CHAPTER 5 Balance sheet 161Coconut Plantations Pty Limited has current assets amounting to $129 710 and investments in property,
plant and equipment of $229 500 (net of accumulated depreciation). The company keeps inventories
of finished goods and raw materials ($60 000), which is not surprising given that it is a manufacturing
entity rather than a service entity or a retail entity. Coconut Plantations has $49 000 in short-term (cur-
rent) liabilities compared to $20 000 in longer term (non-current) liabilities. Its current assets are higher
than its current liabilities which indicates that the company’s liquidity is satisfactory. Retained earnings
of $90 210 indicate the company has been profitable over its first 3 months of operation.
Coconut Plantations Pty Ltd
Balance sheet as at 31 December 2016
$
CURRENT ASSETS
Cash at bank
Accounts receivable
Inventories of finished goods and raw materials
Prepayments45 600
23 110
60 000
1 000
Total current assets 129 710
NON-CURRENT ASSETS
Property, plant and equipment
Less: Accumulated depreciation240 000
(10 500)
Total non-current assets 229 500
Total assets 359 210
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Income tax payable3 300
700
45 000
Total current liabilities 49 000
NON-CURRENT LIABILITIES
Loan payable 20 000
Total non-current liabilities 20 000
Total liabilities 69 000
Net assets 290 210
EQUITY
Share capital
Retained earnings200 000
90 210
Total equity 290 210FIGU R E 5.1 Balance sheet of Coconut Plantations Pty LimitedTo illustrate the information a user can obtain from a cursory glance at a balance sheet, consider the
balance sheets for the Qantas Group, reproduced in figure 5.2. As at 30 June 2015, the group had $17 530
million in assets. These were financed by liabilities of $14 083 million and equity of $3447, indicating
the group relies more on debt than equity to finance its assets. The Qantas Group had considerable invest-
ments in cash ($2908 million) and property, plant and equipment ($10 715 million). It keeps a relatively
low level of inventories ($322 million), which is not surprising given that it is a service entity rather than
a retail entity. The Qantas Group has $771 million in short-term (current) interest-bearing liabilities com-
pared to $4791 million in longer term (non-current) liabilities. Its current assets are lower than its current
interest-bearing liabilities and the movement from 2014 to 2015 indicates that the group’s liquidity has
not changed significantly. Retained earnings of ($1115) million suggest that the Qantas Group has paid
out more dividends than the earnings it has generated over its period of operation.