Financial Reporting is the presentation of the financials by the company for the stakeholders and the public. Financial reporting consists of the following documents – Statement of Financial Position, Income Statement, and the statement of the Cash flows. The financial reports shall be properly accompanied by the disclosures and the notes. The Financial Reports are to be prepared with the GAAP and IFRS rules and policies. Generally, the companies prepare the financial reports either quarterly, Half Yearly or Yearly. The company shall be responsible for presenting the Financial Reports to the Stakeholders. Stakeholders include the Shareholders of the company, Government Bodies, Debtors, and others. The company shall also maintain the Financial Reports on the website of the company (if any), and the company shall also file the financial reports before due dates with the government.
Financial Reporting means to present the financial information to the persons having an interest in the company. The financial statements include the Statement of financial position, Income Statement, Cash flow Statements, Other comprehensive Income, and Statement of changes in equity (NRW Holdings Company, 2020). The financial statements shall be properly attached with the notes to support the respective balances and figures. The Disclosures shall be also the part of the financial statements. The financial reporting can be of two types (NRW Holdings Company, 2020).
These statements are to be presented to the stakeholders outside the company (NRW Holdings Company, 2020).
These statements are prepared and presented to the persons working within the company. The statements are prepared for the management to take decisions which would help in achieving the vision, mission of the company (NRW Holdings Company, 2020). The financial Reporting shall be of two types:
The financial reports are prepared as it is required to be prepared following the GAAP or IFRS (NRW Holdings Company, 2020). The basis of the provisions used for the creation of the provisions. The same financial report can be used by the different stakeholders and to obtain their objective.
The financial reports are being prepared to have specific requirements. For example – the financial statements are being prepared for the case of a merger, Demerger, etc (NRW Holdings Company, 2020).
In the given assignment we have to provide the General financial Reporting based on the NRW Holdings Company (Bradshaw, et al. 2018).
In other words, financial reporting helps make various decisions depending on the person and the form of the issue of the financial statements.
The General-purpose Financial Reporting (GPFR) means to provide information to the readers of the business to allocate the business.
The income statement gives us a detailed analysis of the volume of the sales, the Volume of the purchases. The other incomes for the company and the expenses and the nature of the expenses (NRW Holdings Company, 2020). This income and expenses are to be aggregated to result in the net profit or net loss to the company. The statements for the number of years can be used to identify the trend of the company (NRW Holdings Company, 2020).The statements can be used to compare the changes in the Financial year that the company is having concerning other companies in its peers (NRW Holdings Company, 2020).The purpose of the Balance sheet is being prepared for the testing of the liquidity, funding, debt position of the company. The cash flow statements are prepared to present the inflows and the outflows of the cash. These statements are prepared only for the present the cash flows of the company (Shroff, 2017). The company shall be responsible for presenting the Financial Reports to the Stakeholders. Stakeholders include the Shareholders of the company, Government Bodies, Debtors, and others.
The company NRW holdings has prepared the profit and loss account and the other comprehensive income which would give the result in giving the net income or loss to the company. The company has prepared the financial data for the last 2 years in the year ended 2019 which is showing the net profits for the year 2018 $ 42,166,000 and 2019 $ 32,270,000 (NRW Holdings Company, 2020). The results showing the company is having a negative trend. The various expenditures shown can be easily identified to know about the nature and the amount of the expenditure. The expense on the raw material procurement has double but the revenue from the sale has not be doubled (NRW Holdings Company, 2020).There is also an increase in the sub-contractors cost significantly. The company in the year 2019 has also impaired its financial assets of which results are being affected and becoming the reason for the decline in the profits (NRW Holdings Company, 2020).There has been a loss of the ($ 2,064,000) in the year 2019 from the profit earned $ 1,382,000 in the year 2018. The other Income is earned by the company only in the year 2019 for $ 5,120,000 and the company has also increased in the fixed income earning from $ 493,000 in the year 2018 to $ 739,000 in the year 2019 (NRW Holdings Company, 2020). The employee cost has increased over 50% from $ 196,826,000 in the year 2018 to $ 295,353,000 in the year 2019. The plant & equipment cost has been in the year 2019 $ 33,522,00 (NRW Holdings Company, 2020).
The Basic Earnings per share (BEPS) of the company for the equity shareholders has decreased from $ 11.6 per share to $ 8.6 per share while the Diluted Earnings per Share (DEPS) has also being decreased by $ 3 i.e., from $ 11.4 per share to $ 8.4 per share. This decline in the BEPS and DEPS results in the decline in the shareholder’s wealth (El-Gazzar, & Finn, 2017).
The Balance Sheet of the company is also prepared for the balance of two years. The balance sheet of the company consists of the assets and the liabilities of the company. The total assets of the company is $ 520,187,000 in the year 2018 and $ 588,576,000 and in the year 2019 (NRW Holdings Company, 2020). The Debt of the company has decreased in 2019 from the year 2018 i.e., $ 56,291,000 in 2018 and $ 55,025,000 in 2019. The receivables of the company have increased from the year 2018 comparing to the year 2019 i.e., from $120,699,000 to $ 158,099,000 (NRW Holdings Company, 2020). The company is maintaining a higher inventory ratio comparing to the year 2018 (NRW Holdings Company, 2020).The company has also disinvested in many of the associates i.e., from $ 4,736,000 in the year 2018 which is now left $ 2,652,000 in the year 2019. The payables of the company has also increased $ 127,730,000 in the year 2018 to $ 157,756,000 in the year 2019 (NRW Holdings Company, 2020).The company is maintaining high provisions and due to which the revenues in the income statement has decreased. The provisions were $ 20,166,000 in the year 2018 and it has increased to $ 31,664,000 in the year 2019 (NRW Holdings Company, 2020). The current borrowing of the company has also been increased from $36,921,000 in the year 2018 to the $ 45,434,000 in the year 2019. The company has been able to maintain the goodwill of the company i.e., at the value of $ 40,103,000 in both the year of 2018 and 2019 (NRW Holdings Company, 2020).The company has maintained the equity share capital of the company i.e., at the value of $ 206,126,000 in both the year of 2018 and 2019 (Wood, & Sangster, 2018). The company in the year 2019 has also impaired its financial assets of which results are being affected and becoming the reason for the decline in the profits.
