Question 1: Adoption of AASB 16 has led to ‘right-of-use assets’ appearing on the Balance Sheet along with increased lease liabilities. What should I do when reformulating?

Answer: This makes no difference to our reformulation approach. The principles in Lecture 3 apply: lease-related assets (‘right-of-use assets’) are operating assets and lease-related liabilities are financial obligations.                                                                                                                                                 Taking our approach, you may find some large changes in the balance sheet in 2020 after the adoption of AASB 16 which may have an impact on companies’ ratios. You may consider discussing the impact of AASB 16 in Part D of the project.

Question 2: Some figures are different in the company’s annual report compared to the provided Excel financials. Which numbers should I use?

Answer: The numbers that I provided in Excel should be used. In some cases, I have fixed differences in presentation between annual reports for you. Some companies will slightly alter their figures from one annual report to the next. I have chosen which figures to use for you.

Question 3: Should I disaggregate accounts that you haven’t disaggregated in the provided Excel file?

Answer: Yes, if you think it is necessary. I have disaggregated some accounts for you in excel, but that doesn’t mean I have included every account that may require disaggregation.

Question 4: My company has different line items than that for JB Hi-Fi. What should I do?         Answer: You should adapt the JB Hi-Fi workbook for your company. Every company will have different line items in its financial statements. You must set up your spreadsheet to suit your company.

Question 5: I am not able to break down ROCE. What should I do?

Answer: Anomalies with the Break-Down ROCE = RNOA + FLEV x SPREAD.                                You may encounter problems with interpreting the break-down ROCE = RNOA + FLEV x SPREAD. Two common problems are:                                                                                                                       •     The company has changed from having NFA to NFO or from NFO to NFA                                    •     The company has NFE and NFA or it has NFI and NFO                                                                   If this happens, then for part D3 of the project, you should discuss why the situation has occurred and why it might make this break-down not meaningful/difficult to interpret.

Question 7: I want to compare the ratios of my company with industry ratios. Where I can find the industry ratios?

Answer: I have calculated some ratios for all publicly listed firms in Australia in the Specialty Retail industry [GICS Industry (255040)] during the period 2001-2021. Please refer to the Appendix of Lecture 6 slides.