Antiquated Pty Ltd is a manufacturing firms which has been in operation for past five years. Although the firm has experienced a highly profitable operation in the past, the current Covid-19 pandemic has taken a toll on the ability of the firm to stay profitable and competitive in its industry. Additionally, the current demand for its online services has created a significant burden on the firm's online infrastructure. Specifically, there has been a regular disruption of online services coupled with increase in the level of cyberattacks. In view of these challenges, Antiquated Pty Ltd has established a new risk assessment and minimization task force to help tackle and appropriately manage the emerging challenges of the current time.

Antiquated Pty Ltd has the business object of manufacturing toy cars for sale to its customers. The production process involves a six-stage process which include the planning stage, the design stage, the prototype stage, the design for manufacturing stage, the manufacturing stage and post- manufacturing stage. Antiquated Pty Ltd.'s supply chain management has suffered severe

disruptions during the covid19 pandemic which has led to an increase in the firm's cost of operation.

During the financial year ending 31 March 2021, Antiquated Pty Ltd produced 150 000 units of toys and incurred the following production cost:

Direct material cost$450 000

Direct labour cost$225 000 Manufacturing overheads:

Variable$75 000

Fixed$112 500

Period costs:

Variable:

Selling and administrative expenses $200 000 Fixed:

Selling and Administrative expense $277 500

During the year, three-fourth of the goods produced were sold by the firm which represented a quarter of the average sales generated over the last four years. As result of this, management is currently concerned about the financial performance of the firm.

At the final management meeting for the year, the managing director requested for a detailed report on the firm's financial performance from the finance director. The report is expected to include a broader range of issues as such busines risk and other relevant financial information.

The value for closing inventory for 31 March 2020 includes fixed manufacturing overheads of $45

250. The selling price per unit is $12. Below is the historical statement of profit or loss and statement of financial position for Antiquated Pty Ltd.

