question financial statement analysis

question financial statement analysis

Question No 1:

Using the Following information, complete the balance sheet

Long term debt to equity 5 to 1 Total Asset Turnover 2.5 times Average Collection Period 18 days Inventory turnover 9 times

Plant and Equipment $ Retained earnings $ 100,000 Total Assets Total Liabilities and shareholders equity

Kedzie Kord Company had following balance sheets and income statements over the last three years

Recievables $1,963.00 $2,870.00 $4,051.00

Inventories $2,031.00 $2,613.00 $3,287.00

Current Assets $4,555.00 $5,870.00 $7,540.00

Net fixed assets $2,581.00 $4,430.00 $4,364.00

Total assets $7,136.00 $10,300.00 $11,904.00

Current liabilities $2,413.00 $4,360.00 $5,250.00

shareholders equity $4,223.00 $4,940.00 $5,704.00

Total Liabilities and

shareholders equity $7,136.00 $10,300.00 $11,904.00

Selling, general

and admin expense $2,276.00 $2,471.00 $2,793.00

Profit before tax $977.00 $1,169.00 $1,340.00

Using common-size and percentage analysis, evaluate trends in the company's financial condition and performance

The data for various companies in the same industry are as follows

Company

Sales (in millions) $ 10.00 $ 20.00 $8.00 $5.00 $12.00 $17.00 Total assets (in millions)

$ 8.00

$ 10.00 $6.00 $2.50

$ 4.00

$ 8.00 Net income (in millions) $ 0.70 $ 2.00 $0.80 $0.50 $ 1.50 $ 1.00 Determine the total asset turnover, net profit margin, and earning power for each of the companies

Cordillera Carson Company has the following balance sheet and income statement for 20X2 (in thousands)

Cash $ 400.00 Net sales (all credit) $ 12,680.00

Accounts Recievable $ 1,300.00 Cost of goods sold $ 8,930.00

Inventories $ 2,100.00 Gross profit $ 3,750.00

Current Assets $ 3,800.00 selling, general and admin

Net Fixed Assets $ 3,320.00

Total Assets $ 7,120.00 Interest expense $ 460.00

Profit before taxe $ 1,060.00

Accruals $ 260.00 Profit after taxes $ 670.00

Short term loans $ 1,100.00

Current liabilities $ 1,680.00

Total Liabilities and shareholders equity $ 7,120.00

On the basis of this information, compute (a) the current ratio, (b) the acid test ratio, ( c) the average collection period, (d) the inventory turnover ratio, (e) the debt to net worth ratio, (f) the long term debt to equity ratio, (g) gross profit margin, (h) the net profit margin, and (i) the return on equity

the following information is available on the Vanier Corporation:

BALANCE SHEET AS OF DECEMBER 31, 20X6 (in thousands)

Cash and marketable securities $ 500.00 Accounts payable

$ 400.00

Long-term debt 2,650.00 $

Net fixed assets ? common stock and retained earnings 3,750.00 $

Total assets ? Total liabilities and equity ?

INCOME STATEMENT FOR 20X6

(in thousands)

Interest Expense $ 400.00

OTHER INFORMATION

Depreciation $ 500.00

Total liabilities Shareholders equity 1 to 1

Average collection period 45 days

inventory turnover ratio 3 to 1

Assuming that sales and production are steady through out a 360-day year, complete the balance sheet and income statement for the Vanier Corporation

shops in Wales The chain was built up from the original shop by the present owners who continue to manage the business, but due to serious illnesses are considering putting the company on the market

Extracts from the accounts of Playbus Ltd for each of the past two years ended 30 September

2002 are as follows:

Profit and Loss Account for the year ended 30 September

Balance Sheet as at 30lh September

Current Assets

Cash Flow Statement for the year ended 30 September

Servicing of Finance

Purchase of buildings (1,800)

Childplay plc has a much larger chain of retail toy outlets and is looking to expand An expansion either into Wales or into the North East would make a good strategic fit

Childplay has already done a financial analysis of another potential takeover target, Greattoys pic, which is quoted on the AIM market and is located in the North East

Grealtoys shares are quoted with a price giving a Price Earnings ratio (PER) of 12X whilst the average PER for the retail sector companies trading in similar products is

16X Childplay has a PER of 20X

The following financial statistics have been obtained for Greattoys for the same pair of time periods as Playbus

Greattoys Plc Ratios

Profitability

Annual average sales growth

Liouiditv

Efficiency

Capital Structure

Interest cover 4x 4x

Playbus' annual average sales growth for the past 5 years in 2002 was 30%, which was lower than in 2001 when it was 35 % The sales growth from 2001 to 2002 was 25%

Required

(a) Compute values for each year for not more than 10 ratios for Playbus which should be

used in your report in answer to (b) below

(15 marks) (b) Write a report for Childplay plc advising them on which of the two companies, Playbus

or Grealtoys, purely on financial grounds, would make the beuer takeover target Use the values computed in (a) and the other information provided in the question Mention some other pieces of information that are not available in the question, but which would be useful to obtain to aid your deliberations

(10 marks)

Balance Sheet as of December 31, 20X6(In thousands)

Cash and marketable

securities

Accounts Receivable

Inventory

Current Assets

Net Fixed Assets

Rs,5,000

?

?

?

?

Accounts payable Bank loan

Accruals

Current Liabilities

Long-term debt Common Stock and Retained earnings

Rs.4,000

? 2,000

? 26,500 37,500

Shareholders’ equity

?

INCOME Statement for 20X6 (In thousands) Credit Sales

Cost of Goods sold

Gross Profit

Selling and admin expense Interest expense

Profit Before taxes

Taxes(30%)

Profit After Tax

Rs.100,000 _?

?

? 4,000

? _?

?

Current Ratio Depreciation Net profit margin Total liabilities/shareholders’

equity Average collection period Inventory turnover ratio

3 to 1 Rs.500 7%

1 to 1

45 days

3 to 1 Assume that sales and production are steady throughout a 360-day year; complete the balance

sheet and income statement for Shah Sahib Company (15)