ACCT11059 USING ACCOUNTING

FOR DECISION MAKING

ASSIGNMENT STAGE 1 (ASS#1):

Student Name: Emma Walker

Student Number: S0239551
Course Coordinator: Maria Tyler
Due Date: 10th December 2015

Emma Walker
Student #: S0239551

ACCT11059 Accounting for Decision Making

Page 1

Step 1: Personal Profile & Blog

My personal profile on Moodle is as follows and can be found by following this link
https://moodle.cqu.edu.au/user/profile.php?id=22175. My blog can be found and followed via
this link http://outnumberedbynumbers.blogspot.com.au/.

Hi,
My name is Emma Walker; I am 28 years old and from Sydney.
I am studying my Bachelor of Business majoring in marketing and am planning on
graduating in early 2017. I currently work for a small metal bed manufacturing company
managing the marketing for this business and its sister companies as well. I have had over 7
years experience in marketing roles and am very passionate about marketing, in particular
consumer behaviour.
Outside of my career, I purchased a house with my then boyfriend (now husband) in 2010, I
was married in 2013 and we are now looking forward to starting a family together.
You can follow my blog at outnumberedbynumbers.blogspot.com.
I look forward to meeting you all over the course of this subject.
Kind regards,
Emma Walker
Step 2: Identifying My Company
We received our companies a little over a week go now which proved to be very exciting. The
company I am to review is Caltex Australia Limited.
So, why is this so exciting for me? Caltex Australia are fuel suppliers and retailers, who have
service stations and refineries across Australia and they have a refinery just up the road from
where I reside with my husband. Now, before you go thinking how unfortunate that might be,
let me come straight to their defence! The Caltex Refinery, and Caltex Australia themselves
do so much for our little community here in Kurnell. Kurnell is a little peninsula, a small
suburb south of Sydney. Everyone should, however often aren't familiar with Kurnell, after
Emma Walker
Student #: S0239551

ACCT11059 Accounting for Decision Making

Page 2

all it is the birth place of Australia. Captain Cook first landed in Botany Bay (Kurnell) on
29th April 1770 and discovered Australia. Now, I am getting off track talking about the
suburb I have come to love so much and not Caltex Australia. Although, part of the reasons I
love this suburb and am proud to call it my home actually has a lot to do with Caltex
Australia. Caltex Australia give a lot back to our little community, they make donations to the
local primary school which allows them to update their facilities. They also assist in running
a Santa visit for the kids every Christmas Eve in conjunction with the local Fire Station.
Using their funds, Santa comes around in a decorated fire engine handing out lollies and
visiting the kids. They drive the whole way around the suburb and every child waits
enthusiastically outside their home for Santa to come past. Its very special and something
that they need not organise and it isn't at all promoted by them to anyone outside of the
suburb. Its not the type of information you'll find on their website or in their annual report
but it certainly impacts the community and there is so much more that they do for Kurnell.
For those of you who aren't familiar with Caltex Australia, they are fuel suppliers and
convenience retailers who, according to their company profile, feature the very best
operational excellence in supply, refining, logistics and marketing. I am sure that most of the
Australian based students have used a Caltex service station before, I know there are two
service stations local to me which I have used in the past and there are many more across
Sydney and Australia. They are also one of Australias largest convenience retailers and
franchises, with over 85% of its stores operated by franchisees. According to their Company
History page, their "roots" go back to 1900 however Caltex first opened refineries in the
1950's and 1960's with Ampol being their largest competitor however both companies were
small in the market. In 1995 Caltex and Ampol merged and became the largest refinermarketer in Australia. If you would like to learn more about Caltex, check out their website
here http://www.caltex.com.au/Pages/default.aspx.
I have found and identified where Caltex Australia has their annual reports available and I
have downloaded the past three years of these for review, I have included the links below if
you would also like to have a look at these;
2014 Annual Report
http://www.caltex.com.au/InvestorCentre/Documents/2014/2014%20Annual%20Report.pdf

