1. The following financial statements relate to Al-Husan Company, which operates a wholesale carpet business: Balance sheet as at 31 March, 2019 Assets 2018 OMR 2019 OMR 427,000 160,000 587.000 406,000 273,000 0 679.000 1,266,000 / Non-current assets Land and building 381,000 Fixtures and 129,000 fittings 510,000 Current assets Inventories 300,000 Account 240,000 receivables Cash at bank 4,000 544,000 Total assets 1,054,000 Equity and liabilities Equity OMR 0.50 ordinary 300,000 shares General reserve 263.000 563.000 Non-current liabilities Long-term bank 200,000 loan Current liabilities Account payables 261,000 Bank overdraft 30,000 291,000 Total equity and 1,054,000 liabilities 300.000 234.000 534.000 300.000 354.000 78,000 432,000 1,266,000 Income statement for the year ended 31 March, 2019 2018 OMR 2019 OMR Net sales 2.240.000 2,681,000 (1,745,000) (2,272,000) Cost of goods sold Gross profit 495,000 409,000 (362,000) Operating expenses (252,000) Operating profit 143,000 47,000 Interest paid (18.000) (32,000) 225,000 15,000 Profit before taxation Taxation (60,000) (4,000) Net Profit 165,000 11,000 Notes: 1. The market value of the shares of the business at the end of the reporting period was OMR 2.50 for 2018 and OMR 1.50 for 2019. 2. All sales and purchases are made on credit. 3. The cost of goods sold figure can be analyzed as follows: 2018 2019 OMR OMR Opening inventory 241,000 300,000 Purchases 1,804,000 2,378,000 2,045,000 2,678,000 Closing (300.000) (406,000) inventories Cost of goods sold 1,745,000 2,272.000 4. At 31 March 2017, the trade receivables stood at OMR 223,000 and the trade payables at OMR 183,000. 5. A dividend of OMR 40,000 had been paid to the shareholders in respect of each of the years. Operating expenses (252,000) (362,000) Operating profit 143,000 47,000 Interest paid (18.000) (32,000) 225,000 15,000 Profit before taxation Taxation (60,000) (4,000) Net Profit 165,000 11,000 Notes: 1. The market value of the shares of the business at the end of the reporting period was OMR 2.50 for 2018 and OMR 1.50 for 2019. 2. All sales and purchases are made on credit. 3. The cost of goods sold figure can be analyzed as follows: 2018 2019 OMR OMR Opening inventory 241,000 300,000 Purchases 1,804,000 2,378,000 2,045,000 2,678,000 Closing (300,000) (406,000) inventories Cost of goods sold 1,745,000 2,272,000 4. At 31 March 2017, the trade receivables stood at OMR 223,000 and the trade payables at OMR 183,000. 5. A dividend of OMR 40,000 had been paid to the shareholders in respect of each of the years. Required: A. Choose and calculate eight ratios that would be helpful in assessing the performance of Al- Husan Company. Use end-of-year values and calculate ratios for both 2018 and 2019. (8 marks) B. Using the ratios calculated in (A) and any others you consider helpful, comment on the company's performance. (2 marks) C. Compute the number of days in the cash conversion cycle for each year. (4 marks) D. Did the company manage cash more effectively in the current year? Explain. (1 mark) 2. Shams company is considering two projects. Each requires an initial investment of OMR 100,000. The company cost of capital is 14%. The cash inflows associated with each project are as follows: Cash inflows Year Project A Project B 1 30.000 60,000 2 25,000 50,000 3 30,000 20,000 4 40,000 10,000 15 20,000 120.000 / a. Calculate the NPV for each project. (2 marks) b. Which project you would recommend to the management. Explain why. (1 marks) 3. Write a short note about one of the current trends and issues in finance. (2 marks) 1. The following financial statements relate to Al-Husan Company, which operates a wholesale carpet business: Balance sheet as at 31 March, 2019 Assets 2018 OMR 2019 OMR 427,000 160,000 587.000 406,000 273,000 0 679.000 1,266,000 / Non-current assets Land and building 381,000 Fixtures and 129,000 fittings 510,000 Current assets Inventories 300,000 Account 240,000 receivables Cash at bank 4,000 544,000 Total assets 1,054,000 Equity and liabilities Equity OMR 0.50 ordinary 300,000 shares General reserve 263.000 563.000 Non-current liabilities Long-term bank 200,000 loan Current liabilities Account payables 261,000 Bank overdraft 30,000 291,000 Total equity and 1,054,000 liabilities 300.000 234.000 534.000 300.000 354.000 78,000 432,000 1,266,000 Income statement for the year ended 31 March, 2019 2018 OMR 2019 OMR Net sales 2.240.000 2,681,000 (1,745,000) (2,272,000) Cost of goods sold Gross profit 495,000 409,000 (362,000) Operating expenses (252,000) Operating profit 143,000 47,000 Interest paid (18.000) (32,000) 225,000 15,000 Profit before taxation Taxation (60,000) (4,000) Net Profit 165,000 11,000 Notes: 1. The market value of the shares of the business at the end of the reporting period was OMR 2.50 for 2018 and OMR 1.50 for 2019. 2. All sales and purchases are made on credit. 3. The cost of goods sold figure can be analyzed as follows: 2018 2019 OMR OMR Opening inventory 241,000 300,000 Purchases 1,804,000 2,378,000 2,045,000 2,678,000 Closing (300.000) (406,000) inventories Cost of goods sold 1,745,000 2,272.000 4. At 31 March 2017, the trade receivables stood at OMR 223,000 and the trade payables at OMR 183,000. 5. A dividend of OMR 40,000 had been paid to the shareholders in respect of each of the years. Operating expenses (252,000) (362,000) Operating profit 143,000 47,000 Interest paid (18.000) (32,000) 225,000 15,000 Profit before taxation Taxation (60,000) (4,000) Net Profit 165,000 11,000 Notes: 1. The market value of the shares of the business at the end of the reporting period was OMR 2.50 for 2018 and OMR 1.50 for 2019. 2. All sales and purchases are made on credit. 3. The cost of goods sold figure can be analyzed as follows: 2018 2019 OMR OMR Opening inventory 241,000 300,000 Purchases 1,804,000 2,378,000 2,045,000 2,678,000 Closing (300,000) (406,000) inventories Cost of goods sold 1,745,000 2,272,000 4. At 31 March 2017, the trade receivables stood at OMR 223,000 and the trade payables at OMR 183,000. 5. A dividend of OMR 40,000 had been paid to the shareholders in respect of each of the years. Required: A. Choose and calculate eight ratios that would be helpful in assessing the performance of Al- Husan Company. Use end-of-year values and calculate ratios for both 2018 and 2019. (8 marks) B. Using the ratios calculated in (A) and any others you consider helpful, comment on the company's performance. (2 marks) C. Compute the number of days in the cash conversion cycle for each year. (4 marks) D. Did the company manage cash more effectively in the current year? Explain. (1 mark) 2. Shams company is considering two projects. Each requires an initial investment of OMR 100,000. The company cost of capital is 14%. The cash inflows associated with each project are as follows: Cash inflows Year Project A Project B 1 30.000 60,000 2 25,000 50,000 3 30,000 20,000 4 40,000 10,000 15 20,000 120.000 / a. Calculate the NPV for each project. (2 marks) b. Which project you would recommend to the management. Explain why. (1 marks) 3. Write a short note about one of the current trends and issues in finance. (2 marks)