Question
1. Case Analysis: Al Ismail Fashions (AIF) is a garment company, located in Alkhwair Muscat, which consists primarily of much smaller garment makers. AIF was
1. Case Analysis:
Al Ismail Fashions (AIF) is a garment company, located in Alkhwair Muscat, which consists primarily of much smaller garment makers. AIF was started 13 years ago by Ahmed and Salim, who has over 15 years of experience with a major garment manufacturer. And the partnership initially blended very well. Ahmed is extremely creative with a real talent for merchandising. Mainly as a result of his knowledge, the AIF is known for its quality and in fashions. Salim has contributed to merchandising and marketing ideas, but has mainly assumed the duties of the firms chief operating officer. Ahmed has had little interest in the financial aspects of the company as he preferred to work on fashion designing and development of marketing strategies. A few months ago, however, he decided that he had better become more involved with the companys financials. Ahmed want to analyse the financial statement of the company to know the current financial performance and positions of the company. The following are the financial details of the AIF.
Liabilities | OMR | Assets | OMR |
Equity share capital | 27,800 | Furniture | 4,000 |
Accounts Payable | 1,550 | Cash in hand | 4,500 |
Reserves and surplus | 2,550 | Bills receivables | 3,750 |
Bills payable | 950 | Land | 9,000 |
Long term borrowings | 6,520 | Marketable securities | 850 |
Outstanding Salaries | 850 | Cash in bank | 5,250 |
Loan from Bank | 3,450 | Building | 6,600 |
Preference share capital | 5,265 | Prepaid expenses | 850 |
Bank overdraft | 825 | Cars & Trucks | 3,350 |
Tax outstanding | 590 | Account Receivables | 1,150 |
|
| Inventory | 2,150 |
|
| Income earned but not received | 430 |
|
| Machinery | 6,250 |
|
| Equipment | 2,220 |
Total | 50,350 | Total | 50,350 |
Other information | |
Particulars | OMR |
Sales | 330,000 |
Cost of goods sold | 155,000 |
Administration expenses | 33,000 |
Selling & Distribution exp. | 44,000 |
Interest received | 12,200 |
Rent Received | 2,000 |
Commission received | 1,750 |
As a Finance Manager of the company you are required to:
Requirement : 1 | Calculate the following from the Balance Sheet: | Marks |
A | Total fixed assets | 0.5 |
B | Total long term liabilities | 0.5 |
C | Total current assets | 0.5 |
D | Total current liabilities | 0.5 |
E | Shareholders funds | 0.5 |
F | Capital employed | 0.5 |
Requirement : 2 | Calculate the following from the additional information given | Marks |
G | Gross profit | 0.5 |
H | Net profit | 0.5 |
Requirement : 3 | Calculate the following ratios: | Marks |
I | Return on capital employed | 1.0 |
J | Current ratio | 1.0 |
K | Liquid ratio | 1.0 |
L | Return on Equity | 1.0 |
M | Gross Profit & Net Profit Margin | 1.0 |
N | Give a brief report on the financial position of the company based on the above figures. |
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