Emma Walker

ACCT11059 Accounting for Decision Making

Page 3
Student #: S0239551

2013 Annual Report

http://www.caltex.com.au/InvestorCentre/Documents/2013/2013%20Annual%20Report.pdf
2012 Annual Report
http://www.caltex.com.au/InvestorCentre/Documents/AnnualReports/Caltex
%202012%20Annual%20Report.pdf
With just a brief look over the 2014 annual report I have learnt some new facts about Caltex
Australia which I have included briefly below;

Caltex Australia are the only major brand listed on the Australian Securities Exchange

Their financial year runs from 1st January through 31st December, funnily enough
this interests me as I have only ever been involved in companies with the financial
year beginning 1st July-30th June.

They're share price increased by 71% from 31st December 2013 ($20.05) to 31st
December 2014 ($34.21).

They will be discontinuing the refining of oil at the Kurnell Refinery and it will
instead be a fuel import terminal. This conversion commenced in 2012.

Their statements are set out in narrative format.

All of Caltex Australia's statements are consolidated statements. When researching

what a consolidated income statement was, I came across this definition found on the
Investor Guide website as 'an income statement for a group of enterprises and its
parent company as a whole'.

According to their consolidated income statement their revenue is down in

comparison to 2013. In 2013 their revenue was $24,676,383.00 in 2014 however it
was recorded at $24,231,200.00. Would this be a reflection of the works occurring at
the Kurnell plant?

The consolidated income statement for the year ended 31 December 2014 includes
significant losses of $160,163,000 which, as stated in the notes, were impacted largely
by the conversion of the Kurnell Refinery which included remuneration payments,
consulting fee's etc.

Emma Walker

ACCT11059 Accounting for Decision Making

Page 4
Student #: S0239551

At this early stage of investigation into my companys annual reports, the following are some
questions I have. Please bear with me, I am new to accounting and am totally intimidated by
numbers, I feel like I almost become illiterate when it comes to accounting and mathematics.

Caltex Australia Limited states that they are a company limited by shares,
incorporated and domiciled in Australia. What does this mean?

Caltex only use consolidated statements, there are no separate statements. Are they
not required to submit statements per entity? Is this because they are also franchised?

Within the consolidated income statement and other statements for that matter, under
the revenue figure all the other figures are shown in brackets i.e. Product Duties and
Taxes. Are they shown in brackets because they are a loss? Are brackets replacing the
minus symbol?

I hope these are not stupid questions, as I mentioned, this is my first accounting subject and I
am like a fish out of water.
Being a local to the Kurnell Refinery I was aware of its conversion, we often receive mail
about it from them, however, I was not aware of the costs involved. Many of the workers live
locally, in fact, my neighbour was one staff member who was made redundant and after over
25 years of service, I was aware that he was given quite a generous redundancy. I did a little
research for news articles and came across the following.
This one article published in the Sydney Morning Herald explains how up to 630 jobs will be
lost, both direct and contracting roles, as a result of the Kurnell Refinery Conversion.
http://www.smh.com.au/business/caltex-axes-up-to-630-jobs-with-refinery-closure20120725-22sd6.html.
This next article on the other hand says the 58 year old refinery will cost $270 million dollars
over the two year process. They also state that BP was to close their Brisbane refinery this
year, in 2015.
http://www.heraldsun.com.au/business/breaking-news/caltex-shuts-kurnell-refinery/newsstory/04effca75ca7f10efc2c627aaef64536?=.

