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question financial statement analysis
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 Gross Profit margin 10% Acid-test ratio 1 to 1 Cash $ Notes and payables $ 100,000 Accounts Recievable $ Long-term debt $ Inventory $ Common stock $ 100,000 Plant and Equipment $ Retained earnings $ 100,000 Total Assets Total Liabilities and shareholders equity Question No 2 Kedzie Kord Company had following balance sheets and income statements over the last three years 20X1 20X2 20X3 Cash $561.00 $387.00 $202.00 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 Payables $1,862.00 $2,944.00 $3,613.00 Accruals $301.00 $516.00 $587.00 Bank loan $250.00 $900.00 $1,050.00 Current liabilities $2,413.00 $4,360.00 $5,250.00 Long-term debt $500.00 $1,000.00 $950.00 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 Sales $11,863.00 $14,952.00 $16,349.00 COGS $8,537.00 $11,124.00 $12,016.00 Selling, general and admin expense $2,276.00 $2,471.00 $2,793.00 interest $73.00 $188.00 $200.00 Profit before tax $977.00 $1,169.00 $1,340.00 taxes $390.00 $452.00 $576.00 profit after tax $587.00 $717.00 $764.00 Using common-size and percentage analysis, evaluate trends in the company's financial condition and performance Question No 3 The data for various companies in the same industry are as follows Company A B C D E F 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 Question No 4 Cordillera Carson Company has the following balance sheet and income statement for 20X2 (in thousands) Balace Sheet Income Statement 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 expense $ 2,230.00Net Fixed Assets $ 3,320.00 Total Assets $ 7,120.00 Interest expense $ 460.00 Profit before taxe $ 1,060.00 Account Payable $ 320.00 Taxes $ 390.00 Accruals $ 260.00 Profit after taxes $ 670.00 Short term loans $ 1,100.00 Current liabilities $ 1,680.00 Long-term debt $ 2,000.00 Net worth $ 3,440.00 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 Question No 5 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 Accounts receivable ? Bank loan ? Inventories ? Accruals $ 200.00 Current Assets ? Current liabilities ? 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) Credit sales $ 8,000.00 COGS ? Gross profit ? selling and admin expense ? Interest Expense $ 400.00 Profit before Taxes ? Taxes (44% rate) ? Profit after taxes ? OTHER INFORMATION Current ratio 3 to 1 Depreciation $ 500.00 Net profit margin 7% 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 Q. Playbus Ltd is a company established a few years ago to operate a small chain of retail toy 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 2002 2001 £'000 £'000 Turnover 15,000 12,000 Cost of Sales (9.500) (7.000) Gross Profit 5,500 5,000 Administrative Expenses (3,200) (2,900) Interest (300) (100) Profit before taxation 2,000 2,000 Taxation (1.000) (600) Profit after Taxation 1.000 1400 Balance Sheet as at 30lh September 2002 2001 £'000 £'000 Fixed Assets 4,400 2,000 Current Assets Stock 1500 1,000 Debtors 800 500 Cash 3.300 3.500 5,600 5,000 Creditors due within one year (2.000) 3.600 (1,500) 3,500 8,000 5,500 Long-term liabilities (2,500) (1,000) 5,500 4,500 Share Capital (£1 ordinary shares) 1,000 1,000 Retained profit 4,500 3,500 5,500 4,500 Cash Flow Statement for the year ended 30 September 2002 2001 £'000 £'000 Net cash inflow from operations 1,650 1,600 Servicing of Finance Interest paid (250) (100) Taxation paid (600) ((1,000) Capital Expenditure Purchase of buildings (1,800) - (700) - Increase in loan 1,500 1,000 (Decrease)/ Increase in cash (200) 1,500 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 2002 2001 Profitability Annual average sales growth over 5 years 34% 35% Sales growth over previous year 30% 30% Return on capital employed 30% 28% Return on sales 15% 14% Asset turnover 2x 2x Return on equity 40% 40% Earnings per share £0.80 £0.60 Liouiditv Current ratio 2.0x 2.2x Quick ratio 0.7x 0.8x Quality of profit 120% 115% Efficiency Debtors period 15days 15days Stock period 70days 65days Capital Structure Long-term debt/Equity 60% 60% Total debt of Total assets 50% 45% 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) Q. The following information is available on the Shahnawaz Company: 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 Total Assets ? Total Liabilities and 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) . Financial Statement Analysis Question No 1: Using the Following information, complete the balance sheet Long. $587.00 $717.00 $764.00 Using common-size and percentage analysis, evaluate trends in the company's financial condition and performance Question No 3 The data for various companies in the same. for each of the companies Question No 4 Cordillera Carson Company has the following balance sheet and income statement for 20X2 (in thousands) Balace Sheet Income Statement Cash $ 400.00 Net