transferred in this account |
10.19% |
|
Reserves |
-23,002.00 |
-24,541.00 |
Sum total of all of the amounts set aside in all the previous year |
could be due to addition of previous year’s profit/(losses) |
-6.27% |
|
Total |
3,27,100.00 |
3,11,683.00 |
|
Myer |
Kathmandu |
|
|
Particulars |
2017 |
2017 |
|
Contributed equity |
7,39,329.00 |
2,00,209.00 |
|
Reserves |
-8607 |
-23,002.00 |
|
Retained earnings |
3,42,146.00 |
1,49,893.00 |
|
– |
– |
|
|
Total |
10,72,868.00 |
3,27,100.00 |
|
Statement of cash flows |
||||
|
(Amounts in $ in thousands) |
||||
|
Particulars |
2017 |
2016 |
Understanding |
Change in % |
|
Cash flows from operating activities: |
||||
|
Receipts from customers (inclusive of goods and services tax) |
29,31,853.00 |
31,01,149.00 |
amounts received from the accounts receivables on account of sales made |
-5.46% |
|
Payments to suppliers and employees (inclusive of goods and services tax) |
-27,44,651.00 |
-29,15,467.00 |
amounts paid in to the suppliers towards the raw material purchased |
-5.86% |
|
Other income |
– |
71.00 |
amounts received by the company from other investments |
|
|
Interest paid |
-10,165.00 |
-15,894.00 |
amounts paid by the company on borrowings made from outside |
|
|
Tax paid |
-27,759.00 |
-20,369.00 |
amounts paid by the company towards taxes on the revenue earned |
|
|
Net cash provided by operating activities |
1,49,278.00 |
1,49,490.00 |
||
|
Cash flows from investing activities: |
||||
|
Payments for property, plant and equipment |
-88,452.00 |
-40,479.00 |
amounts paid by the company towards the payments for the property, plant and equipment purchased |
118.51% |
|
Payments for intangible assets |
-24,217.00 |
-11,891.00 |
amounts paid by the company towards the purchase of intangibles |
103.66% |
|
Payment for acquisition of assets, under business combination |
-13,000.00 |
– |
amounts paid by the company towards the assets acquired due to the business combination |
|
|
Lease incentives and contributions received |
16,758.00 |
1,856.00 |
amounts paid on account of the lease incentives and the contributions received by the company |
|
|
Net investment in associate |
-966.00 |
-8,680.00 |
amounts paid by the company for making and invetsment in associate |
-88.87% |
|
Interest received |
421.00 |
943.00 |
amounts received by the company towards the interest |
|
|
Net cash used in investing activities |
-1,09,456.00 |
-58,251.00 |
||
|
Cash flows from financing activities |
||||
|
Repayment of borrowings, net of transaction costs |
-5,000.00 |
-2,95,000.00 |
amounts paid by the company towads repaying in the borrowings |
-98.31% |
|
Dividends paid to equity holders of the parent |
-49,276.00 |
-16,426.00 |
amounts paid by the company as dividend to the shareholders |
199.99% |
|
Payment for acquisition of treasury shares |
-196.00 |
– |
payments made by the company for acquiring the treasury shares |
#DIV/0! |
|
Proceeds from the issue of shares, net of transaction costs |
– |
2,12,011.00 |
amounts received from the issue of shares |
-100.00% |
|
Other |
34.00 |
60.00 |
amounst received from sale of other financing activities |
-43.33% |
|
Net cash used in financing activities |
-54,438.00 |
-99,355.00 |
||
|
Total of operating, financing and investing activities |
-14,616.00 |
-8,116.00 |
Net cash from aggregate of the activties in the year |
|
|
Opening cash balance |
45,207.00 |
53,323.00 |
Cash in the start |
|
|
Cash and cash equivalents at end of period |
30,591.00 |
45,207.00 |
Net cash at the end of the year |
|
Kathmandu Holdings:
|
Particulars |
2017 |
2016 |
Understanding |
Change |
Change in % |
|
(Amounts in NZ $ in thousands) |
|||||
|
Cash flows from operating activities |
|||||
