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Challenger Limited
Balance Sheets for the year
ended at 31 December
( U.S dollars)
2007 2008
Assets
Non-Current Assets
Property , plan and equipment $152,425,129.00 $49,410,844.00
Total non-currentassets $152,425,129.00 $49,410,844.00
Current assets
Spare parts inventory $6,956,849.00 $12,874,676.00
Receivables and prepayments $40,518,272.00 $18,887,780.00
Due from related parties $519,044.00 $140,136.00
Cash and Cash equivalents $2,842,879.00 $2,753,003.00
TotalCurent assets $50,837,044.00 $34,655,595.00
Total Assets $202,262,173.00 $84,066,439.00
Equity and liabilities
Equity
Capital $64,957,265.00 $50,000,000.00
Additional Paid-in Capital $70,795,653.00 $15,000,000.00
Revaluation reserve $16,782,544.00 $1,403,983.00
Other -$1,368,122.00
R/E $9,240,432.00 $2,314,787.00
Total Equity $160,407,772.00 $68,721,770.00
Liabilities
Non-Current Liabilities
Borrowings $4,545,190.00 $738,499.00
Total Non-CurrentLiabilities $4,545,190.00 $738,499.00
Current Liabilities
Borrowings $13,554,645.00 $2,676,000.00
Trade and other payables $14,060,820.00 $7,016,164.00
Current Tax liabilities $4,062,411.00 $2,869,643.00
Provisions $491,280.00
Divididends and redemption payable $3,078,302.00 $2,044,363.00
Due to related parties $3,061,753.00
Total CurrentLiabilities $38,309,211.00 $14,606,170.00
Total liabilities $42,854,401.00 $15,344,669.00
Total equity and liabilities $203,262,173.00 $84,066,439.00
Challenger Limited
Statements of Income
for the year ended
31 of december
( US dollars)
2007 2008
Drilling revenue $73,071,917.00 $46,043,831.00
Drilling costs -$52,933,369.00 -$34,309,267.00
Gross Profit $20,138,548.00 $11,734,564.00
General and administrative Expenses -$9,775,827.00 -$8,021,383.00
Other income $2,446,433.00 $19,005.00
Other expense -$1,870,000.00
Operating (loss) / Profit fromoperations $10,939,154.00 $3,732,186.00
Finance income $46,015.00 $751,224.00
Finance cost -$673,397.00 -$559,662.00
(Loss) / profit before income tax $10,311,772.00 $3,923,748.00
Income tax -$3,389,127.00 -$2,307,594.00
(Loss)/ profit for the year $6,922,645.00 $1,616,154.00

Basis of Preparation The financial statements have been preparedin accordance with International Financial Reporting Standards(IFRS). The financial statements have been prepared under thehistorical cost convention as modified by the revaluation of therigs. Rigs include drilling equipment, well control equipment,electrical equipment, power plant, and so on.

Required:

A. Since the financial statements are prepared in U.S. dollars,does this imply that the financial statements are prepared inaccordance with U.S. GAAP? Why or why not?

B. List three major differences between this balance sheet incomparison to balance sheets prepared under U.S. GAAP.

C. Evaluate the performance of the company using the incomestatement. What appears to be the cause of the major change inperformance?

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Lelia Lubowitz
Lelia LubowitzLv2
28 Sep 2019