Emma Walker

ACCT11059 Accounting for Decision Making

Page 5
Student #: S0239551

Its understandable that the closure of the Caltex Refinery in Kurnell had a big impact on
their figures which is shown in their 2014 report.
Comments and discussions with Peers on this blog post
The following are comments left by peers and my responses to those for this section and blog
post.
1. sharonandreassen3 December 2015 at 03:20
Hi Emma, WOW, you are certainly off to a flying start with your company. I'm afraid I'm
a bit of a novice when it comes to accounting so I'm not much help to you with regards to
your questions. I'm great with numbers, not so good on the reflection side, so I'm finding
this whole posting your thoughts and feelings weird haha. Keep up the good work,
Hooroo Sharon
EmmaW3 December 2015 at 03:38
Hi Sharon,
Thanks for your feedback!
I am also finding this whole blogging and interactive learning quite different to
any other subject I have studied so far. AND I am in my final year of studying.
Anyway, makes it interesting I guess.
Good luck with your studies also! I loved your blog; in fact, its in my top 3 :).
2. Pattiyapon Jantarapitak3 December 2015 at 07:46
Hi Emma, your blog looks good so far! and from reading this post, I have some new
knowledge about Caltex and there's no such thing as silly questions because sometime the
question you ask might be the same/similar as someone else :)
Good luck with your studies :)
EmmaW3 December 2015 at 23:56
Thanks Patti,
I thoroughly enjoyed reading your blog too!
Good luck with your studies also!
3. Renae Gordon3 December 2015 at 16:40

Emma Walker

ACCT11059 Accounting for Decision Making

Page 6
Student #: S0239551

Loved reading this so much - I just wished I had been able to read this yesterday. So
interesting and informative. Your marketing is coming through with the intro to your
company! I know Kurnell well so I understand where you are coming from and its a
great little bit of local knowledge you can bring to the assignment. Did your find out
reasons for the difference in financial year in the Notes? Possibly because of
international trade perhaps? Your other questions are interesting to me as they are
currently being covered in the ACCT19062 Issues in Financial Reporting subject that
I'm currently doing also (well supposed to be doing but this subject is taking up my
time!) So I will think about your questions when and hopefully I can answer them for
you... with get back to you about these!! Re the brackets (..) You said this is your first
ACCT subject, so you haven't done principles of Accounting subject. This is covered
in this subject as the basics in accounting. But you are pretty much correct - yes
items/amounts that are shown in (brackets) are negative amounts in relation to the TAccount, I don't want to confuse you too much with jargon tho. eg Taxes are paid
OUT so negative. It has to do with increasing or decreasing the value in the
accounting equation. So I do empathize with you and now understand ur feeling of
being a fish out of water. But considering you have done VERY well!!! :-)
EmmaW4 December 2015 at 00:00
HI Renae,
Thanks so much for your feedback, I really appreciate it.
Yes, my first accounting subject, I have only done Econ and Statistics before this
and I must admit, only got a pass in those subjects :(.
I appreciate your offer to assist, I will be uploading some more questions shortly
with my spreadsheets which maybe you could assist with.
You know Kurnell? Do you live locally or have you been here before? Even
people in Sydney look at me funny when I say I live here which I am quite fine
about really, its our own secluded paradise :)
I loved reading your blog, it made mine and what seems like everyones top 3.
Congratulations, its very well done.
4. Renae Gordon3 December 2015 at 18:09

Emma Walker

ACCT11059 Accounting for Decision Making

Page 7
Student #: S0239551

also - have a read of Chapter 1 under Proprietorship in the 3rd paragraph - this
explained the debit/credit or positive negative amounts in an easily to understand
language that may also assist.
EmmaW4 December 2015 at 00:01
Thank you so much!
My Top 3 Blogs
The following is what I had included on my blog about my top 3 blogs. I had put a link to these
on the blog links forum as the assignment requested; this can be found here;
https://moodle.cqu.edu.au/mod/forum/discuss.php?d=91850.
I commented on a number of peoples blogs, a small number of which can be seen following
these links. I did comment on more blogs however I did not record all links and cannot find these
throughout my browser history.

http://misstara11059.blogspot.com.au/2015/11/worst-feeling-ever.html?
showComment=1449142029644#c6683207399898904282

http://iaccountnow.blogspot.com.au/2015/11/hi-everyone-i-have-started-this-blogas.html?showComment=1449141640119#c4594836338835834868

https://sharonandreassen.wordpress.com/2015/11/15/hello/comment-page-1/#comment-7

http://pattijantacct11059.blogspot.com.au/2015/11/welcome-to-my-blog.html#commentform