|
Receipts from customers |
4,44,100.00 |
4,24,182.00 |
these are the amounts received by the company from the sales made during the year |
could be due to lesser revenue from product agreements |
4.70% |
|
Interest received |
28.00 |
26.00 |
amounts received by the company on the investments made outside |
could be due to more investment made by the company |
7.69% |
|
Income tax received |
– |
1,357.00 |
Refund of the excess income taxes paid during the year |
could be due to more income earned during the year |
-100.00% |
|
Payments to suppliers and employees |
-3,60,122.00 |
-3,36,968.00 |
these are the amounts paid to the suppliers for the purchase of the raw material |
could be due to increase in the raw material purchased |
|
|
Income tax paid |
-14571 |
-16688 |
Amounts paid to the income tax authorities on the income earned during the year |
could be due to decrease in the revenue before taxes |
|
|
Interest paid |
-2162 |
-2829 |
these are the amounts paid by the company towards the interest on borrowed capital |
could be due to repayment of the loans or the borrowings |
|
|
Net cash flows used in operating activities |
67,273.00 |
69,080.00 |
|||
|
Cash flows from investing activities |
|||||
|
Proceeds from sale of property, plant and equipment |
1.00 |
5.00 |
Sale of fixed assets |
could be due to sale of property |
-80.00% |
|
Purchase of property, plant and equipment |
-11,419.00 |
-20,729.00 |
Purchase of fixed assets for the company |
could be due to purchase of property |
|
|
Purchase of intangibles |
-1,857.00 |
-2,467.00 |
amounts paid by the company towards the purchase of intangibles |
could be due to more purchase of intangibles |
|
|
Net cash flows used in investing activities |
-13,275.00 |
-23,191.00 |
|||
|
Cash flows from financing activities |
|||||
|
Proceeds of loan advances |
90,330.00 |
63,047.00 |
amounts received by the company towards the loans advanced |
could be due to receipt of more borrowings by the company |
43.27% |
|
Proceeds from share issues |
– |
– |
amounts received from issue of shares |
could be due to no issue of shares during the year |
|
|
Dividends paid |
-24,179.00 |
-16,119.00 |
amounts paid on investment made by the shareholders |
could be due to dividends paid on the investments made in by the shareholders |
|
|
Repayment of loan advances |
-1,23,533.00 |
-87,658.00 |
amounts paid towards the loans borrowed |
could be due to repayment of loans |
|
|
Net cash flows used in financing activities |
-57,382.00 |
-40,730.00 |
|||
|
Total of operating, financing and investing activities |
-3,384.00 |
5,159.00 |
Total of operating, financing and |
||
|
Opening cash balance |
6,921.00 |
1,732.00 |
Cash in the start |
||
|
Cash and cash equivalents at end of period |
3,537.00 |
6,891.00 |
Net cash at the end of the year |
The following is the desired comparative statement:
|
Myer |
Kathmandu |
|||||
|
Particulars |
2017 |
2016 |
2015 |
2017 |
2016 |
2015 |
|
Net cash from operating activities |
1,49,278.00 |
1,49,490.00 |
96,915.00 |
67,273.00 |
69,080.00 |
29,627.00 |
|
Net cash from financing activities |
-54438 |
-99,355.00 |
-95,232.00 |
-57,382.00 |
-40,730.00 |
-14,898.00 |
|
Net cash from investing activities |
-1,09,456.00 |
-58,251.00 |
-1,04,250.00 |
-13,275.00 |
-23,191.00 |
-19,980.00 |
|
Total |
-14,616.00 |
-8,116.00 |
-1,02,567.00 |
-3,384.00 |
5,159.00 |
-5,251.00 |
In respect of Myer Holdings, the company has faced some severe cash shortage which would have made it difficult to cater to the short term liabilities for it.
In respect of Kathmandu Holdings, the company has faced some severe cash shortage which would have made it difficult to cater to the short term liabilities for it.