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(Amounts in millions) 2017 2016 2015
Revenues $ 485,873.00 $ 482,130.00 $ 485,651.00
Cost of sales $ 361,256.00 $ 360,984.00 $ 365,086.00
Gross Profit $ 124,617.00 $ 121,146.00 $ 120,565.00
Operating, selling, general and administrative expenses 101,853.00 97,041.00 $ 93,418.00
Operating income $ 22,764.00 $ 24,105.00 $ 27,147.00
Non-operating Income/Expenses:
Interest expenses 2,367.00 2,548.00 $ 2,461.00
Interest income 100.00 81.00 $ 113.00
Interest, net $ 2,267.00 $ 2,467.00 $ 2,348.00
Income from continuing operations before income taxes $ 20,497.00 $ 21,638.00 $ 24,799.00
Income taxes 6,204.00 6,558.00 $ 7,985.00
Income from continuing operations $ 14,293.00 $ 15,080.00 $ 16,814.00
Income (loss) from discontinued operations, net of income taxes - - $ 285.00
Consolidated net income $ 14,293.00 $ 15,080.00 $ 17,099.00
Weighted-average common shares outstanding (basic) 3,101.00 3,207.00 3,230.00
Cash Dividends declared $ 6,202.00 $ 6,285.72 $ 6,202.00
Current assets:
Cash and cash equivalents 6,867.00 8,705.00 $ 9,135.00
Receivables, net 5,835.00 5,624.00 $ 6,778.00
Inventories 43,046.00 44,469.00 $ 45,141.00
Prepaid expenses and other 1,941.00 1,441.00 $ 2,224.00
Total current assets $ 57,689.00 $ 60,239.00 $ 63,278.00
Property and equipment:
Property and equipment 179,492.00 176,958.00 $ 177,395.00
Less accumulated depreciation (71,782.00) (66,787.00) $ (63,115.00)
Property and equipment, net $ 107,710.00 $ 110,171.00 $ 114,280.00
Property under capital leases:
Property under capital leases 11,637.00 11,096.00 $ 5,239.00
Less accumulated amortization (5,169.00) (4,751.00) $ (2,864.00)
Property under capital leases, net $ 6,468.00 $ 6,345.00 $ 2,375.00
Goodwill 17,037.00 16,695.00 $ 18,102.00
Other assets and deferred charges 9,921.00 6,131.00 $ 5,671.00
Total assets $ 198,825.00 $ 199,581.00 $ 203,706.00
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings 1,099.00 2,708.00 $ 1,592.00
Accounts payable 41,433.00 38,487.00 $ 38,410.00
Accrued liabilities 20,654.00 19,607.00 $ 19,152.00
Accrued income taxes 921.00 521.00 $ 1,021.00
Long-term debt due within one year 2,256.00 2,745.00 $ 4,810.00
Obligations under capital leases due within one year 565.00 551.00 $ 287.00
Total current liabilities $ 66,928.00 $ 64,619.00 $ 65,272.00
Long-term debt 36,015.00 38,214.00 $ 41,086.00
Long-term obligations under capital leases 6,003.00 5,816.00 $ 2,606.00
Deferred income taxes and other 9,344.00 7,321.00 $ 8,805.00
Redeemable noncontrolling interest - - $ -
Total Long-term liabilities $ 51,362.00 $ 51,351.00 $ 52,497.00
Total Liabilities $ 118,290.00 $ 115,970.00 $ 117,769.00
Equity:
Common stock 305.00 317.00 $ 323.00
Paid-in Capital in excess of par value 2,371.00 1,805.00 $ 2,462.00
Retained earnings & Accumulated other comprehensive income (loss) 75,122.00 78,424.00 $ 78,609.00
Total Walmart shareholders' equity $ 77,798.00 $ 80,546.00 $ 81,394.00
Nonredeemable noncontrolling interest 2,737.00 3,065.00 $ 4,543.00
Total equity $ 80,535.00 $ 83,611.00 $ 85,937.00
Total liabilities and equity $ 198,825.00 $ 199,581.00 $ 203,706.00
(Amounts in millions) 2014 2013 2012
Revenues $ 476,294.00 $ 469,162.00 $ 446,950.00