The cash flow statements of the company are being prepared for the last two years by the company. The statements consist of the operating, Investing, and Financing activities (NRW Holdings Company, 2020). The overall cash and cash equivalence of the company has been increased from the year 2018 to the year 2019 (NRW Holdings Company, 2020).The increase in the cash is by $6,185,000 resulting in a total cash flow of $ 65,031,000. Cash from operating activities have increased from $ 74,759,000 in 2018 to $ 99,816,000 in 2019. The Cash from Financing activities has decreased from $ 56,636,000 in 2018 to ($ 7,701,000) in 2019. The cash from Investing activities has increased from ($ 114,813,000) in 2018 to ($ 85,930,000) in the year 2019 (Larkin, & DiTommaso, 2018).
The notes are also attached to the end of the financial statements to support the calculations and having the brief explanations of the values used in the computation of the above data (Dunn, 2018). The above notes shall also contain information relating to the accounting standards used by the company. It shall also contain the detail about the currency used by the company. The companies used in the consolidation of the company. The company shall also contain the basis for the valuation of the assets and liabilities (Street, 2012). The accounting notes shall also contain the details of the judgment used and applied in the preparation of the financial statements as accounting judgments and accounting estimates and the accounting policies (Street, Nichols, & Gray, 2010).
The objectives of the financial reporting about the financial position, position and the enterprise can make it useful for the wide range of the stakeholders. The objective of the financial statement is different for the different users of the company (NRW Holdings Company, 2020).
Owners and managers are required the financial statement to take important business decisions. These statements are even part of the annual financial statements which are presented to the stakeholders (Barth, et al. 2016). Employees of the company use these reports to bargain the agreements with the management of the company. These financial statements are also used for the promotional and appraisal matters (Haverty, 2016).
Investors use the financial statements for the finding the viability of the possible investment into the business of the company. These financial statements are used to make investment decisions (Tarca, 2014). Banks and other Financial Institutions use them to provide them loans required by the company to cover their working capital requirement or to settle any outstanding liabilities (Cordazzo, 2018). The companies used in the consolidation of the company. The company shall also contain the basis for the valuation of the assets and liabilities.
To conclude the general purpose financial reporting, are the financial reports prepared by the company to all the stakeholders stating about the operations of the business of the company. The general purpose reporting states the profits of the company, the valuation of the assets, the accounting policies for the valuation, and the creation of provision of the company. The basis of the provisions used for the creation of the provisions. The same financial report can be used by the different stakeholders and to obtain their objective. The reporting is mostly general unless the specific event is occurring in the company. The specific event generally happens in between the year and the financial reports are to be prepared till the date of the happening of the events and the various accounts and balances are to be adjusted as per the requirements for the company.
Barth, M. E., Landsman, W., Lang, M., & Williams, C. (2016). Accounting quality: International accounting standards and US GAAP. Manuscript, Stanford University, 1-46.
Bradshaw, M. T., Christensen, T. E., Gee, K. H., & Whipple, B. C. (2018). Analysts’ GAAP earnings forecasts and their implications for accounting research. Journal of Accounting and Economics, 66(1), 46-66.
Cordazzo, M. (2018). The impact of IAS/IFRS on accounting practices: evidence from Italian listed companies. Séminaire DEMA/ERM.
Dunn, L. N. (2018). The Fundamentals of GAAP: Case Studies of Accounting Principles.
El-Gazzar, S. M., & Finn, P. M. (2017). Restatements and accounting quality: a comparison between IFRS and US-GAAP. Journal of Financial Reporting and Accounting.
Haverty, J. L. (2016). Are IFRS and US GAAP converging?: Some evidence from People's Republic of China companies listed on the New York Stock Exchange. Journal of International Accounting, Auditing and Taxation, 15(1), 48-71.
Larkin, R. F., & DiTommaso, M. (2018). Wiley Not-for-profit GAAP 2018: Interpretation and Application of Generally Accepted Accounting Principles. John Wiley & Sons.
Shroff, N. (2017). Corporate investment and changes in GAAP. Review of Accounting Studies, 22(1), 1-63.
Street, D. L. (2012). GAAP 2001—benchmarking national accounting standards against IAS: summary of results. Journal of International Accounting, Auditing and Taxation, 11(1), 77-90.
Street, D. L., Nichols, N. B., & Gray, S. J. (2010). Assessing the acceptability of international accounting standards in the US: An empirical study of the materiality of US GAAP reconciliations by non-US companies complying with IASC standards. The International Journal of Accounting, 35(1), 27-63.
Tarca, A. (2014). International convergence of accounting practices: Choosing between IAS and US GAAP. Journal of International Financial Management & Accounting, 15(1), 60-91.
Wood, F., & Sangster, A. (2018). Frank Wood's Business Accounting UK GAAP (Vol. 1). Pearson Education. NRW Holdings Company, (2020), annual report of the company, retrieved from https://nrw.com.au/investors/annual-reports
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