The Value Of Cash Flow For The Financial Year 2015

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Question 1 a. The main source of cash flow for the financial year 2015 of the Harvey Norman Holdings Limited is from franchising operations. The net cash flow from the operating activities increased by 45% to $340.45 million from $338.94 million in the prior year. The strong underlying sales performance is due to the increase of franchise fees of 7.2% or $47.44 million which is from $661.86 million (2014) to $709.3 million (2015). There is also decrease in tactical support to franchise during 2015 financial year by 21.2% or $21.84 million, from $103.19 million (2014) to $81.35 million (2015). The reduction in tactical support & increase in franchise fees income and higher sales company operated stores justified the 39.4 % or $56.64…show more content…
It is specified in the notes to the financial statements that Plant and Equipment assets are stated at historical costs cost accumulated depreciation and any accumulated impairment losses. Land and buildings are measured at fair value less accumulated depreciation on buildings and leasehold land any impairment losses recognised at the date of the revaluation. Valuations are performed with sufficient frequency to ensure that the carrying amount of a revalued asset does not differ materially from its fair value. The assets residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. The company’s investment properties in Australia and properties held in joint venture entities are all subject to a semi-annual review to a fair market value every reporting period. The properties were independently valued made by external valuers or reviewed internally by the Property Review Committee and the directors of the company which shows that it is in accordance with the Accounting Standards on measurement after recognition (paragraphs 29-66). It is also stated in the report that the depreciation method used is straight line method. The valuation for the 30 June 2015 financial year resulted in a net increase. c. Accounting Policies for Dividends • A liability for dividends arises when the treasurer makes a formal determination or when it is declared by resolution of the members or shareholders in a general
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