Cost of sales $ 358,069.00 $ 352,488.00 $ 335,127.00
Gross Profit $ 118,225.00 $ 116,674.00 $ 111,823.00
Operating, selling, general and administrative expenses $ 91,353.00 $ 88,873.00 $ 85,265.00
Operating income $ 26,872.00 $ 27,801.00 $ 26,558.00
Non-operating Income/Expenses:
Interest expenses $ 2,335.00 $ 2,251.00 $ 2,322.00
Interest income $ 119.00 $ 187.00 $ 162.00
Interest, net $ 2,216.00 $ 2,064.00 $ 2,160.00
Income from continuing operations before income taxes $ 24,656.00 $ 25,737.00 $ 24,398.00
Income taxes $ 8,105.00 $ 7,981.00 $ 7,944.00
Income from continuing operations $ 16,551.00 $ 17,756.00 $ 16,454.00
Income (loss) from discontinued operations, net of income taxes $ 144.00 $ - $ (67.00)
Consolidated net income $ 16,695.00 $ 17,756.00 $ 16,387.00
Weighted-average common shares outstanding (basic) 3,269.00 3,374.00 3,460.00
Cash Dividends declared $ 6,139.00 $ 5,361.00 $ 5,048.00
ASSETS 2014 2013 2012
Current assets:
Cash and cash equivalents $ 7,281.00 $ 7,781.00 $ 6,550.00
Receivables, net $ 6,677.00 $ 6,768.00 $ 5,937.00
Inventories $ 44,858.00 $ 43,803.00 $ 40,714.00
Prepaid expenses and other $ 2,369.00 $ 1,588.00 $ 1,774.00
Total current assets $ 61,185.00 $ 59,940.00 $ 54,975.00
Property and equipment:
Property and equipment $ 173,089.00 $ 165,825.00 $ 155,002.00
Less accumulated depreciation $ (57,725.00) $ (51,896.00) $ (45,399.00)
Property and equipment, net $ 115,364.00 $ 113,929.00 $ 109,603.00
Property under capital leases:
Property under capital leases $ 5,589.00 $ 5,899.00 $ 5,936.00
Less accumulated amortization $ (3,046.00) $ (3,147.00) $ (3,215.00)
Property under capital leases, net $ 2,543.00 $ 2,752.00 $ 2,721.00
Goodwill $ 19,510.00 $ 20,497.00 $ 20,651.00
Other assets and deferred charges $ 6,149.00 $ 5,987.00 $ 5,456.00
Total assets $ 204,751.00 $ 203,105.00 $ 193,406.00
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings $ 7,670.00 $ 6,805.00 $ 4,047.00
Accounts payable $ 37,415.00 $ 38,080.00 $ 36,608.00
Accrued liabilities $ 18,793.00 $ 18,808.00 $ 18,180.00
Accrued income taxes $ 966.00 $ 2,211.00 $ 1,164.00
Long-term debt due within one year $ 4,103.00 $ 5,587.00 $ 1,975.00
Obligations under capital leases due within one year $ 398.00 $ 327.00 $ 326.00
Total current liabilities $ 69,345.00 $ 71,818.00 $ 62,300.00
Long-term debt $ 41,771.00 $ 38,394.00 $ 44,070.00
Long-term obligations under capital leases $ 2,788.00 $ 3,023.00 $ 3,009.00
Deferred income taxes and other $ 8,017.00 $ 7,613.00 $ 7,862.00
Redeemable noncontrolling interest $ 1,491.00 $ 519.00 $ 404.00
Total Long-term liabilities $ 54,067.00 $ 49,549.00 $ 55,345.00
Total Liabilities $ 123,412.00 $ 121,367.00 $ 117,645.00
Equity:
Common stock $ 323.00 $ 332.00 $ 342.00
Paid-in Capital in excess of par value $ 2,362.00 $ 3,620.00 $ 3,692.00
Retained earnings & Accumulated other comprehensive income (loss) $ 73,570.00 $ 72,391.00 $ 67,281.00
Total Walmart shareholders' equity $ 76,255.00 $ 76,343.00 $ 71,315.00
Nonredeemable noncontrolling interest $ 5,084.00 $ 5,395.00 $ 4,446.00
Total equity $ 81,339.00 $ 81,738.00 $ 75,761.00
Total liabilities and equity $ 204,751.00 $ 203,105.00 $ 193,406.00
1. Calculate the Net income, Dividens, Net sales, Net credit sales, average inventory, and Average fixed assets