Antiquated Pty Ltd

Statement of Profit or loss for the year ended 31 March 2020

2020 2019 2018 2017

Net sales revenue 401,578.00 478,355.00 585,875.00 430,251.00

Less: Cost of sales

Cost of sales 273,073.00 272,660.00 357,380.00 257,924.00

Freight costs 1,250.00 1,100.00 2,500.00 500.00

Total cost of sales 274,323.00 273,760.00 359,880.00 258,424.00

Gross profit 127,255.00 204,595.00 225,995.00 171,827.00

Other operating revenue

Service revenue 6,030.00 7,175.00 17,576.00 7,745.00

Discount received 405.00 645.00 2 154 542.00

Total other operating revenue 6,435.00 8,120.00 19,730.00 8,287.00

133,690.00 212,715.00 245,725.00 180,114.00

Operating expenses

Selling expenses

Advertising expenses 7,055.00 6,220.00 8,788.00 4,304.00

Depreciation expenses 6,020.00 7,650.00 17,570.00 6,185.00

Motor vehicles expenses 6,825.00 7,325.00 8,980.00 4,405.00

Rent expenses 20,075.00 25,520.00 32,305.00 21,510.00

Total selling expenses 39,975.00 46,715.00 67,643.00 36,404.00

Administrative expenses

Accountancy fees 1,325.00 1,025.00 1,425.00 1,215.00

Electricity expenses 1,050.00 1,150.00 1,350.00 1,030.00

Insurance expenses 915.00 945.00 1,010.00 850.00

Office supplies expense 490.00 505.00 775.00 455.00

Repairs expenses 355.00 455.00 615.00 515.00

Superannuation expenses 1,495.00 1,605.00 1,705.00 1,305.00

Telephone expenses 650.00 450.00 545.00 350.00

Wages expenses 63,475.00 72,455.00 69,435.00 58,455.00

Total administrative expenses 69,755.00 78,590.00 76,860.00 64,175.00

Financial expenses

Bad debts expenses 245.00 435.00 325.00 150.00

Bank fees 325.00 325.00 160.00 160.00

Borrowing expenses 1,000.00 1,000.00 1,000.00 1,000.00

Discount allowed 1,355.00 1,650.00 2,455.00 1,345.00

Total financial expenses 2,925.00 3,410.00 3,940.00 2,655.00

Total operating expenses 112,655.00 128,715.00 148,443.00 103,234.00

Profit 21,035.00 84,000.00 97,282.00 76,880.00

Antiquated Pty Ltd

Statement of Profit or loss for the year ended 31 March 2020

2020

2019

2018

2017

Net sales revenue

401,578.00

478,355.00

585,875.00

430,251.00

Less: Cost of sales

Cost of sales

273,073.00

272,660.00

357,380.00

257,924.00

Freight costs

1,250.00

1,100.00

2,500.00

500.00

Total cost of sales

274,323.00

273,760.00

359,880.00

258,424.00

Gross profit

127,255.00

204,595.00

225,995.00

171,827.00

Other operating revenue

Service revenue

6,030.00

7,175.00

17,576.00

7,745.00

Discount received

405.00

645.00

2 154

542.00

Total other operating revenue

6,435.00

8,120.00

19,730.00

8,287.00

133,690.00

212,715.00

245,725.00

180,114.00

Operating expenses

Selling expenses

Advertising expenses

7,055.00

6,220.00

8,788.00

4,304.00

Depreciation expenses

6,020.00

7,650.00

17,570.00

6,185.00

Motor vehicles expenses

6,825.00

7,325.00

8,980.00

4,405.00

Rent expenses

20,075.00

25,520.00

32,305.00

21,510.00

Total selling expenses

39,975.00

46,715.00

67,643.00

36,404.00

Administrative expenses

Accountancy fees

1,325.00

1,025.00

1,425.00

1,215.00

Electricity expenses

1,050.00

1,150.00

1,350.00

1,030.00

Insurance expenses

915.00

945.00

1,010.00

850.00

Office supplies expense

490.00

505.00

775.00

455.00

Repairs expenses

355.00

455.00

615.00

515.00

Superannuation expenses

1,495.00

1,605.00

1,705.00

1,305.00

Telephone expenses

650.00

450.00

545.00

350.00

Wages expenses

63,475.00

72,455.00

69,435.00

58,455.00

Total administrative expenses

69,755.00

78,590.00

76,860.00

64,175.00

Financial expenses

Bad debts expenses

245.00

435.00

325.00

150.00

Bank fees

325.00

325.00

160.00

160.00

Borrowing expenses

1,000.00

1,000.00

1,000.00

1,000.00

Discount allowed

1,355.00

1,650.00

2,455.00

1,345.00

Total financial expenses

2,925.00

3,410.00

3,940.00

2,655.00

Total operating expenses

112,655.00

128,715.00

148,443.00

103,234.00

Profit

21,035.00

84,000.00

97,282.00

76,880.00

Antiquated Pty Ltd

Statement of financial position as at 31 March 2020

2020 2019 2018 2017

Assets

Current assets

Cash and cash equivalent 32,355.00 70,750.00 95,175.00 47,335.00

Accounts receivable 31,130.00 52,620.00 71,305.00 40,740.00

Inventory 121,405.00 101,455.00 132,535.00 91,235.00

Prepayments 24,351.00 20,405.00 19,560.00 23,540.00

Total current assets 209,241.00 245,230.00 318,575.00 202,850.00

Non-current assets

Prepayments 2,455.00 1,235.00 4,215.00 3,450.00

Motor vehicles (net) 32,245.00 35,245.00 38,245.00 41,245.00

Equipment and fittings (net) 59,755.00 45,760.00 38,745.00 20,450.00

Total non-current assets 94,455.00 82,240.00 81,205.00 65,145.00

Total assets 303,696.00 327,470.00 399,780.00 267,995.00

Liabilities

Current liabilities

Accounts payable 15,315.00 20,505.00 14,535.00 12,530.00

Accrued expenses 27,855.00 55,075.00 49,855.00 46,755.00

Bank loan 6,535.00 8,755.00 10,245.00 12,452.00

Total current liabilities 49,705.00 84,335.00 74,635.00 71,737.00

Non-current liabilities

Bank loan 95,000.00 95,000.00 95,000.00 95,000.00

Total non-current liabilities 95,000.00 95,000.00 95,000.00 95,000.00

Total liabilities 144,705.00 179,335.00 169,635.00 166,737.00

Net assets 158,991.00 148,135.00 230,145.00 101,258.00

Equity

Share capital 80,000.00 80,000.00 80,000.00 80,000.00

Retained earnings 78,991.00 68,135.00 150,145.00 21,258.00

Total equity 158,991.00 148,135.00 230,145.00 101,258.00

Required:

With reference to the case of Antiquated Pty Ltd, provide appropriate responses to the following questions:

A. With regards to the financial position of Antiquated Pty and given information, present a critical analysis with justifications of at least four techniques of information analysis that could be employed by the financial director to shed more light on the financial performance of Antiquated Pty Ltd (10 marks)

B. Using absorption costing and variable costing techniques, present a critical analysis of Antiquated Pty Ltd's profit from operations for 31 March 2021. Explain the difference between profit from operations under the two techniques. (10 marks)

C. Determine the quantity of toys that must be sold be Antiquated Pty Ltd in 2021 to achieve an after-tax target profit of twice the amount of 2020. Assume a tax rate of 30%

(10 marks)

D. Critically analyse the financial performance of Antiquated Pty Ltd over the period 2017- 2020 using financial ratios. A minimum of three ratios must be used for each class of financial ratio.