Cricket Twenty Company Ltd, (the company) is a retailer of sports goods and sports equipment. The company was incorporated in Cariland in 1998. It has an issued share capital of 100 ordinary shares of which Henri Gale has 76 and Dane Brave has 24. The companys Board comprises three directors, Gale, Brave and Ravi Ram. The company has presented its financial statements at each Annual General Meeting to date. These financial statements were all approved by the shareholders, who were satisfied with the companys performance over the last decade. However, to date, there has been very little in depth financial analysis of the companys performance. The Board has noted that during the past two years, the company has been impacted severely by developments in the business environment. The Board is therefore of the view that it has now become critical for the performance of the company to be more closely monitored and analysed. Also, Brave is thinking of exiting from the company to devote more time to his musical ambition. Two months ago, he asked Gale whether he would be interested in purchasing his shares. However, Gale responded that he was himself thinking of retirement but not in the immediate future. Accordingly, he was not interested in purchasing any of Braves shares. This was especially so as he already had control of the company through his holding of at least 75 shares which was the number that is required to pass a special resolution. However, he was not averse to the idea of selling any shares he had in excess of this number. Last month, Brave learnt that Jason Chase, a colleague of both Gale and Brave, would be interested in purchasing all of Braves shares once they could agree on a price. Brave duly informed the Board of his intention to dispose of his shares and of Chases interest in acquiring them. This step was necessary since the companys Articles of Incorporation requires that a shareholder who wishes to dispose of his shares must first offer them to the other shareholder(s) at a price to be approved by the Board. Should no current shareholder be interested in acquiring the shares offered, the shares could then be sold but only with the approval of the Board. You are a student in LOMAT at Cariland University. The Board has engaged you to report to it on the companys financial performance in particular, and to suggest a value for Braves shares. The Board has provided you with the companys financial statements for the last two years as well as some sports goods and equipment industry data. These are set out in Appendix I and Appendix II respectively. You intend to use in your analysis, the categories of performance indicators applied by the industry and the end of year figures in the statements of financial position of the company. You will also assume a 365-day year. You will also apply two methods of share valuation to establish a minimum and maximum share value. These are: (a) valuing all 100 shares at an amount equal to 10 times the companys net income before tax in 2021; and (b) valuing each of Braves shares using a Price Earnings multiple of 12. REQUIRED Write a report to the Board and include the following: (i) an analysis and evaluation of the financial performance of the company over the past two years with any recommendations for improvement; (ii) a comparison of the companys performance in 2021 with that of the industry; (iii) any assumptions you have made and any limitations you have identified in your analyses above; (iv) the range of estimated values you would place on the value of each of Braves shares together with any reservations you may have as to your estimates; and (v) the factors you would consider when placing a value on two (2) of Gales shares. APPENDIX I Cricket Twenty Company Ltd Statement of Income for the year ended December 31 2020 2021 $ $ Turnover 3,500,035 2,910,180 Cost of Sales 1,783,290 1,690,214 Gross Profit 1,716,745 1,219,966 Administrative Expenses 412,980 384,250 Distribution Expenses 218,126 196,204 Net Income before Tax 1,067,171 623,266 Taxation 72,275 24,254 Net Income after Tax 994,896 599,012 Statement of Financial Position as at December 31. 2020 2021 $ $ Current Assets: Cash in Hand and at Bank 282,110 57,842 Accounts Receivable 182, 028 212, 865 Inventory 546,902 724,960 1,011,040 995,667 Non Current Assets: Property, Plant and Equipment 618,590 602,750 Total Assets 1,629,630 1,598,417 Current Liabilities: Accruals 56,675 64,382 Accounts Payable 104,678 198,056 Current Portion of Long-Term Loan 50,000 50,000 211,353 312,438 Non-Current Liabilities: Bank Loan 590,000 540,000 Total Liabilities 801,353 852,438 Equity: Ordinary Share Capital 600,000 600,000 Retained Earnings 228,277 145,979 828,277 745,979 Total Liabilities and Equity 1,629,630 1,598,417 STATEMENT OF CHANGES IN EQUIT Ordinary Retained Total Share Capital Earnings $ $ $ Balance at at 1. 1. 2021 600, 000 228, 277 828, 277 Net Income after Tax 599, 012 599, 012 Dividends (681, 310) (681, 310) Balance 600, 000 145, 979 745, 979 APPENDIX II INDUSTRY DATA 2021 Gross Profit Margin 50% Net Profit Margin 32% Return on Capital Employed 45% Return on Equity 60% Current Ratio 2.6 times Acid Test Ratio 1.2 times Accounts Receivable Collection Days 20 days Total Assets Turnover $3.10 Inventory Turnover 80 days Payables Turnover 35 days Operating Cycle 100 days Gearing 30% Interest Cover 10 times Average Price Earnings Multiple 15 ******.