Financial Statement Analysis Question No 1:

Using the Following information, complete the balance sheet Long term debt to equity Total Asset Turnover Average Collection Period Inventory turnover Gross Profit margin Acid-test ratio Cash Accounts Recievable Inventory Plant and Equipment Total Assets $ $ $ $ .5 to 1 2.5 times 18 days 9 times 10% 1 to 1 Notes and payables Long-term debt Common stock Retained earnings Total Liabilities and shareholders equity $ $ $ $ 100,000 100,000 100,000

Question No 2
Kedzie Kord Company had following balance sheets and income statements over the last three years 20X1 $561.00 $1,963.00 $2,031.00 $4,555.00 $2,581.00 $7,136.00 $1,862.00 $301.00 $250.00 $2,413.00 $500.00 $4,223.00 $7,136.00 20X2 $387.00 $2,870.00 $2,613.00 $5,870.00 $4,430.00 $10,300.00 $2,944.00 $516.00 $900.00 $4,360.00 $1,000.00 $4,940.00 $10,300.00 20X3 $202.00 $4,051.00 $3,287.00 $7,540.00 $4,364.00 $11,904.00 $3,613.00 $587.00 $1,050.00 $5,250.00 $950.00 $5,704.00 $11,904.00

Cash Recievables Inventories Current Assets Net fixed assets Total assets Payables Accruals Bank loan Current liabilities Long-term debt shareholders equity Total Liabilities and shareholders equity

Sales COGS Selling, general and admin expense interest Profit before tax taxes profit after tax

$11,863.00 $8,537.00 $2,276.00 $73.00 $977.00 $390.00 $587.00

$14,952.00 $11,124.00 $2,471.00 $188.00 $1,169.00 $452.00 $717.00

$16,349.00 $12,016.00 $2,793.00 $200.00 $1,340.00 $576.00 $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 $ $ Sales (in millions) 10.00 20.00 $8.00 $5.00 $12.00 $ $ $ Total assets (in millions) 8.00 10.00 $6.00 $2.50 4.00 $ $ $ Net income (in millions) 0.70 2.00 $0.80 $0.50 1.50

F $17.00 $ 8.00 $ 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 Cash Accounts Recievable Inventories Current Assets Net Fixed Assets Total Assets $ 400.00 Income Statement Net sales (all credit) Cost of goods sold Gross profit selling, general and admin expense Interest expense Profit before taxe Taxes Profit after taxes $ 12,680.00 $ 8,930.00 $ 3,750.00 $ 2,230.00 $ 460.00 $ 1,060.00 $ 390.00 $ 670.00

$ 1,300.00 $ $ $ $ 2,100.00 3,800.00 3,320.00 7,120.00

Account Payable Accruals Short term loans Current liabilities Long-term debt Net worth Total Liabilities and shareholders equity

$ $ $ $ $ $

320.00 260.00 1,100.00 1,680.00 2,000.00 3,440.00

$ 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 Accounts receivable Inventories Current Assets $ 500.00 ? ? ? Accounts payable Bank loan Accruals Current liabilities Long-term debt common stock and retained earnings $ 400.00 ? $ 200.00 ? $ 2,650.00 $ 3,750.00

Net fixed assets

Total assets

? INCOME STATEMENT FOR 20X6 (in thousands)

Total liabilities and equity

Credit sales COGS Gross profit selling and admin expense Interest Expense Profit before Taxes Taxes (44% rate) Profit after taxes OTHER INFORMATION Current ratio Depreciation Net profit margin Total liabilities. Shareholders equity Average collection period inventory turnover ratio

8,000.00 ? ? ? 400.00 ? ? ?

3 to 1 500.00 7% 1 to 1 45 days 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 '000 15,000 (9.500) 5,500 (3,200) (300) 2,000 (1.000) 1.000 Balance Sheet as at 30lh September 2002 '000 4,400 1500 800 3.300 5,600 (2.000) 1,000 500 3.500 5,000 (1,500) 2001 '000 12,000 (7.000) 5,000 (2,900) (100) 2,000 (600) 1400 2001 '000 2,000

Turnover Cost of Sales Gross Profit Administrative Expenses Interest Profit before taxation Taxation Profit after Taxation

Fixed Assets Current Assets Stock Debtors Cash

Creditors due within one year Long-term liabilities

3.600 8,000 (2,500) 5,500 1,000 4,500 5,500

3,500 5,500 (1,000) 4,500 1,000 3,500 4,500 2001 '000 1,600 (100) ((1,000)

Share Capital (1 ordinary shares) Retained profit

Cash Flow Statement for the year ended 30 September 2002 '000 Net cash inflow from operations 1,650 Servicing of Finance Interest paid (250) Taxation paid (600)

Capital Expenditure Purchase of buildings Increase in loan (Decrease)/ Increase in cash

(1,800) (700) 1,500 (200)

1,000 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 Profitability Annual average sales growth over 5 years Sales growth over previous year Return on capital employed Return on sales Asset turnover Return on equity Earnings per share Liouiditv Current ratio Quick ratio Quality of profit Efficiency Debtors period Stock period Capital Structure Long-term debt/Equity 34% 30% 30% 15% 2x 40% 0.80 2.0x 0.7x 120% 15days 70days 60% 2001 35% 30% 28% 14% 2x 40% 0.60 2.2x 0.8x 115% 15days 65days 60%

Total debt of Total assets Interest cover

50% 4x

45% 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 Rs,5,000 Accounts payable securities ? Bank loan Accounts Receivable ? Accruals Inventory ? Current Liabilities Current Assets ? Long-term debt Net Fixed Assets Common Stock and Retained earnings 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 ? _______? ?

Rs.4,000 ? 2,000 ? 26,500 37,500 ?

Current Ratio 3 to 1 Depreciation Rs.500 Net profit margin 7% Total liabilities/shareholders 1 to 1 equity Average collection period 45 days Inventory turnover ratio 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)