impirement
Accounting estimate are approximations whose values change as circumstance and conditions change and more information become available,which will only affect future expectation.
Based on the divestment of consumer electronic ANZ business , the judgment and estimate by company affects cash in balance sheet and gain in disposal-equipment(7.9M after tax).（note33）
The underlying rationale is prudence principle which make sure that no overstating in assets and income and no understating in liabilities and expense. （http://accountingexplained.com/financial/principles/prudence） Because of the divestment of business, Woolworth gain profit in disposal equipment and plant . Therefore, this change of information leads to the higher estimated value of current assets(cash)and a higher estimated value of gain and revenue(gain on disposal). the changed value of items in current assets and gain&revenue can impact the ratio analysis in question above.As ratio can generally be classified by four categories,we can analysis separately.
In aspect of profitability ratios,the gain from estimation increases the net profit and equity.therefore,increasing the value of net profit margin ratio and return on equity ratio which indicate a higher efficience of company’s cost control and generating additional earnings.in terms of management efficiency ratios,only the average total assets rises slightly which leads to the decrease in total assets turnover ratio.in other words, estimate lower the estimated ability of transfer assets to produce revenue.the rise in the value of current assets(cash) leads to a corresponding rise in current ratio which evaluate the ability to meet short-term debt obligation. The total assets.experience a growth by the estimate above.so total debt ratio,serves as the core part of solvency ratio, reduces and company’s financing risk decline.lastly,the earning per share ratio increase by the higher estimate value of net income with share outstanding
Based on the divestment of consumer electronic ANZ business , the judgment and estimate by company affects cash in balance sheet and gain in disposal-equipment(7.9M after tax).（note33）
The underlying rationale is prudence principle which make sure that no overstating in assets and income and no understating in liabilities and expense. （http://accountingexplained.com/financial/principles/prudence） Because of the divestment of business, Woolworth gain profit in disposal equipment and plant . Therefore, this change of information leads to the higher estimated value of current assets(cash)and a higher estimated value of gain and revenue(gain on disposal). the changed value of items in current assets and gain&revenue can impact the ratio analysis in question above.As ratio can generally be classified by four categories,we can analysis separately.
In aspect of profitability ratios,the gain from estimation increases the net profit and equity.therefore,increasing the value of net profit margin ratio and return on equity ratio which indicate a higher efficience of company’s cost control and generating additional earnings.in terms of management efficiency ratios,only the average total assets rises slightly which leads to the decrease in total assets turnover ratio.in other words, estimate lower the estimated ability of transfer assets to produce revenue.the rise in the value of current assets(cash) leads to a corresponding rise in current ratio which evaluate the ability to meet short-term debt obligation. The total assets.experience a growth by the estimate above.so total debt ratio,serves as the core part of solvency ratio, reduces and company’s financing risk decline.lastly,the earning per share ratio increase by the higher estimate value of net income with share outstanding