BAO2203: Disclosure and the Usefulness of Financial Reports - Corporate Accounting

Internal Code: MAS3581

Corporate Accounting:

Disclosing entities are regulated by the Corporations Act (2001), Accounting Standards and ASX requirements. The continuous disclosure requirements in ASX LR 3.1 require timely reporting to the ASX of significant events and financial information that is likely to impact the price of the entity’s securities. ASX LR 3.1 contains an overriding general requirement to disclose information that a reasonable person would expect to have a material effect on price, however, the rule includes the following exceptions: 1)  It would breach the law to disclose information 2) The information relates to an incomplete proposal or negotiation 3) The information comprises matters of supposition or is insufficiently definite to warrant disclosure 4) Information is generated for internal management of the company 5) Information is a trade secret 6) A reasonable person would not expect the information to be disclosed 7) The information is confidential and ASX has not formed a view that has ceased to be confidential. Questions: Part 1: 1. The percentage increase in Gross profit. 2. The percentage increase in net profit. 3. Return on investment (assets) for 2015 & 16. (hint, use EBIT). 4. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2016. 5. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Financial Position for 2016. 6. As a financial analyst, comment (two paragraphs) on the strength of the Consolidated Statement of Cash Flows for 2016. 7. Based on your analysis, and BEFORE knowledge of the recent share price decline and share trading halt, would you have recommended to your clients to buy, hold or sell Bellamy’s shares? Why?