澳洲会计学课程论文2

1、.：.；Page PAGE 10 of NUMPAGES 10Woolworths Ltd: A Financial AnalysisSubmitted by8 October 2021Table of Contents TOC o 1-3 h z u HYPERLINK l _Toc273719819 1.0 Executive Summary PAGEREF _Toc273719819 h 3 HYPERLINK l _Toc273719820 2.0 Introduction PAGEREF _Toc273719820 h 3 HYPERLINK l _Toc273719821 3.0

2、Key Objectives PAGEREF _Toc273719821 h 4 HYPERLINK l _Toc273719822 4.0 Theoretical background PAGEREF _Toc273719822 h 4 HYPERLINK l _Toc273719823 5.0 Research methodology PAGEREF _Toc273719823 h 4 HYPERLINK l _Toc273719824 6.0 Research findings PAGEREF _Toc273719824 h 5 HYPERLINK l _Toc273719825 6.1

3、 Geographical comparison PAGEREF _Toc273719825 h 5 HYPERLINK l _Toc273719826 6.1.1 European Union PAGEREF _Toc273719826 h 5 HYPERLINK l _Toc273719827 6.1.2 The United States PAGEREF _Toc273719827 h 5 HYPERLINK l _Toc273719828 6.1.3 Canada PAGEREF _Toc273719828 h 6 HYPERLINK l _Toc273719829 6.1.4 Kor

4、ea PAGEREF _Toc273719829 h 6 HYPERLINK l _Toc273719830 6.2 Comparison of adopting IFRS before and after the crisis PAGEREF _Toc273719830 h 6 HYPERLINK l _Toc273719831 6.2.1 Adoption of IFRS the cases of the United States PAGEREF _Toc273719831 h 6 HYPERLINK l _Toc273719832 6.2.2. Korea PAGEREF _Toc27

5、3719832 h 7 HYPERLINK l _Toc273719833 7.0 Research Limitations PAGEREF _Toc273719833 h 8 HYPERLINK l _Toc273719834 8.0 Conclusion and Recommendations PAGEREF _Toc273719834 h 8 HYPERLINK l _Toc273719835 9.0 References PAGEREF _Toc273719835 h 9 HYPERLINK l _Toc273719836 10.0 Report reflection PAGEREF

6、_Toc273719836 h 101.0 Executive SummaryThis report studies the financial statement of Woolworths and provides a valuation for the company, applying the approach suggested in the corporate finance literature, for instance, Bredley and Myers (2003). Empirical analysis showed that Woolworths is a defen

7、sive stock by applying regression analysis to the market returns. Based on the market data, the fair valuation of the firm is A$xx. Compared to the current market price, it is xx% above/below the fair valuation based on assumptions drawn from historical market data and financial reports. The firm is

8、 therefore undervalued/overvalued. 2.0 IntroductionThis submission serves for several purposes. Historical price data of the company and the board market index are drawn from Yahoo! Finance to classify whether the stock is defensive or risky from their historical returns, based on the capital asset

9、pricing model proposed by Sharpe (1963). Based on the slope obtained from the regression analysis, the cost of equity is determined in the preceding section. 3.0 Determine the cost of equity for the firm To determine the cost of equity of the firm, a typical approach is to consider the use of capita

10、l asset pricing model 4.0 Cash Flow Forecasts To determine the value of the firm, a necessary step is to forecast the future cash flow. Based on the pro-forma financial statements rebuilt in the previous section, the free cash flow analysis will follow the approach suggested by Damodaran (2007) and

11、xx (2003). 5.0 Research methodologyThis session outlines the research methodologies used in this submission. First of all, a set of regions will be studied in this report to give an outlook on the pace of implementation of IFRS around the globe. Next, this submission studies whether there has been c

12、hanged in adopting IFRS by investigating the corporations, regulatory bodies and investors. Developing regions and developed economies will be compared in adopting IFRS so as to compare the factors affecting the pace of adopting IFRS. 6.0 Research findings6.1 Geographical comparison6.1.1 European Un

13、ionEuropean Union has moved the ahead in adopting IFRS compared to other countries. In June 2000, the European Commission published the document, EU Financial Reporting Strategy: The Way Forward, which suggested that all publicly listed companies prepare their consolidated accounts in accordance wit

14、h IAS by 2005. Given the scale of the pledge, more than 9,000 listed companies are now using IFRS when generating their consolidated financial statements, according to statistics compiled in the Danskes (2006) research. In addition, member states of the European Union (EU) allow companies to use IFR

15、S for corporate income tax statements. Today, most EU countries require companies to generate reports that are in compliance with local Generally Accepted Accounting Principles (GAAP) for tax purposes, but those reports dont have to be in compliance with IFRS. In practice, companies may be implement

16、ing IFRS, as local GAAP guidelines increasingly converge with IFRS.6.1.2 The United StatesThe Securities and Exchange Commission (SEC) was a supporter towards a uniform accounting standard in the world. They suggested officially that US corporations should adopt IFRS by the end of 2021. However, the

17、y have turned their view to the opposite side after the financial crisis. The ambiguous treatment methods on special propose vehicle and credit instruments remained the concern of SEC officials on adopting IFRS for US corporations. Moreover, they suggested that it incurred a huge cost for companies

18、to change the accounting method. 6.1.3 Canada The Canadian Accounting Standards Board made a major change in 2005. They decided to adopt IFRS rather than the U.S. GAAP. The board has announced a fixed deadline of 2021 for companies to adopt IFRS in 2007. IFRS will be required for interim reports for

