Refer to the 2012 annual report for David Jones Ltd (DJS) and answer the following questions. (To answer some questions, you will need to also refer to the 2011 DJS annual report.) Question 1 (4 marks) What type of business structure is DJS? (Sole proprietor, partnership, private company or public company?) (1 mark) Indicate 3 features of DJS’s financial statements that support your choice. (3 marks) Question 2 (2 mark) Refer to DJS’s statement of financial position and identify the 2 items that have the same dollar value. (1 mark) Use the accounting equation (Assets – Liabilities = Equity) to explain why these 2 items have the same dollar value. (1 mark) Question 3 (2 marks) Why are DJS’s financial statements referred to as “consolidated” statements? Question 4 (2 marks) On DJS’s statement of financial position, why are ‘Interest bearing liabilities’ reported as both current liabilities and non-current liabilities? Question 5 (7 marks) Name the 3 components of Equity shown on DJS’s statement of financial position and explain how each has arisen. (3 marks) What was the dollar amount of DJS’s total equity in 2011 and in 2012? (1 mark) Which financial statement explains the change in total equity between 2011 and 2012? (1 mark) Explain this change in your own words. (2 marks) Question 6 (3 marks) What is the dollar amount shown on DJS’s statement of financial position for ‘Inventories’? (1 mark) Refer to Note 1 (para. 1.1 and para. 1.17) and explain the valuation method used by DJS for inventories of finished goods. (2 marks) Question 7 (8 marks) What is the dollar amount shown on DJS’s statement of financial position for ‘Property, plant and equipment’ (PPE)? (1 mark) Refer to Note 1 (para. 1.18.1) and identify the valuation method used by DJS for its PPE. (2 marks) Now refer to Note 13 and list the 6 different classes of PPE carried by DJS. (2 marks) How much depreciation expense was recorded for ‘Computer equipment’ in 2012? (1 mark) What is the total amount of depreciation that has been recorded for this equipment since it was acquired? (1 mark) What is the difference between ‘depreciation’ and ‘amortisation’? (1 mark) Question 8 (4 marks) What is the dollar amount shown on DJS’s statement of financial position for ‘Receivables’? (1 mark) Now refer to Note 9 and identify: (i) the total amount owed by suppliers; (ii) the allowance for doubtful debts; (iii) the amount David Jones expects to receive from suppliers. (3 marks) Question 9 (3 marks) Refer to Note 14 to DJS’s financial statements and explain (in one sentence) how the amount recorded as ‘Goodwill’ arose. (1 mark) In general terms (that is, not with reference to DJS) explain what ‘goodwill’ represents and how it is calculated. (2 marks) Question 10 (4 marks) In general terms, what are ‘provisions’? (2 marks) What types of provisions has David Jones recorded (see Note 18)? (2 marks) Question 11 (4 marks) In general terms, what is a ‘contingent liability’? (2 marks) Why are DJS’s contingent liabilities (see Note 25) not shown on its statement of financial position? (2 marks) Question 12 (4 marks) Refer to Note 21: What is the total number of shares that have been issued by DJS? (1 mark) What is the total dollar amount that has been contributed by DJS’s shareholders? (1 mark) How much profit was earned by DJS’s shareholders, on a per share basis, in 2012? (1 mark) How much of this profit did the shareholders actually receive, on a per share basis, in 2012? (1 mark) Question 13 (2 marks) Refer to DJS’s cash flow statement: What was the dollar amount of DJS’s ‘Cash and cash equivalents’ at the end of the financial year? (1 mark) Why does this figure differ from the amount of cash and cash equivalents shown on DJS’s statement of financial position? (1 mark) Question 14 (4 marks) What is the reported dollar amount for DJS’s ‘Net cash flows from operating activities’? (1 mark) Suggest 3 possible reasons why this figure is so much higher than DJS’s net profit after tax. (3 marks) Question 15 (3 marks) Observe that DJS has reported negative net cash flows for 2 of the 3 types of activities reported in its cash flow statement. Explain whether, in your opinion, these negative net cash flows represent a potential problem for DJS. Question 16 (28 marks) Use the formulae presented on pp. 376-377 of your textbook to calculate the following ratios for DJS for 2011 and 2012: (i) ROE; (ii) ROA; (iii) gross profit margin; (iv) net profit margin; (v) inventory turnover (days); (vi) debtors’ turnover (days); (vii) current ratio; (viii) quick asset ratio; (ix) debt-to-equity ratio; (x) interest coverage ratio. (20 marks) (Note: you must show all calculations in full.) Refer to the changes in these ratios between 2011 and 2012 to explain whether you believe there has been an improvement or deterioration in the following aspects of DJS’s performance or situation: (i) profitability; (ii) asset efficiency; (iii) liquidity; (iv) long-term debt-paying ability. (8 marks) Question 17 (8 marks) What is meant by the term ‘corporate sustainability’? (2 marks) Refer to DJS’s Corporate Sustainability Report (pp. 26-37 of the annual report) and identify the 4 categories of key performance indicators listed. (2 marks) Select 2 indicators from each category and comment on whether you believe DJS has improved its performance with respect to those indicators between 2011 and 2012. (4 marks) Question 18 (2 marks) With respect to its commitment to the environment, what are the 4 strategic objectives outlined by DJS in its Corporate Sustainability Report? Question 19 (2 marks) Refer to the section of DJS’s Corporate Sustainability Report titled ‘Environmental Management’ (p. 35 of the annual report) and identify the specific initiatives that have led to the reported 29.4% improvement in energy efficiency over the past 6 years. Question 20 (4 marks) In the section of DJS’s Corporate Sustainability Report titled ‘Environment Strategy’, para. 2.1 states: “To meet its aim of reducing greenhouse gas emissions, David Jones … invested $4.9 million in 34 capital projects …”: Can you identify whether this amount has been recognised by DJS as an asset or an expense? (2 marks) How do you believe it should have been recognised? (You must refer to the definition and recognition criteria for assets and expenses as contained in the IASB’s Framework when answering this question.) (2 marks) Note: This assignment is scored out of 100 marks and will be scaled to a mark out of 20.
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