A fire destroyed your firm’s ending balance sheet and income statement after the year-end
but before the financial statements are released. However, you have been successful in obtaining the
numbers for the beginning balance sheet and the statement of cash flows, which are provided to you and
your team members in Excel format. Fields representing the missing balance sheet and income statement
are End of year2 in the Excel sheet

CONSOLIDATED BALANCE SHEETS (USD $) End of year 2 End of year 1
In Thousands, unless otherwise specified
Current assets:
Cash and cash equivalents 　 598
Receivables, net 　 230
Inventories, net 　 2309
Other current assets 　 47
Total current assets 　 3184
Property and equipment, net of accumulated depreciation 　 1292
Assets held for sale 　 1
Goodwill 　 76
Intangible assets, net 　 29
Other assets, net 　 32
Assets, Total 　 4614
Current liabilities: 　 0
Current portion of long-term debt 　 0
Accounts payable 　 2030
Accrued expenses 　 380
Other current liabilities 　 150
Total current liabilities 　 2560
Long-term debt 　 604
Other long-term liabilities 　 239
Commitments and Contingencies 　 0
Stockholders Equity Attributable to Parent [Abstract] 　 0
Preferred stock, nonvoting, $00001 par value 　 0
Common stock, voting, $00001 par value 　 0
Additional paid-in capital 　 520
Treasury stock, at cost 　 -27
Accumulated other comprehensive income (loss) 　 3
Retained earnings 　 715
Total stockholders equity 　 1210
Liabilities and Stockholders Equity, Total 　 4613
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) 12 Months Ended
In Thousands, except Per Share data, unless otherwise specified Year 2
Net sales 　
Cost of sales, including purchasing and warehousing costs 　
Gross profit 　
Selling, general and administrative expenses 　
Operating income 　
Interest expense 　
Other income, net 　
Total other, net 　
Income before provision for income taxes 　
Provision for income taxes 　
Net income 　
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) 12 Months Ended
In Thousands, unless otherwise specified Year 2
Cash flows from operating activities:
Net income $392
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 208
Share-based compensation 13
Loss on property and equipment, net 1
Other 2
Provision for deferred income taxes -2
Excess tax benefit from share-based compensation -16
Increase Decrease in Operating Capital
Receivables, net -32
Inventories, net -204
Other assets 11
Accounts payable 113
Accrued expenses 63
Other liabilities -4
Net cash provided by operating activities 545
Cash flows from investing activities:
Purchases of property and equipment -196
Payments to Acquire Businesses, Gross -186
Sale of certain assets of acquired business 19
Proceeds from sales of property and equipment 1
Net cash used in investing activities -362
Cash flows from financing activities:
(Decrease) increase in bank overdrafts -3
Decrease in financed vendor accounts payable 0
Issuance of senior unsecured notes 449
Payment of debt related costs -9
Borrowings under credit facilities 0
Payments on credit facilities 0
Dividends paid -18
Proceeds from the issuance of common stock, primarily exercise of stock options 4
Tax withholdings related to the exercise of stock appreciation rights -22
Excess tax benefit from share-based compensation 16
Repurchase of common stock -81
Contingent payment accrued on acquisitions 5
Other -1
Net cash provided by (used in) financing activities 331
Net increase (decrease) in cash and cash equivalents 514
Cash and cash equivalents, beginning of period 598
Cash and cash equivalents, end of period 1,112
Supplemental cash flow information:
Interest paid 35
Income tax payments 219
Non-cash transactions:
Accrued purchases of property and equipment 21
Retirement of common stock 0
Contingent consideration accrued on acquisitions 0
Changes in other comprehensive income 1
Declared but unpaid cash dividends $4

Common Size Income statement

2017

2016

$M

Percentage

$M

Percentage

Operating revenue

2319

100%

2375

100%

Operating expenses

-1666

-71.84%

-1725

-72.63%

Earnings before interest, tax, depreciation, amortisation,changes in fair value of hedges and other signifcant items(EBITDAF)