In the nutshell, the following would be stated:
|
Statement of comprehensive income |
|||
|
(Amounts in $ in thousands) |
|||
|
Particulars |
2017 |
2016 |
|
|
Profit for the period |
11,939.00 |
60,543.00 |
|
|
Other comprehensive income |
|||
|
Cash flow hedges |
547.00 |
-14,486.00 |
|
|
Exchange differences on translation of foreign operations |
329.00 |
-221.00 |
|
|
Other comprehensive income for the period, net of tax |
876.00 |
-14,707.00 |
|
|
Total comprehensive income for the period attributable to owners of Myer Holdings Limited |
12,815.00 |
45,836.00 |
Kathmandu Holdings:
|
Statement of comprehensive income |
||
|
(Amounts in NZ $ in thousands) |
||
|
Particulars |
2017 |
2016 |
|
Profit after income tax |
38,039.00 |
33,521.00 |
|
Other comprehensive income that may be recycled through profit and loss: |
||
|
Movement in cash flow hedge reserve |
209.00 |
-15,891.00 |
|
Movement in foreign currency translation reserve |
209.00 |
-6,384.00 |
|
Other comprehensive income/(expense) for the year, net of tax |
418.00 |
-22,275.00 |
|
Total comprehensive income for the year attributable to shareholders |
38,457.00 |
11,246.00 |
There are many of the revenues, expense, gains and the losses that are not realised and hence, these are reported in the statement of comprehensive income. There is something which has been realised when there is an underlying transaction which has been completed such as the investment which has been sold. In order to illustrate, in case the company has made an investment in bonds, then if the fair value of these bonds changes, then this would be an unrealised loss or a unrealised gain for the company. As and when these bonds are sold, the company could go on to include the loss or gain on such bonds. It is also acceptable for the company to report in the components of the other comprehensive income which is net of taxes or even before the related tax effects with a single expense of income taxes.
This statement of comprehensive income helps the user of the financial statements to know the financial status of the company but it gives too much complexity to the statement of income (Bragg, 2018).
The following is the desired statement:
|
Myer |
Kathmandu |
|
|
Particulars |
2017 |
2017 |
|
Comprehensive income |
12,815.00 |
38,457.00 |
There are many of the revenues, expense, gains and the losses that are not realised and hence, these are reported in the statement of comprehensive income. There is something which has been realised when there is an underlying transaction which has been completed such as the investment which has been sold. In order to illustrate, in case the company has made an investment in bonds, then if the fair value of these bonds changes, then this would be an unrealised loss or a unrealised gain for the company. As and when these bonds are sold, the company could go on to include the loss or gain on such bonds. It is also acceptable for the company to report in the components of the other comprehensive income which is net of taxes or even before the related tax effects with a single expense of income taxes.
This statement of comprehensive income helps the user of the financial statements to know the financial status of the company but it gives too much complexity to the statement of income. Hence, since these are not realised profit or loss for the company, therefore, these should not be included in evaluating the performance of the company
The following table shows in the desired amounts:
|
Myer |
Kathmandu |
|
|
Particulars |
2017 |
2017 |
|
Income taxes |
18,274.00 |
16,935.00 |
The following is the desired table:
|
Effective tax rate |
||
|
Myer |
Kathmandu |
|
|
Particulars |
2017 |
2017 |
|
Effective tax rate: |
60% |
31% |
|
Income taxes |
18,274.00 |
16,935.00 |
|
Earnings before taxes |
30,213.00 |
54,974.00 |
A deferred tax assets is the asset of the company that has the ability of reducing in the income of the company. This could also mean the case wherein the business has gone to over pau the taxes or have paid the taxes in advance on the date of the balance sheet. These are the amounts of the taxes that are ultimately returned in to the company in the form of tax relief or as an over payment and hence, these are termed as the deferred tax assets for the company (Taxmann, 2018).
