A. Income statement and Cash flow statement
Accounting profit: The process of accrual accounting recognises earned revenue and incurred expenses (Deegan & Samkin, 2013). It is the difference between the revenue earned by a company and its costs. There are certain adjustments in consideration like depreciation, interest and tax. It consists of non-cash items as well. It is also called the net income of the company. It considers both cash received/paid and to be received/paid in future (Robertson). Profit data is based on numerous subjective and certain creative judgements (Deegan & Samkin, 2013).
Cash flow: It is the difference between the actual cash received and cash payments over a specified …show more content…
The major difference between the two numbers is the figure used for calculations. One considers only cash items and other considers non-cash items as well (Robertson). Companies showing profit might fail due to lack of cash management.
Example: a firm shows a profit based on its sales accrual. But later in time, the customer defaults and now the company is under stress from not having enough funds to manage the expenses. The company is under liquidity crisis, even though when it had made profits (Deegan & Samkin, 2013). When investing in a company, the main question arises, whether the investor should consider the cash flow numbers or accounting profits.
Cash flow considers time value of money, whereas accounting profits can be manipulated if the numbers don’t look good. Cash flow is a real measure of how a company is doing and profit is not real as there is no actual movement of cash. Although cash flow shows the actual movement of cash, this can give a wary picture of the company. This is because due to actual cash flow the company may show making money in a particular time period where as it will show stress the next month due to no actual receipt of …show more content…
There was an increase as compared to the first half of the year.
• There is an increase in the closing balance of the change in equity statement, it movement to $109,777,000 from $57,643,000 in 6 months.
The various disclosures required along with the Statement of change in equity are:
• Distribution to and contribution from owners – which will include the transactions with owners, like information of the issue of ordinary share capital, employee equity settled payments reserve and cost of share issued. It will also include the information about the distribution of dividends, if any. In case of ATM all the above will be included in such afore mentioned discloser other than dividend distribution as there is no distribution of dividends for ATM in the last 6 months that are under discussion.
• Individual components of total comprehensive income – these components are issue of share capital, dividends, change in equity and change in accounting policies, if any. In case of ATM except for change in accounting policy all other will comprise the discloser.
• Non-controlling interest – as ATM is a big company with a market cap of $1,374,270 (as per NZX data), so this discloser is required as