Prepare comparative income statements and balance sheet

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Reference no: EM131466042

Answer all questions. Intended learning outcomes:

1. Evaluate the performance of a company using various financial analytical tools.
2. Analyse different patterns of cost behaviour and apply cost-volume-profit analysis to business decisions.
3. Select and apply investment appraisal techniques appropriately.
4. Evaluate the performance of business units using both financial and non-financial measures.

Q1. Assume that you are a Financial Analyst working for Middle East Venture Capital L.L.C. Evaluate the financial performance of a company listed in the Muscat Securities Market (MSM)/GCC Market by taking into consideration the following instructions.

Instructions:

- Select a company listed in Muscat Securities Market/GCC Market (preferably other than banking and investment companies or Holding companies).
- Collect financial reports of the chosen company for three consecutive years.
- Use annual financial statements for analysis. Avoid using quarterly statements.
- Provide references for the data collected (use Coventry Harvard style of referencing). Company websites can also be used for data collection.
- From the financial statements and additional information collected by you complete the below mentioned tasks.

TASKS

a. Prepare comparative income statements and balance sheet for 3 years using Horizontal and Vertical Analysis techniques for the both income statements and balance sheet.

b. On the basis of literature review and from the above computations analyse; Profitability position and Financial position of the chosen company.
(Literature Review: 10 marks; analysis: 20 marks (profitability position-10 marks & financial position-10 marks); Total 30 marks)

c. Compare and contrast Vertical analysis and Horizontal analysis techniques.

Q2. Mars Hypermarket LLC is planning to expand and open new stores in Sultanate of Oman. Currently they are considering two options, one is to start a new store in Barka and other is to take over an existing store in Ibra. But due to recent developments they will be able to fund only one store as the overall revenue trends are subdued. The required rate of return is 10%. Details of cash inflows of 5 years of the two projects along with additional information is given in the table below,

Details

New Store at Barka

Take-over existing store at Ibra

Suppliers availability

Not available. To be initiated

Already existing

Consumer trends

Growth expected at 10%

Stagnated

Population growth

12%

5%

Competition

Strong

Moderate

Initial cost

200,000

200,000

Cash flows

Year 1

60,000

20,000

Year 2

80,000

60,000

Year 3

100,000

80,000

Year 4

60,000

120,000

Year 5

40,000

80,000

a. Evaluate the projects using, Net Present value Method and Internal Rate of Return method.

b. Based on the above analysis and on the basis of the relevant literature review, which project would you recommend and why. The students have to consider the non-financial information provided in the case and other relevant non-financial factors while recommending a project.

(Recommendation based on calculations (with Literature review) - 10 marks and discussion non- financial factors (with Literature review)

Q3. Your company, a leading cement manufacturer has asked you to submit a cost-volume-profit analysis report for the two products being produced in your company.

Product A

Product B

 

RO

RO

 

RO

RO

Sales

 

300,000

Sales

 

300000

Less: Variable Cost

240000

 

Less: Variable Cost

200000

 

Fixed Cost

30000

270000

Fixed Cost

70000

270000

Budgeted Profit

 

30000

Budgeted Profit

 

30000

You are required to:

a. Calculate break - even point of each product.
b. The company prefers to maintain a desired profit of RO 10,000. Identify the sales volume to maintain the desired profit.
c. Compute margin of safety for both products.
d. The business is expected to go through ups and downs in the demand hence you need to state which product is likely to earn greater profit in conditions of heavy demand for the product and low demand for the product.
e. Evaluate the importance of the role of CVP analysis in taking business decisions with appropriate literature review.

(Calculations of BEP, Desired Profit and Margin of Safety; Discussion on which product is likely to earn higher profit; Role of CVP analysis)

Instructions to Students:

1. Work proposal should be submitted by week 5. The main task is identifying the company for doing the analysis and ensuring that the financial statements are available for three consecutive years.