I must admit, I have had a lot of fun having a look at everyone's blogs. Its been incredibly
interesting and its been awesome to meet so many people from all over the world.
My top 3 favourite blogs are as follows;
Sharon Andreason by Sharon Andreason- https://sharonandreassen.wordpress.com/

Emma Walker

ACCT11059 Accounting for Decision Making

Page 8
Student #: S0239551

She had me at "Hooroo"!! Hooroo was how Sharon signed off on her first blog post and as this is
something my mum often says also, it put a smile on my face and I was all ears (or eyes) from
that point on. I was drawn to Sharons blog straight away, its easy on the eye, well-structured
and details of her company are communicated well. I was very interested in the company she had
been assigned and I believe she offered enough information on her blog to give me great insight
into who they are and what they do.
Is it all numbers and no fun? Tiff's accounting journey by Tiffany Hill
-http://isitallnumbersandnofun.blogspot.com.au/
Is it all numbers and no fun?? I was leaning towards yes when enrolling in this subject however I
have, so far, been proven wrong. Tiff's blog is very informative. She has communicated her
company in a way that is interesting and capturing. You can tell Tiff is actually very interested in
her company as well, she isn't just competing for marks, there seems to be genuine interest in her
company involved as well.
Lady of Ledgers by Renae Gordon - http://ladyofledgers.blogspot.com.au/
I must admit, I was trying to avoid adding this to my top 3 but for no other reason than that she
has made it into nearly everyone's top 3. However, I must give credit where credit is due and it
definitely is here. Renae has not only jumped straight onto this assignment and almost completed
all tasks but she has done it thoroughly and with humor. It is a really enjoyable blog and I look
forward to following it.
Comments and discussions with Peers on this blog post
1. Renae Gordon3 December 2015 at 16:44
LOL... that's funny (yes we need to share the 'love' around) but thank you very much. You
really have done a great job on this Assignment especially considering this is your first
ACCT subject so I admire you. Its hard enough for us that have done some. You have
asked some very valid questions and NO question is silly at all. Everyone needs to ask
questions to learn. And I am sure that others have the same questions too. Well done on a
great effort, I loved reading about Caltex and the way you have structured this and
explained things is very easy to read and engaging!

Emma Walker

ACCT11059 Accounting for Decision Making

Page 9
Student #: S0239551

EmmaW4 December 2015 at 00:02

Thanks so much Renae, I really appreciate your feedback!
Step 3: Caltex Australia Limited Financial Statements
My company spreadsheet has been uploaded with this assignment as requested.
Whilst compiling the information for this section I had come across some KCQs which are
as follows.
1. I noticed whilst entering the data for my companies Consolidated Income Statements
that, especially in 2012, the data changes from the 2012 Annual report to the 2013
Annual report for the year of 2012. So when looking at the figures on both reports,
they are slightly different. My question is, do I use the figures from the 2012 report as
the assignment asks OR do I use the figures in the 2013 Annual Report? For these
spreadsheets I have used the 2012 Annual Report information, after all this is what the
assignment asks for. However, logic tells me that I should use the figures from the
2013 report as obviously there has been some corrections made. What is everyone's
thoughts on this? My gut tells me that the answer is possibly in one of the lectures but
I thought I'd throw it out to me peers first.
2. Also, from year to year, lines in the statements have been added, so in my
spreadsheets I too added these and left blank those years that did not have anything
for this. Is this correct?
3. Another question is, when entering my balance sheets I had noticed that whilst the
total figures of sections were the same, they had moved figures and adjusted them
throughout other categories. For example Annual Report for 2012 and Annual Report
for 2013, talking of figures for the year 2012 only. I noticed that under current
liabilities, figures were noted for current tax liabilities and provisions but in the 2013
Annual Report a new category of employee benefits was added and they split the
figures up to be included here also. This comes back to my first question, do I enter
on my spreadsheets the figures from the 2012 Annual Report or 2013 Annual Report.
4. My other question is what is the consolidated statement of comprehensive income?
This obviously isn't required for this assignment and I may be getting ahead of myself
but I am interested to know!
Once the sections of my draft assignment were available through my blog I had emailed my
assigned feedback group for their input. Unfortunately at this point, one day prior to the
assignment due date I was unable to wait any longer and so I had emailed Maria Tyler, the

