Reference no: EM131343701

PART ONE

Task 1.1
Always Better Control plc. has the following details as on 1" January 2015:

Particulars	Amount
Fixed assets	200,000
Stocks	190,000
Bank Balance	90,000
The Budget for the first quarter are as follows:
Sales for the months:
Jan-15	300,000
Feb-15	600,000
Mar-15	700,000
Gross profit margin	20% of sales
Bad debts	1% of sales
Variable selling overheads	10% of sales
Fixed selling overheads	$25,000
Variable administrative overheads	2% on sales
Fixed administrative overheads	$15,000
Credit terms for sales, purchase and overheads(there is no outstanding debtors or creditors on 1st january 2015)	1 month credit

Prepare a profit statement to show the profit for the quarter ended 31" March 2015 and prepare a cash budget for January 2015 to March 2015.

Task 1.2
CIMA defines relevant costs as 'costs appropriate to aiding the making of specific management decisions'. With this view explain the importance of relevant information in pricing decisions.

Task 1.3
Consider two projects. Each requires an immediate cash outlay of $10,000. Project A will return $13,000 at the end of two years. Project B will return $6,500 each year at the end of year 1 and 2. Assume the discount rate is 15% and ignore depreciation and taxes. Evaluate the project by using the capital investment appraisal tools. Critically analyse the better project.

PART TWO
SCENARIO
LEG's Financial Statement for the period ending 31" March

(Dollars in thousands)	2016	2015	2014
Assets
Cement Assets:
Cash and Cash Equivalents	$272,640	582,540	$321,390
Receivables	12,090	3,480	7,550
Inventory	738,630	857,090	668,200
Prepaid Expenses	54,880	54,030	39,670
Total Current Assets	1,078,240	997,140	1,036,810
Property. Plant & Equipment (at Cost):
Land and Buildings	531,270	383,350	312,670
Fixtures and equipment	476,460	411,230	251,920
Leasehold improvements	16,460	15,120	12,340
Construction in progress	---	46,370	32,800
Less Accumulated Depreciation	(248,430)	(183,890)	(135,020)
Property, Plant & Equipment, net	775,760	672,180	474,710
Total Assets	$1,854,000	$1,669,320	$1,511,520
liabilities and Stockholders' Equity
Current liabilities:
Accounts Payable	$377,970	$244,150	$259,040
Advance Payment on Orders	4,460	2,030	3,500
Income Tax Payable	70,800	53,020	103,970
Other current obligations	154,510	139,950	148,790
Total Current Liabilities	607,740	439,150	515,300
Long term debt	78,000	84,130	76,740
Stockholders' Equity
Common stock; 20.1M, 20.1M & 20.0M shares, respectively as par	2,010	2,010	2,000
Additional Capital, net	311,360	307,810	293,080
Retained Earnings	983,810	875,160	624,400
Loa Treasury Stock, at cost	(128,920)	(38,940)	--
Total Stockholders' Equity	1,168,260	1,146,040	919,480
Total Liabilities and Equity	$1,854,000	$1.669,320	$1,511,520

Task 2.1
Discuss the Cash flow analysis of LEG Plc. in detail from the given financial statement for the period 2014 to 2016

Task 2.2
You are required to analyse the performance of LEG Plc. for the last 4 years by using Comparative balance sheet analysis for the 3 years period.

Task 2.3
From the financial statement of LEG Plc. calculate the following ratios and comment on their performance throughout the period.
a. Asset coverage ratio
b. Debt ratio
c. Debt to equity ratio
d. Equity ratio
e. Long term debt to Capitalization ratio
f. Long term debt to Total Asset ratio