2. The report should have table of contents and appendices if any.

3. Appropriate references using Harvard style of referencing and in-text citations are mandatory.

4. The report to follow font style Times New Roman, font size 12 and text color black.

Verified Expert

The task consists of three managerial questions. The first one comprises of the common size financial statements and the analysis of the results. The second part requires the application of capital budgeting tools. While the third task has been worked on the principles of marginal costing. like break-even, CVP.

Reference no: EM131466042

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Reviews

inf1466042

5/10/2017 5:54:21 AM

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len1466042

4/18/2017 2:38:42 AM

General Outstanding presentation, logically structured, using correct grammar and spelling, accurate referencing and bibliography correctly using the CU Harvard Style. Good presentation, completely structured, acceptable grammar and spelling, generally well referenced with correct use of the CU Harvard Style. Acceptable presentation and structure, acceptable grammar and spelling and acceptable referencing. Generally accurate use of CU Harvard Style. Adequate presentation and structure, grammar and spelling and adequate referencing. CU Harvard Style used but may contain some inaccuracies. Poor/weak presentation, grammar and spelling, little or no referencing, incorrect style, or very inaccurate use of CU Harvard style.

len1466042

4/18/2017 2:38:27 AM

Question 3: a., b. & C. Calculation of BEP, desired profits and Margin of safety for both products. d. Discussion on which product is likely to earn higher profits Outstanding application of numeracy skills and excellent ability to apply the tools. Outstanding discussion on identifying the product which is going to earn higher profit during low and high demands based on the calculations. e. Role of CVP analysis in decision making Outstanding discussion and excellent understanding of the role of CVP analysis in decision making and evidence of rigorous literature review.

len1466042

4/18/2017 2:38:10 AM

Question 2: a. Evaluation of projects using investment appraisal techniques. b. (i) Recommendatio n with appropriate justification. Outstanding application of numeracy skills. Outstanding recommendatio n which is extremely coherent with the evaluation and appropriately justified with evidence of rigorous literature review. (ii) Discussion on Outstanding non-financial discussion based factors on the non- financial factors given in the case study and excellent knowledge of relevant non- financial factors for the evaluation of given projects and evidence of rigorous literature review.

len1466042

4/18/2017 2:37:54 AM

Question 1: a. Computation of vertical and horizontal statements and ability to apply the tool. (Detailed calculations for 3 years) b. (i) Literature Review Outstanding application of numeracy skills and excellent ability to apply the tools. Evidence of rigorous literature review and scholarly works. (ii) Analysis of Outstanding Liquidity and interpretation of Profitability critical factors in position of the the analysis and chosen company very meaningful using above conclusions calculations & drawn in relation literature to the company review. Ability of evaluation. to link the calculations and theory to draw valid discussion. c. Discussion on Outstanding techniques used discussion and for the analysis excellent knowledge of relevant theories and concepts related to the techniques used for the evaluation and evidence of rigorous literature review.

len1466042

4/18/2017 2:37:26 AM

For a mark of >69% ? Show a thorough understanding of the purpose of the activity. ? Display knowledge of the major principles, theories, methodologies, and practices involved and an ability to apply them effectively. ? Provide evidence of wide reading, including academic journals. ? Demonstrate an ability to select critical points, evaluate them and communicate the conclusions effectively. ? Provide approaches that are creative, practicable, and supported. ? Provide a sound, supported critique of your own work. ? Provide sound and supported discussions of further research that may be needed.

len1466042

4/18/2017 2:37:19 AM

Dear sir ,, I i wont to make for me this assignment and all information is in the PDF fill .... more over the title is (Financial University of Dofer Analysis)1. Work proposal should be submitted by week 5. The main task is identifying the company for doing the analysis and ensuring that the financial statements are available for three consecutive years. 2. The report should have table of contents and appendices if any. 3. Appropriate references using Harvard style of referencing and in-text citations are mandatory. 4. The report to follow font style Times New Roman, font size 12 and text color black. (Refer Student Manual) 6. Deadline for submissions is week 12. 7. A viva – voce may be conducted as per the discretion of the faculty and it carries no marks. 8. Marks awarded in the assessment is provisional till it is approved by the Exam Board

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