Reference no: EM131592674

ASSIGNMENT BRIEF -

The Joythi family are the owners of Jayam Ltd, a medium sized company dealing in crockery. Upon the eath of their father a year ago, the older brother Paran took over as the managing director, but some of the family are concerned with the current performance of the business. They have been doing some investigating and they produce a table showing the industry and previous year's ratiostogether with industry averages for 2016 (refer Appendix A). JayamLtd 's comparative financial statements for the years ended 31 March 2016 and 2015 are provided below.

Note: Analysis ratios for use with the Cunningham textbook are listed in Appendix B

Jayam Limited Comparative Statement of Financial Performance for the year ended 31 March 2016
	2016	2015
	$'000	$'000
Sales (all on credit)	4,200	4,500
Cost of Goods Sold	2,940	3,000
Gross Profit	1,260	1,500
Selling Expenses	305	256
Administration Expenses	487	501
Interest	142	135
	934	892
Net Profit before Tax	326	608
Income Tax Expenses	114	201
Net Profit after Tax	212	407
Dividends	300	300
Retained Earnings	(88)	107

 

Jayam Limited Comparative Statement of Financial Position as at 31 March 2016
	2016	2015
	$'000	$'000
Shareholders' Funds
Contributed Share Capital	3,000	3,000
Retained earnings	1,568	1,656
	4,568	4,656
Represented by:
Current Assets
Bank	35	165
Marketable Securities	126	134
Accounts Receivable	441	595
Inventory	790	613
Prepaid Expenses	56	62
	1,448	1,569
Current Liabilities
Bank Loan (Current Portion)	170	170
Accounts Payable	655	489
Accrued expenses	89	78
	914	737
Working Capital	534	832
Non-current assets
Equipment	1,449	1,667
Property	3,421	3,169
	4,870	4,836
Less Long Term Liabilities
Term Loan	836	1,012
Net Assets	4,568	4,656

Required:

a) Complete the ratio analysis figures for the 2016 in the template in your Assignment 2 Answer booklet.

b) Report

You are required to write a report to the Joythi family on the financial performance of Jayam Ltd. in 2016 and the financial position at year end. You should base your report on the financial statements, the ratios for the two years and the selected industry averages.

Your discussion should focus on the following areas:

(i) Return on Owners' Equity

 (ii) Operating Performance

(iii) Liquidity and Financial Flexibility

Your conclusion should identify two significant problem areas at Jayam Ltd. and advise what action should be taken by management to address the problems identified.

Attachment:- Assignment.rar