Emma Walker

ACCT11059 Accounting for Decision Making

Page 10
Student #: S0239551

course coordinator, regarding this who gave me some tips on how to answers my questions.
Her email response to these questions is as follows;
Hi Emma,
Thanks for your email, and best wishes for a speedy and thorough
recovery!
Firstly, you will notice in the assessment marking criteria that
marks are allocated for feedback that YOU have provided to others,
and also for your comments on the usefulness of other's feedback.
So, you don't actually NEED feedback from others, although it would
certainly make your commenting on their usefulness much easier :)
Secondly, you can choose which set of figures to enter. The
important point here is that you find out WHY the figures have
changed.... this is an excellent point to put on our Moodle discussion
forum, and also to do a little bit of research on (hint: the financial
report itself must tell you, in one of its notes, where figures may
have been re-stated).
Thirdly, it is fine how you have treated amounts that may not be
present in some years to other.
Finally, please see my response above - have a good thorough read
of the notes - and then, you can email me (and perhaps answer
your own query on the discussion forum) why this has occurred, and
which set of figures you would like to use! I can guarantee there are
other students who have the same query....
You are on your way to active learning!
Kind regards,
Maria
With further research I have identified the following for my first question.
1. When reading through the notes of the 2013 Annual Report regarding the changes in
the figures from 2012-2013, they stated the following however I am still left feeling a
little lost.
During 2012, the Group incurred significant items totalling a loss of
$441,355,000, that have been recognised in the income statement. These items
relate to employment benefit and remediation provisions ($430,000,000)
arising from the announcement
on 26 July 2012 of the planned 2014 closure of Kurnell refinery in New South
Wales, Australia and its proposed conversion to an import terminal. The
remaining expenses of $11,355,000 relate to cancelled capital projects
associated with the Kurnell refinery.
Emma Walker

ACCT11059 Accounting for Decision Making

Page 11
Student #: S0239551

Of this total $27,763,000 significant items (2012: $441,355,000), $42,611,000

is included in Other income (2012: $nil), $11,003,000 is included in Refining
and Supply expenses (2012: $441,355,000), and $3,845,000 in Other expenses
(2012: $nil).
Step 4: Ideas, reflections and reactions to Chapter 1 & 3 readings
Chapter 1 - 'A Way of Viewing Business'
When reading through Chapter 1 A way of viewing business, I must admit, there were a lot
of times I asked myself what does this seriously have to do with accounting?. I am still
overly confused why there was so much time discussing typewriters and QWERTY
keyboards when really, we could have just had one sentence that said we continue to do
things the same way as it would be too hard and long a process to teach an old dog new
tricks and hey, I get it, I am a dont fix it unless its broken kinda gal. At the end of the day,
I have very limited time to do the things I need to in everyday life and when it comes to
studying, I like to know that I am getting facts straight up, tell me what I need to know, no
beating around the bush. Regardless, these are my thoughts reading through the chapter.
Dr Martin Turner introduces MYOB in the very first paragraph, phew, this one I know.
Whilst I am not in an accounting position at work, we do use MYOB and I often us it to
produce outstanding debtors ledgers to identify which if my customers is in debit over their
trading terms. One thing I did not know about MYOB is that it stands for Mind Your Own
Business and really, its kind of obvious!
Later Dr Turner talks about trusts and whilst I do not totally understand a trust, not much
more than what was explained in this document, I had heard of them before. The company
that employs me pays their employees bonuses at Christmas time and that bonus comes from
a trust named after the directors late father who also founded the business. Woah, maybe this
isnt too bad after all, I know of most of this stuff!
When reading about trial balances previous to this document, I could never get my head
around what that would be? After all, how do you trial a balance? But now I understand and
in an essence, when I look at my credit card statement online, this is shown in a trial balance
format. Please correct me if I am wrong but this is definitely how I understand it.
One thing I am still confused on is the double entry accounting and it is here that I wish this
chapter concentrated less on typewriters and keyboards and explained more thoroughly what
Emma Walker

