I need to answer the obvious question. If I know what the 'net margin error' is, why don't I just fix it? Two reasons:
1/ AWF does not provide 'net profit' figures for divisions. I have derived divisional net profit figures by assigning unallocated costs in proportion to divisional revenues. If this assumption is not entirely accurate (and it probably isn't) then the divisional 'revenues minus expenses' sums will also be inaccurate.
2/ I have assumed that all business units pay tax at 28 cents in the dollar. But this assumes that all expenses are tax deductible, and that might not be true. If I calculate that less tax is paid that is really due, then my calculated after tax profit will be higher than reality.
There is insufficient disclosure in the annual results to quantify the error effects of 1/ and 2/. Except to say that if I:
a/ add up my divisional NPAT for each division AND
b/ if that sum does not equal the NPAT company declared total
THEN there is definitely an error in the assumptions I have made. But exactly where that error is can't be pinpointed. So IMO it is best to accept the divisional results 'as calculated', while bearing in mind that the significance of the figures calculated are suspect by the percentage of the error quoted that was introduced when I did my own calculations.
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