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Unformatted text preview: ACCT3563 Issues in Financial Reporting and Analysis Part (e) BHP (i) The actual fair value of the company, as judged by the market shows that a majority of assets within BHP is reflected in the market perspective for positive future growth. The goodwill reflected in BHP in it MCS indicates that the current financial statements are not able to reflect the true market capitalisation. (ii) The volatility of the goodwill in the MCS remains quite stable, and reflects current market sentiment towards the company, that is that BHP still retains strong market confidence in its performance. However a recent fall in the 2009 year parallels employee cuts to its operations. In comparison to the book value which is a constant decrementing account, this is as BHP did not purchase any intangible assets from external sources, and in accordance with current accounting standards was required to amortise its recognised amount. WOW (i) The actual market capitalisation of Woolworths indicates that the company is highly undervalued in its financial statements, and the book values of the goodwill is not representative of the fair value of the market confidence in the company. Furthermore it must be noted that the retail industry has a high gearing as such it has lower net tangible assets. In addition the retail industry has limited identifiable intangible asset options as the majority of its operations are the transaction of physical goods, reflected in the relatively small book value of the purchased Eric Ng z3254875 Matt Young z3220749 Daryl Chee z3217460 Michael Hu z3257712 ACCT3563...
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This note was uploaded on 03/05/2012 for the course ACCT 2542 taught by Professor Knapp during the Three '11 term at University of New South Wales.
- Three '11