ACCT11059 Accounting for Decision Making

Page 12
Student #: S0239551

this was. I understand that this is obviously a double handling at some stage but I feel this is
something I am going to need to research more thoroughly to completely understand. Any
insight on this would be appreciated also.
Question 1 Why do we have double entry accounting? Why do we put everything in
twice? Why not just once?
I feel quite nervous answering this question as I do not feel I totally understand this concept. I
feel the only reason that the double handling of information is done to rule out human error
upon the entering of the data. Computers may pick up some errors made during entry but not
all. Is this all this is, a "quality assurance" process?
Question 1-2
For your firm, identify three Assets, three Liabilities and three items of Equity. Describe
what each item means to you (you may find some footnotes in your firms financial
statements may help you to make more sense of these items). Put on your blog your answer
to this question and comment on the answers to this question of at least three other people.
Include links to your blog and also to your comments in other peoples blogs.
Three assets that I have identified in Caltex Australia Limiteds 2014 Annual Report include
1. Cash and cash equivalents whilst there is no note on this asset and I am not
entirely sure what is, a quick google search informs me it could include petty cash,
cheques not yet deposited and currency (2004-2015, p. 1).
2. Receivables @ $837,672.00 according to their notes this includes trade debtors,
allowance for impairment, associated entities, other related entities and other debtors.
3. Inventories @ $1,118,084.00 this figure includes, according to their notes, crude oil
and raw material, inventory in process, finished goods and materials and supplies.
Three liabilities that I have identified on the Caltex Australia Balance Sheet from their 2014
Annual report include;
1. Payables @1,175,515.00 this includes, according to their notes, trade creditors
unsecured, related entities and other corporations and persons.
2. Interest bearing liabilities @ $110,000.00 this includes, according to their notes,
US notes, hedge payable and lease liabilities.
Emma Walker

ACCT11059 Accounting for Decision Making

Page 13
Student #: S0239551

3. Employee benefits @ $163,200.00 this includes, according to their notes, annual

leave, long service leave, employee bonus, redundancy and retirement benefits.
A question that came to mind when identifying these liabilities was what is a hedge payable?
This was listed in their notes under interest bearing liabilities.
Three equity items identified on the Caltex Australia Balance Sheet from their 2014 Annual
report include;
1. Issued Capital @ $543,415.00 this includes, according to their notes, ordinary
shares.
2. Treasury Stock @ -$607,000.00 I am not certain what this is and there are no notes
to assist me in understanding. I believe, from a quick google search, that this includes
shares acquired (2004-2015, p. 1).
3. Reserves @ -$3,498,000.00 again I am not certain what this is and there are no
notes to assist me in understanding. Again, according to a quick google search I
believe this relates to capital investment projects or any other large and anticipated
expense(s) that will be incurred in the future (2015, p. 1).

Chapter 3 - Introducing Financial Statements

I was looking forward to this chapter of the study guide, hoping that I was going to grasp a
good understanding of what we have been working on and hopefully reassure me on my work
so far. Sometimes being a distance student is so hard!! I lack confidence when it comes to
numbers and I am an over thinker which I honestly believe makes me confuse myself even
more. Regardless, I think I did well in this chapter, I feel a little fuzzy on the du Pont
structure and question two for this chapter kind of stumped me but I believe I have answered
it correctly and if not, please feel free to enlighten me.
When this chapter explained that financial statements were set out differently from company
to company my first thoughts were, I got this! I was aware that firms set out their financial
statements differently just by looking at those prepared by myself for Caltex and the ones my
peers have completed for their assigned companies. I was also aware that different companies
called their statements different things for the same reason; I learnt this through my peers
blogs. I dont quite understand why they would be called different names, especially if they