653

28.16%

650

27.37%

Depreciation and amortisation

-264

-11.38%

-236

-9.94%

Impairment of assets

-10

-0.43%

-4

-0.17%

Loss on sale of assets

-4

-0.17%

-1

-0.04%

Net change in fair value of electricity and other hedges

-76

-3.28%

-15

-0.63%

Operating profit

299

12.89%

402

16.93%

Finance Cost

79

3.41%

80

3.37%

Interest Income

2

0.09%

2

0.08%

Net change in fair value of treasury instruments

55

2.37%

-68

-2.86%

Net profit before tax

277

11.94%

256

10.78%

Income tax expense

-80

-3.45%

-71

-2.99%

Net proft after tax attributed to the shareholders of the parentcompany

197

8.50%

185

7.79%

Earnings per share (EPS) attributed to ordinary equityholders of the parent

cents

cents

Basic and diluted earnings per share

7.7

0.33%

7.2

0.30%

COMPREHENSIVE INCOME STATEMENT

COMPREHENSIVE INCOME STATEMENT

2017

2016

$M

Percentage

$M

Percentage

Net profit after tax

197

8.50%

185

7.79%

Other comprehensive income

Intems that will not be reclassifed to profit or loss

Asset revaluation

428

18.46%

889

37.43%

Defferred tax on the above item

-120

-5.17%

-248

-10.44%

Items that may be reclassified to profit or loss

308

641

Net gain on cash flow hedges

2

0.09%

Exchange differences arising from translation of foreignoperation

1

0.04%

-23

-0.97%

Income tax on the above items

3

0.13%

-23

-0.97%

Other comprehensive income for the year, net of tax

311

13.41%

618

26.02%

Total comprehensice income for the year, net of tax attributedto shareholders of parent company

508

21.91%

803

33.81%

BALANCE SHEET

2017

2016

$M

Percentage

$M

Percentage

Current Assets

Cash and cash equivalents

80

0.92%

118

1.38%

Trade receivables

260

3.00%

194

2.27%

Financial Instruments

59

0.68%

71

0.83%

Other assets

32

0.37%

23

0.27%

Total Current Assets

432

5.00%

406

5.00%

Non-current assets

Property, plant and equipment

7961

91.88%

7771

91.02%

Intangible assets

58

0.67%

47

0.55%

Deferred tax

43

0.50%

40

0.47%

Financial Instruments

172

1.98%

274

3.21%

Total non-current assets

8234

95.00%

8132

95.00%

Total assets

8665

100.00%

8538

100.00%

Current Liabilities

Payables and accuals

296

3.42%

205

2.40%

Employee entitlements

15

0.17%

15

0.18%

Current portion of termborrowings

170

1.96%

214

2.51%

Finance lease payable

1

0.01%

1

0.01%

Financial Instruments

67

0.77%

48

0.56%

Current tax payable

30

0.35%

30

0.35%

Total current Liabilities

579

6.68%

513

6.01%

Non-current liabilities

Term borrowings

1022

11.79%

1000

11.71%

Deferred tax

1710

19.73%

1617

18.94%

Provisions

9

0.10%

8

0.09%

Finance lease payable

46

0.53%

47

0.55%

Financial Instruments

124

1.43%

203

2.38%

Term payables

93

1.07%

100

1.17%

Total non-current liabilities

3004

34.67%

2975

34.84%

Total liabilities

3583

41.35%

3488

40.85%

Net assets

5082

58.65%

5050

59.15%

Shareholders' equity

Share capital

1598

18.44%

1597

18.70%

Reserves

3484

40.21%

3453

40.44%

Total shareholders' equity

5082

58.65%

5050

59.15%

Using the following financial ratiosfor 2016 and 2017 periods, and other associated

information available in the publicdomain, assess the financial health of MEL from the

view of an investor.

Liquidity ratios

b) Asset management efficiencyratios

c) Profitability ratios

d) Market ratios

Assume you are a banker evaluating aloan request from Meridian Energy Limited

(MEL) for $220 million. ConsideringMEL’s recent earnings announcements and

earnings forecast updates, what wouldbe your concerns in deciding on approval or

denial of the loan request? Use thecompany’s capital structure ratios for 2016 and 2017

in your explanation.

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