Task 3

Case Study 1 You and your fellow group members are part of an Investment Analysis team advising clients as to whether to invest in certain companies. Based on the companies you have been allocated (Eastco Lid and Westco Ltd), you are required to prepare and submit (i) a report of approximately 1,200 words (including an executive summary) and (ii) a 6-minute pre-recorded video presentation summarising the content of your report. Please note that you are not required to submit the slides used in your presentation. In your report and presentation, based on the financial data provided in this document, you need to include a discussion via the use of ratio analysis for both Eastco Lid and Westco Lid on the following tasks: Task 1: Short term liquidity of both companies Task 2: The profitability of both companies from: a) b ) Entities view, and Shareholders view Task 3: Long term solvency of both companies Selected financial data of two intense competitors in a recent year are presented here (in millions). Eastco Ltd Westco Ltd Statement of profit or loss data Net sales 5 40 000 5 62 000 Cost of sales (32 000) (65 000) Selling and administrative expenses (7 200 (13 000) Finance expense (600) (1 000) Gain on sale of equipment 300 200 Income tax expense (300) (1 200) Profit $ 700 $ 2000 Statement of financial position data (end-of-year) Current assets $ 11 000 $ 11 000 Property, plant and equipment (net) 9000 17 481 Total assets $ 20 000 $ 28 481 Current liabilities $5 500 $9 000 Non-current liabilities 8 200 11 000 Total equity 6 300 8 481 Total liabilities and equity $ 20 000 $ 28 481 Beginning-of-year balances Total assets $ 17 504 $26 441 Current liabilities 5 698 9 981 Total equity 6 09 10 753 Other data Average net receivables 5 500 2 200 Average inventory 1000 8 000 Net cash provided by operating activities 1 000 2 500