Reference no: EM133666320

Business Valuation

Assignment - Purpose
This assignment creates a contextual link between theory and practice by requiring you to apply the strategy and accounting analysis concepts as part of the business valuation process using the publicly available annual report and financial statement of an actual corporate entity. The assignment will also develop the skills sought by employers: (i) the ability to convey information concisely, (ii) teamwork and (iii) analytical skills.

Assignment instruction
You are a strategy and accounting quality analyst to provide a report for valuation purposes. Use the Qantas 2023 annual report and the Case Study 1 Part A and Part B available at the end of your textbook and relevant media news (post pandemic issues; pandemic lay-offs, loss of high court case, CEO resignation and appointment of new CEO - impact on Qantas/airline industry) to provide a report in response to the following questions. In some of the questions, you may need information from the 2020 to 2022 Qantas annual reports or other airline company information for a benchmark.

Note: There is no word limit applied but provide a concise report following the order of the questions below, as guidance, 1500-2000 words on 12 size font such as Times New Roman.

Question 1: Using the five forces framework, analyse the competitive forces in the airline industry facing Qantas. Evaluate Qantas's prospects for profitability and growth in the next five years. To support your analysis, use past and current annual reports and relevant news or company disclosures.

Question 2: Discuss Qantas' competitive strategy since 2000 based on Case 1 Part A; discuss whether there have been significant changes in its competitive strategy in 2023, especially facing the current/post-Covid-19 circumstances (i.e, post pandemic issues).

Question 3: What is Qantas' competitive advantage, if any and can it still be sustained in the current/post-Covid-19 situation?

The following questions are associated with the steps in the accounting analysis of Qantas 2023 annual report. Using the annual report and with referral to the strategy analysis you have done and the accounting analysis in Case 1 Part B, respond to the following questions:

Question 4: As an outsider, an analyst can only rely on publicly available information, such as the annual report to assess the accounting quality. Discuss which sections of the annual report particularly interest you as an accounting analyst. What sensitive issues have been the auditor's focus in the 2023 annual report? (refer to closely watched accounting policies in the airline industry discussed in Case1 Part B).

Question 5: A nonrecurring item refers to an infrequent or unusual entry that appears on a company's financial statements. What is the importance of identifying nonrecurring items? What are your findings about the nonrecurring items in the 2023 Qantas annual report?

Question 6: In the 2023 annual report, several judgements made by management in the application of AASBs have a significant effect on the Consolidated Statements. What items in the financial statements are affected and what are the auditor's findings on this issue?

Question 7: Does the standard (IFRS) regulate segment reporting? What is the segment reporting in Qantas based on? What information would you look for in this segment reporting section as an analyst? Refer to at least one major airline company (such as Singapore Airlines, etc.) to compare regarding segment reporting.

Question 8: Accrual quality assessment deals with how a firm times its transactions to affect income. Discuss how you would assess the accrual quality (your approach) based on the 2023 report and what your findings are.

Question 9: Provide your comment on the changes in revenue and expense items for Qantas from 2021, 2022 and 2023; link your answer to Case Part B.

Question 10: Continue the operating profit and cash flow graph from operation presented in Case Part B to cover the figures in 2020, 2021, 2022 and 2023. Discuss what the purpose of analysing these figures for you is.

Question 11: Much of the financial analysis that analysts do, rely on good disclosures provided in the annual report; where in the 2023 annual report would you find disclosures to analyse Qantas' business? What disclosures you found in the 2023 annual report are significant for your accounting analysis?

Question 12: Evaluate and conclude your analysis with your comment on risks facing Qantas in the current and future; provide your discussion with a referral to the source you used.

Note: Need only Question 4 to Question 12.