Emma Walker

ACCT11059 Accounting for Decision Making

Page 14
Student #: S0239551

are Australian companies. I would have thought there would be a guideline or rule for this,
obviously not.
To be honest, before I read through Chapter 1 and had to answer the questions, in particular
question 2, I had no idea that the assets, liability and equity were all included in the balance
sheet only. I expected to see these throughout the four financial statements I had in front of
me, little did I know then. This chapter has now confirmed this and settled any doubt I had
about that and about my answer to Question 2 for Chapter 1. Light bulb moment, the balance
sheet does state this pretty clearly however, I wasnt sure if it was a trick.
This chapter states that in the balance sheet there should/may be a category called
Investment in Subsidiaries which lists the firms in which the company, along with the
shareholding the parent company has in each of them. My company, Caltex Australia Ltd,
does not have a category called Investment in Subsidiaries and the only thing closest to this
was the Investments accounted for using the equity method. When I went to the notes for
this category it does list five other company names and a percentage of interest of which I am
assuming they own. Would this be correct? Is this their Investments in subsidiaries? If so, I
was expecting there to be more than five of these. Maybe because they franchise a lot of their
retail outlets, this takes away many of their investments? Also, out of the five companies,
three are 50% owned by Caltex, two are 40% owned and one is 25% owned by Caltex but
these are not listed on the balance sheet as non-controlling interests or minority interests as
this chapter suggests. It does however show, in the 2014 Annual report, the percentages
owned for the years 2013 and 2014 and these did not change over those two recorded years.
This chapter explains that the income statement will also include the non-controlling
interests or minority interests, again, Caltex Australia does not list either of those
categories, rather lists share of net profit of entities accounted for using the equity method
and this is listed at $917,000.00 for 2014. I am unsure why they name this category different
and I am unsure what the equity method is. This is another question of mine, what is the
equity method?
Looking at my companies Statement of Changes in Equity I can see that their balance at
31st December 2013 ($2,159,579.00) is larger than that of the balance at 31st December 2014

Emma Walker

ACCT11059 Accounting for Decision Making

Page 15
Student #: S0239551

($2,532,591.00). There is not a large difference but there is still a decrease which I would
think is a cause for concern, should it be?
Question 3-1
What is wrong with just doing what works in relation to analysing financial statements?
There are plenty of experienced practitioners in our capital markets. Why do we not simply
find out what most are doing and just do this ourselves? What do you think and why?
I dont think that we could do what just works or what everyone else is doing because every
companys financial statements are different, they contain different categories and therefore
will require different analysis. If they were all analysed the same then they would all require
the same categories and layouts etc. to be successful. But then again, every business is
different so how can you analyse them as being the same? It just would not work.
Question 3-2
What is the benefit of having a structure, such as the du Pont Companys framework, to
help use ratios to analyse a firms financial statements? Is it any better (or worse) than
simply doing what experienced practitioners do? Why or why not?
I believe, the benefit of a structure, such as the du Pont Companys framework to use ratios to
analyse a firms financial statements may be that of time. By looking at ratios there is a quick
and clear cut identification of the performance of the company. However, as this chapter
explains, an analysis of a firms financial statements can help us gain an understanding of the
quantified dollar effects of the companies economic and business realities. The du Pont
Companys framework is not quantifiable and therefore I do not believe it is any better than
what experienced practitioners do. How can you truly understand the value if it isnt
quantifiable?
Step 5: Student Feedback
References
Accounting Coach 2004-2015, Q&A, viewed 5th December 2015,
http://www.accountingcoach.com/blog/item-in-cash-and-cash-equivalents
Accounting Coach 2004-2015, Stockholders equity, viewed 5th December 2015,
http://www.accountingcoach.com/stockholders-equity/explanation/4

Emma Walker

ACCT11059 Accounting for Decision Making

Page 16
Student #: S0239551

Investopedia 2015, Capital reserve, viewed 5th December 2015,

http://www.investopedia.com/terms/c/capitalreserve.asp

Emma Walker

ACCT11059 Accounting for Decision Making

Page 17
Student #: S0239551