1.How would you analyze the financial statements of a firm? Explain each step thoroughly.

1.Hihotech Company reported net income of 2.3 million for the year ended 20XX and had a weighted average of 800,000 common shares outstanding. At the beginning of the fiscal year, the company has option of 30,000 with an average exercise price 35. No potentially dilutive securities are outstanding. Over the fiscal year, the company's market price averaged 55 per share.

Required:

a)Calculate company's basic and diluted EPS under IFRS and US GAAP

b)It has been argued that both methods will yield the same results but the underlying justification employed by both methods is different. Explain these justifications.

3) Company owner contributes 100,000, which is invested in a twenty-year bond with a 5% coupon paid semi-annually. After six months the firm receives the coupon payment of 2500 and the market price has reached to 102,000. Show the balance sheet and income statement treatment under each of the following categorization: held for trading, available for sale, held to maturity.

4) At the start of year 1 owner contribute 100. After year 1 the company purchases the financial assets categorized as AFS worth 10. During year 1 the net income is 20 which is retained. The value of financial assets goes up to 12. During year 2 there is treasury stock operation worth 30 Net income is 40 which is retained. Financial asset goes up to 15. Show the relevant equity components at the end of year 1 and 2.

5) The following table presents the financial summary of a major international company.

Exhibit 1 FY10 FY11 FY12 FY13 FY14 Financial statements GBP m GBP m GBP m GBP m GBP m Income statements Revenue 4,390 3,624 3,717 8,167 11,366 Profit before interest and taxation 844 700 704 933 1,579 (EBIT) Net interest payable -80 -54 -98 -163 -188 Taxation -186 -195 -208 -349 -579 Minorities -94 -99 -105 -125 -167 Profit for the year 484 352 293 296 645 Balance sheets Fixed assets 3,510 3,667 4,758 10,431 11,483 Current asset investments, cash at 316 218 290 561 682 bank and in hand Other current assets 558 514 643 1,258 1,634 Total assets 4,384 4.399 5,691 12,250 13,799 Interest bearing debt (long term) -602 -1,053 -1,535 -3,523 -3,707 (continued)Exhibit 1 (Continued) FY10 FY11 FY12 FY13 FY14 Other creditors and provisions -1,223 -1,054 -1,102 -2,377 -3,108 (current) Total liabilities 1,$25 2,107 2,637 5,900 6 815 Net assets 2,559 2,292 3,054 5,350 6,984 Shareholders' funds 2,161 2,006 2.309 5,572 6,165 Equity minority interests 393 286 745 778 819 Capital employed 2,569 2,292 3,054 5,350 6,984 Cash flow Working capital movements -53 5 71 85 107 Net cash inflow from operating 864 859 975 1,568 2,292 activities