Financial Accounting Economic Environment

Question: Discuss about theFinancial Accounting for Economic Environment. Answer: Analysis The modern world is concerned with computing proper financial statements of every organization in order to maintain their competitive edge in the economic environment. This study is thus a critical evaluation of three organizations taken from three different sectors. The financial statements to be evaluated are one from the Government, the other from a government trading enterprise and the other from a commercial organization listed in the ASX. The firms, which taken into consideration, are State of Victorian Government for the Government sector, Power Water Corporation under Government trading firm and Virgin Australia coming under the commercial organization. To understand the differentiation in the reporting class of these organizations, an in depth assessment of their financial statements for the accounting period 2015-16 is undertaken. The Victorian Government as the name suggests is the Government itself, and the financial department of the above mentioned is analyzed. The finance department of the Government has a unique reporting mechanism, which evaluates the financial transaction and the services and portfolio of the organization. The financial statement reveals the important performance indicators of the organization. The financial position of the State of Victoria is in a feasible and healthy position with net assets amounting to $140 billion. There is an increase in the balance sheet by $5.7 billion because of excess cash flow operations. The net results of the Government are $50.7 million in surplus. This indicates that there is an increase in the financial assets as the process flows according to the movement of the global equity market. The entity also generates a good amount of revenue through the taxation from the economy. The key performance of Victorian Government is to efficiently looking after the welfare of the state and improving the standard of living of the citizens (Dtf.vic.gov.au. 2016). Power Water Corporation is a Government Trading organization performing in Australia concentrating on providing water to the state. They also focus on repairing pipelines and water lines to the society. They show a net profit after tax as a negative variance of 49.6% thus leading to an increase in the depreciation and amortization to $ 38.2 million. The gearing ratio is also very low due to rise in level of debt and equity. The cash flow created from operating performance is $ 22.6 million lower due to increased net profit after tax. The return on asset is lower than the previous year due to increase in the value of the asset. All the changes in the value of EBIT, operating cash flow, net profit variance has been due to revaluation of the assets. The source of income for this organization is through secured and unsecured loans and from the shareholders equity. The organization also uses its reserves to perform its activities (Powerwater.com.au. 2016). Virgin Australia is a renowned airline organization listed in the ASX, and the annual report of this firm is prepared with accordance with the framework permitted by the Australian Financial board so as to prepare a simple statement to attract potential investors and to satisfy the existing shareholders. The profit and loss statement shows that with the acquisition of Tiger Air, the firm has increased its income by $ 21.8 million. The introduction of new financial methods has led to the increase in the financial costs. The net deferred tax on assets has risen to $ 69.7 million because of extra losses from $ 152.4 million, which is inclusive of 14 million loss on tax due to subtraction of the losses of Tiger Air from the fixed assets. The property and plant has increased by 379 million dollars and the intangible assets by $202 million. The sum total of equity has reduced by $27. 3 million, due to a loss of $ 93.8 million. The other payables has grown by 80.1 million dollar and the pro visions of current and non-current. The interest bearing amount has increased by $ 811.5 million, which is inclusive of the secured and unsecured bonds. The organization focuses on generating high revenue after tax and an increase in the return of the average shareholders equity. The primary source of fund for this firm is through acquisition of new organizations and by releasing shares in the market. The revenue created from the business function acts a reserve to the firm (Virgin Australia 2016). Income Statement Cash Flow Statement Balance Sheet Financial Statements Key Indicators Source of fund Finance department of Victorian Government YES YES YES YES 1.Tax revenue from the state. 2.Funding from central government 3.Departmental funding Power Water Corporation YES YES YES YES 1.Secured and Unsecured loans from banks. 2.Investment from shareholders equity 3.Reserves of the organization Virgin Australia YES YES YES YES 1.Acquisition of new companies 2.Introduction of new shares in the market. 3.Increase in reserves and surplus due to better profit from the business function. Reference List Dtf.vic.gov.au. (2016).Treasury and Finance. [online] Available at: https://www.dtf.vic.gov.au/ [Accessed 26 Sep. 2016]. Powerwater.com.au. (2016).Home - Power and Water Corporation. [online] Available at: https://www.powerwater.com.au/ [Accessed 26 Sep. 2016]. Virgin Australia. (2016).Virgin Australia | Book flights holidays with Virgin Australia. [online] Available at: https://www.virginaustralia.com [Accessed 21 Sep. 2016].