- compute and analyze the trend analysis of the company.
- What are the various ratios computed to analyze the financial statements?
- Based on these ratios and their comparisons with industry ratios, would you, as the loan officer, grant the loan request?
- What areas of improvement can you suggest for the future?
EXHIBIT 1: INCOME STATEMENT, APRIL 1 TO MARCH 31 (IN THOUSANDS) EXHIBIT 2: BALANCE SHEET (IN THOUSANDS) I \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Cash flow statement } \\ \hline \multicolumn{4}{|c|}{ In Thousands } \\ \hline & 201213 & 2013-14 & 2014-15 \\ \hline \multicolumn{4}{|l|}{ Cash Flow from Operating Activities: } \\ \hline Net Income & $364.00 & $672.00 & $840.00 \\ \hline Depreciation & $100.00 & $400.00 & $660.00 \\ \hline Adjusted Net Income & $464.00 & $1,072.00 & $1,500.00 \\ \hlineA/R & & ($1,200.00) & ($600.00) \\ \hline Inventories & & ($1,180.00) & ($750.00) \\ \hline Current Liabilities & & $1,468.00 & $1,052.00 \\ \hline Cash from Operating Activities & & $160.00 & $1,202.00 \\ \hline \multicolumn{4}{|l|}{ Cash Flows from Investing Activities: } \\ \hline Purchase of Assets & & ($1,000.00) & ($2,860.00) \\ \hline Cash Used in Investing Activities & & ($1,000.00) & ($2,860.00) \\ \hline \multicolumn{4}{|l|}{ Cash Flows from Financing activities } \\ \hline Borrowings & & $500.00 & $1,264.00 \\ \hline Shares Issued & & $400.00 & $400.00 \\ \hline Cash Generated from Financing Activities & & $900.00 & $1,664.00 \\ \hline Net Cash Generated & & $60.00 & $6.00 \\ \hline Add:Beginning cash balance & & $40.00 & $100.00 \\ \hline Ending Cash Balance & & $100.00 & $106.00 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{7}{|c|}{ Comon Size Income statement } \\ \hline & 201213 & % to Total sales & 2013-14 & % to Total sales & 201415 & % to Total sales \\ \hline \multicolumn{7}{|l|}{ Sales } \\ \hline Cash & $200.00 & 10.00% & $480.00 & 10.00% & $800.00 & 10.00% \\ \hline Credit & $1,800.00 & 90.00% & $4,320.00 & 90.00% & $7,200.00 & 90.00% \\ \hline Total Sales & $2,000.00 & 100.00% & $4,800.00 & 100.00% & $8,000.00 & 100.00% \\ \hline COGS & $1,240.00 & 62.00% & $2,832.00 & 59.00% & $4,800.00 & 60.00% \\ \hline Gross profit & $760.00 & 38.00% & $1,968.00 & 41.00% & $3,200.00 & 40.00% \\ \hline \multicolumn{7}{|l|}{ Operating Expenses: } \\ \hline Gen.adm.\& sell.exp. & $80.00 & 4.00% & $450.00 & 9.38% & $1,000.00 & 12.50% \\ \hline Depreciation & $100.00 & 5.00% & $400.00 & 8.33% & $660.00 & 8.25% \\ \hline Int.exp.