Telstra Case

Question one:

The investing activity in the statement of Cash flows is basically a line of investment actions, which the company has done during the report of the year. It is including in the financial statement section. It contains the information of the period investment gain or loss; the financing activity in the statement is the external activities that allow company to increase the capital or repay the investors by issuing dividends or stock. It indicates the financial “healthy” of the company.  

In the case of Telstra, by reviewing on the 2015 annual report, the two largest investing activities are 1. Payments for property, plant and equipment with the amount of $2845M. (Telstra annual report 2015) It includes “building the nation’s largest Wi-Fi network, continuing investment in growth areas (such as network access services and cloud services) and supporting the accelerated rollout of mobile 4G and 4GXTM networks.” (Telstra annual report 2015). 2. Payments for intangible assets with the amount of $2257M. (Telstra annual report 2015) This is from “the acquisition of spectrum licenses and an increase in goodwill resulting from acquisitions of controlled entities and businesses.” (Telstra annual report 2015)

However, the two largest financing activities are: 1. Repayment of borrowings with the amount of 3,368M. (Telstra annual report 2015) “Lower average debt levels resulting from debt maturities, which were funded out of existing liquidity”. (Telstra annual report 2015) 2. Dividends paid to equity holders of Telstra entity with the amount of 3,699M. (Telstra annual report 2015) “Dividends paid are fully franked at a tax rate of 30 per cent, as the final dividend for financial year 2015 was not determined or publicly recommended by the Board as at 30 June 2015, no provision for dividend have been raised in the statement of financial position. The final dividend has been reported as an event subsequent to reporting date.” (Telstra annual report 2015)