19、 public listed companies. 6.1.4 KoreaA domestic version of the Generally Accepted Accounting Principles (GAAP) has been adopted by Korean companies before the Asian Financial Crisis at the dawn of the last decade. However, the International Monetary Fund (IMF) advised Korean companies to improve tra

20、nsparency in accounting. Ever since the suggestion by the IMF, Korean companies have investigated to integrate their financial statements to international standard. They started planning and came to adopt IFRS gradually. 6.2 Comparison of adopting IFRS before and after the crisis6.2.1 Adoption of IF

21、RS the cases of the United StatesWith the green light from the SEC, U.S. corporations were welcome to the new accounting standards instead of U.S. GAAP. With the intensification of the globalization, more and more U.S. corporations seek business from overseas. Overseas investments account for an inc

22、reasing portion of top line and bottom line of the financial statements for US corporations. According to a survey done by the U.S Treasury, overseas equity investment showed a big jump in this decade. Equity investment in Europe doubled in 3 years time between 2003 and 2006. Therefore, there was an

23、 urgent need for them to adopt IFRS to give investors more transparency on their financial positions. Before the financial crisis, the SEC took an aggressive position on the harmonization of IFRS. It offered a road map to migrate GAAP to IFRS that would lead to all public companies reporting under I

24、FRS by 2021. Multinational companies were given permission to adopt IFRS before the purposed deadline. However, in a recent speech by SEC Director of Corporate Finance, White, he claimed that the IFRS should not be considered as the universal accounting standard. In his speech, White (2021) commente

25、d that He also commented that the SEC cannot see a single rationale for why the Commission should be looking at IFRS for U.S. companies. This indicated that without a strong support from the regulatory body, US corporations stepped backward to a further integration of accounting standards after the

26、crisis. Raising concerns from the corporate side have been spotted on the plan from the corporate side. According to a survey conducted in 2021 to financial professionals, close to half of respondents questioned about the current time line of implementing IFRS. Additional costs incurred in the prepa

27、ration of financial statements, together with economic slowdown, made companies burden heavier. There has been heated debate among accounting professionals and other stakeholders about the financial reporting quality and the additional costs incurred by corporations in adopting IFRS. Fuelled by the

28、financial crisis, extra costs in adopting IFRS becomes the major concern in budget planning in the U.S. corporations. 6.2.2. KoreaKorea sets an example of how integration of international accounting standard pick up its pace in speed after the global financial crisis. According to the Association of

29、 Korea Listed Companies, almost two-third of public listed companies has completed their internal investigation to the implementation of IFRS. By 2021, financial companies, such as banks, insurance companies and brokerage firms have obliged to publish their financial statements in compliant with IFR

30、S.7.0 Research LimitationsThis submission compares the pace of adopting IFRS in various regions in the world. Our analysis is limited to studying the implementations of IFRS in a selected sample set of countries only. As mentioned in Sletten and Ramanna (2021), accounting standards represent equilib

31、rium, and they co-develop with economic, political, and cultural institutions. (Hail, Leuz, and Wysocki, 2021). Cultural factors and shareholding structures should also be taken into consideration when this topic is studied. 8.0 Conclusion and RecommendationsFew will disagree that the consensus of r

32、eaching some form of uniform accounting standard is essential for the healthy development of business community. Exactly how much is a long-unresolved issue. And few would dispute that widening globalization of markets and politics implies some narrowing of rule differences among nations, though her

33、e too the optimal degree of uniformity is far from clear. The degree of harmonization, however, depends on the tangible economic benefits of corporations by adopting uniform accounting standards in the region. 9.0 ReferencesChoi, F., Frost D.S., and Meek, G. K, (1999) International Accounting, New Y

34、ork: Prentice Hall, Upper Saddle River. Clarkson, P., J. Guedes and R. Thompson (1996), On the Diversification, Observability, and Measurement of Estimation Risk, Journal of Financial and Quantitative Analysis, March, pp. 69-84.Daske, H. (2006) Economic Benefits of Adopting IFRS or US-GAAP Have the

35、Expected Cost of Equity Capital Really Decreased? Journal of Business Finance & Accounting, 33(3) & (4), pp. 329373Diamond, D. W. and R. E. Verrecchia (1991), Disclosure, Liquidity, and the Cost of Capital, Journal of Finance, Vol. 46, No. 4, pp. 1325-9.Hail, L., C. Leuz, and P. Wysocki. (2021). Glo

36、bal accounting convergence and the potential adoption of IFRS by the United States: An analysis of economic and policy factors. Working Paper, available on SSRN.Lawrence, S. (1996), International Accounting. London: International Thomson Business Press.Ramanna, K., and Sletten, E. (2021) Network Eff

37、ects in Countries Adoption of IFRS. Retrieved on 30th September 2021 from HYPERLINK ssrn/abstract=1590245 ssrn/abstract=1590245 Samir, S.M., and Sletten, E. (2003) Harmonization of Accounting Standards. Retrieved on 30th September 2021 from HYPERLINK /resource_file/11430p681-684.pdf /resource_file/11430p681-684.pdfWhite, J. (2021) IFRS and U.S. Companies: A Look Ahead, Retrieved on 30th September 2021 from HYPERLINK /news/speech/2021/spch060508jww.htm /news/speech/2021/spch060