The following is the desired computation:
|
Particulars |
Myer |
Kathmandu |
|
|
Net income |
11,939.00 |
38,039.00 |
|
|
Less: deferred tax assets |
1,265.00 |
733.00 |
|
|
Income on which taxes would have been paid |
10,674.00 |
37,306.00 |
Both of these companies have a loss and so, the cash effective tax rate would not be possible.
|
Particulars |
Myer |
Kathmandu |
|
|
Income tax provision |
– |
– |
|
|
Increase in deferred tax assets |
1,265.00 |
733.00 |
|
|
Current income taxes |
1,265.00 |
733.00 |
|
|
Other income |
1,76,485.00 |
– |
|
|
Taxes paid on other income |
1,05,891.00 |
– |
|
|
Unlevered cash taxes |
-1,04,626.00 |
733.00 |
|
|
EBITA |
41,036.00 |
57,004.00 |
|
|
Cash tax rate |
-254.96% |
1.29% |
The effective rate of tax is the rate at which the company would pay in the government and it is somewhat charged at the same rate. It is the rat at which the business or the individual shall be charged on the earned income. This is calculated using the tax amount that has been paid and is divided by the taxable income.
Whereas, the cash tax rate is the rate at which the company actually pays in the taxes. The company though could have a certain amount of money which could be payable by it, but it ends up paying more or less than that amount due to the presence of deferred tax assets or the deferred tax liabilities (Bayt, 2018).
Conclusion:
In the nutshell, from the above, it could be stated that the cash crunch is being faced by both of the company and this is evident from the negative amounts of the cash flows in each of the 3 years. Further, Myer Holdings limited has more amount of shareholders equity invested in it. Which means that the company has more equity and less debt invested in itself. There are few of the reasons for the fact that the items are not included in the statement of profit or loss and the same have been stated therein this report. Due to the reason that these are the amounts of the gains or the loss that are still unrealised, hence, these are not included in the statement of profit or loss. In terms of the balance in the statement of comprehensive income, Kathmandu Holdings has more amount when compared amongst these 2 companies. In the terms of effective tax rate, Myer Holdings has more tax rate. This means that the company is paying more tax when compared with Kathmandu Holdings Limited. The main aim of including the deferred taxes is the fact these serve as the assets or the liabilities for the company in the balance sheet.
References:
Bayt.com. (2018). What is the difference between effective tax rate and statutory tax rate? – Bayt.com Specialties. [online] Available at: https://www.bayt.com/en/specialties/q/76082/what-is-the-difference-between-effective-tax-rate-and-statutory-tax-rate/ [Accessed 18 Sep. 2018].
Bragg, S. and Bragg, S. (2018). Other comprehensive income. [online] AccountingTools. Available at: https://www.accountingtools.com/articles/what-is-other-comprehensive-income.html [Accessed 18 Sep. 2018].
Editorial, R. (2018). ${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com. [online] U.S. Available at: https://www.reuters.com/finance/stocks/company-profile/MYR.AX [Accessed 18 Sep. 2018].
https://www.taxmann.com. (2018). Difference between Deferred Tax Asset (DTA) and Deferred Tax Liability (DTL). [online] Available at: https://www.taxmann.com/blogpost/2000000449/difference-between-deferred-tax-asset-dta-and-deferred-tax-liability-dtl.aspx [Accessed 18 Sep. 2018].
Kathmandu Investor Centre. (2018). Home. [online] Available at: https://www.kathmanduholdings.com/ [Accessed 18 Sep. 2018].
www.kathmanduholdings.com. (2018). Annual report 2015. [online] Available at: https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-AR-2015-web-ready.pdf [Accessed 18 Sep. 2018].
www.kathmanduholdings.com. (2018). Annual report 2017. [online] Available at: https://www.kathmanduholdings.com/wp-content/uploads/2012/08/Kathmandu-Annual-Report-2017_online.pdf [Accessed 18 Sep. 2018].
www.myerholdings.com. (2018). annual report 2015. [online] Available at: https://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/Myer_Annual_Report_2017.pdf [Accessed 18 Sep. 2018].
www.myerholdings.com. (2018). Annual report 2017. [online] Available at: https://investor.myer.com.au/FormBuilder/_Resource/_module/dGngnzELxUikQxL5gb1cgA/file/Myer_Annual_Report-2015.pdf [Accessed 18 Sep. 2018].
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download