Summary Of Article Outline And Evaluation Of Major Issues. Explanation Of Accounting Terms And Data. Relevance And Limitations Of Accounting.

1356 words - 5 pages

By:Chan Kwan LoongU025143JFang WeiweiU025686ULow Lip HenU025695ANg Cai LingU022299YQuek Kwang TiU025095NB2420 March 2003ContentsReport Title2Main Body3Summary of Article3Outline and Evaluation of Major Issues3Explanation of Accounting Terms and Data5Relevance and Limitations of Accounting6References7Appendix8Report TitleA.Financial accounting information is frequently used in newspaper and magazine articles. Scan the articles in the Business times or business pages of the Straits times or any business magazine (Far Eastern Economic Review, Business Review Weekly, Fortune).a.Select an article which uses accounting terms and data.b.Summarise the content of the article in one paragraph. Outline the point(s) that the writer is trying to make by using the accounting terms and data. Include in your answer an explanation of the accounting terms used and highlight any relevance and limitations of the accounting terms/data.Summary of ArticleIn December 2002, ANZ, NatSteel's independent financial adviser (IFA), advised shareholders of NatSteel shares to sell their shares in the open market or to 98 Holdings. This advice was made under the likelihood that the share price may crash should 98 Holdings fail to takeover NatSteel Limited or should another bidder join in the battle. In addition, the company's profit guidance had given the impression that the profit in the last six months of the year was only expected to be satisfactory. As a consequence of the above-mentioned reasons, many shareholders sold their shares last December at a price of $2.06 per share. However, things turned out quite differently. On 16 March 2003 Sunday, NatSteel announced that its pre-tax earnings were high at $16.1 million and $25.9 million for the first and second half of 2002 respectively. As a result, the company declared a high dividend of $1 per share. This in turn caused NatSteel's share price to rise greatly to $2.40 on Monday. The dividends issued, together with the rising share price, allowed shareholders who held on to their shares to make a fortune. Mr. Oei Hong Leong, for instance, stands to reap a $112 million dividend windfall from his 29.9 per cent stake in the company. Upon seeing this situation, the shareholders who sold their shares in December regretted having heeded ANZ's advice.Outline and Evaluation of Major Issues(Paragraph 1) "...raking in millions of dollars in paper gains for large shareholders..."The term "paper gains" refers to an unrealized gain when the market price of the shares has increased but the shareholders have not sold it yet.(Paragraph 2) "...independent financial adviser's (IFA's) call..."The IFA is an independent observer who guides the minority shareholders on whether they should hold on to their shares or sell them either to the acquiring company or to the open market. Evidently, the IFA made a wrong judgement in the case of NatSteel.(Paragraph 2) "...heat of the recent takeover battle for the steel miller..."This takeover battle refers...

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