(on borrowings) & $60.00 & 3.00% & $158.00 & 3.29% & $340.00 & 4.25% \\ \hline Profit before tax (PBT) & $520.00 & 26.00% & $960.00 & 20.00% & $1,200.00 & 15.00% \\ \hline Tax at 30% & $156.00 & 7.80% & $288.00 & 6.00% & $360.00 & 4.50% \\ \hline Profit after tax (PAT) & $364.00 & 18.20% & $672.00 & 14.00% & $840.00 & 10.50% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|} \hline \multicolumn{6}{|c|}{ Common Size Balance Sheet } & \multirow[b]{2}{*}{% to Total } \\ \hline Assets & & \% to Total & & % to Total & & \\ \hline Fixed Assets (Net of Depreciation) & 1900 & 74.22% & 2500 & 44.64% & 4700 & 51.33% \\ \hline \multicolumn{7}{|l|}{ Current assets } \\ \hline Cash \& Cash equivalents & 40 & 1.56% & 100 & 1.79% & 106 & 1.16 \\ \hline \begin{tabular}{|l|} Accounts Receivables \\ \end{tabular} & 300 & 11.72% & 1500 & 26.79% & 2100 & 22.94% \\ \hline Inventories & 320 & 12.50% & 1500 & 26.79% & 2250 & 24.57% \\ \hline Total & 2560 & 100.00% & 5600 & 100.00% & 9156 & 100.00% \\ \hline \multicolumn{7}{|l|}{ Equity \& Liabilities } \\ \hline Equity share capital(\$ 10) & 1200 & 46.88% & 1600 & 28.57% & 2000 & 21.84% \\ \hline Reserves \& surplus & 364 & 14.22% & 1036 & 18.50% & 1876 & 20.49% \\ \hline Long-termborrowings & 736 & 28.75% & 1236 & 22.07% & 2500 & 27.30% \\ \hline \begin{tabular}{|l|} Current Liabilities \\ \end{tabular} & 260 & 10.16% & 1728 & 30.86% & 2780 & 30.36% \\ \hline Total & 2560 & 100.00% & 5600 & 100.00% & 9156 & 100.00% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline Ratio Analysis & & 201213 & 2013-14 & 201415 & Industry average \\ \hline & Current assets & 660 & 3100 & 4456 & \\ \hline & Current Liabilities & 260 & 1728 & 2780 & \\ \hline Current ratio & & 2.54 & 1.79 & 1.60 & 2.3:1 \\ \hline \multirow[t]{3}{*}{ Quick Ratio } & Current assets & 660 & 3100 & 4456 & \\ \hline & Inventory & 320 & 1500 & 2250 & \\ \hline & Current Liabilities & 260 & 1728 & 2780 & \\ \hline Quick Ratio & & 1.31 & 0.93 & 0.79 & 1.20:1 \\ \hline Receivables T.O.Ratio (Times) & & 6.00 & 4.80 & 4.007 & 7 times \\ \hline & & & & & \\ \hline Receivable Turnover Days & & 61 & 76 & 91 & 52 Days \\ \hline Inventory T.O. Ratio (Times) & COGS/Av.Inventory & 3.88 & 3.11 & 2.56 & 4.85 times \\ \hline & & & & & \\ \hline Inventory Turnover Days & 365/.T.O. & 94 & 117 & 143 & 75 days \\ \hline Long-Term Debt to Total Debt & LTDebt/Total debt & 73.90% & 41.70% & 47.35% & 24% \\ \hline Debt to Equity Ratio & Debt/equity & 61.33% & 77% & 125% & 35% \\ \hline Gross Profit Ratio & Gross Profit/sales & 38% & 41% & 40% & 40% \\ \hline & & & & & \\ \hline Net Profit Ratio & Net Profit/Sales & 18.2% & 14.0% & 10.5% & 18% \\ \hline Return on equity & Net Profit/Total Equity & 23.27% & 25.49% & 21.67% & 22% \\ \hline Return on Total assets & Net Profit/Total Assets & 14.22% & 12.00% & 9.17% & 10% \\ \hline Total Asset Turnover ratio & Sales/Total assets & 0.78 & 0.86 & 0.87 & 1.1 \\ \hline & & & & & \\ \hline Fixed assets turnover ratio & Sales/GrossFixedassets & 1 & 1.6 & 1.37 & 2 \\ \hline Current assets T.O.Ratio & Sales/Current assets & 3.03 & 1.55 & 1.80 & 3 \\ \hline \end{tabular}
