This question is intended for personal knowledge and not for assignment purposes. Could you also please analyse this question by presenting it; inform of the financial ratios like Liquidity ratio, Profitability ratio, Activity ratio and Leverage ratio, and providing an analysis basing on the questions (b) and (c) asked.
QESTION Kigamboni Enterprises has been a bank customer for the past 5 years and for the past 4 years they have been borrowing on an overdraft. This year Kigamboni Enterprises has applied for renewal of the overdraft facility at an enhanced level with the reason that they have experienced much liquidity problems. As usual you asked for the financial statements for their business, and you summarised them as given hereunder Current Assets 2017 2018 2019 Cash 100 210 254 Debtors 900 1,013 1,229 Prepayments 10 15 20 Stocks 1,500 2,925 4,388 Total Current Assets 2,510 4,163 5,889 Net Fixed Assets 1,000 1,177 1,421 Total Assets 3,510 5,340 7,310 Current Liabilities Bank Overdraft 500 9211 1,560 Trade Creditors 800 1,742 2,580 Other Creditors 15 23 29 Total Current Liabilities 1,315 2,686 4,169 Long Term Liabilities 450 675 878 Total Liabilities 1,765 3,361 5,047 Paid-up Capital 1,500 1,500 1,500 Retained Earnings 245 479 763 Total Owner's Equity 1,745 1,979 2,263 Total Owner's Equity & Liabilities 3,510 5,340 7,310 INCOME STATEMENT Sales 10,000 15,000 19,500 Cost of Goods Sold 7,000 10,950 14,430 Gross Profit 3,000 4,050 5,070 Operating Expenses 2,000 3,015 3,900 Net Income Before Taxes 1.0001 1,035 1,170 Taxes 300 311 351 Net Income After Taxes 700 725 819 Purchases 6,000 9,000 11,700 You are required to: (a) Critically analyze the financial statements (b) Identify source of the problem of the company (c) Give a reply to your customers giving him any suggestionsQESTION Kigamboni Enterprises has been a bank customer for the past 5 years and for the past 4 years they have been borrowing on an overdraft. This year Kigamboni Enterprises has applied for renewal of the overdraft facility at an enhanced level with the reason that they have experienced much liquidity problems. As usual you asked for the financial statements for their business, and you summarised them as given hereunder Current Assets 2017 2018 2019 Cash 100 210 254 Debtors 900 1,013 1,229 Prepayments 10 15 20 Stocks 1,500 2,925 4,388 Total Current Assets 2,510 4,163 5,889 Net Fixed Assets 1,000 1,177 1,421 Total Assets 3,510 5,340 7,310 Current Liabilities Bank Overdraft 500 9211 1,560 Trade Creditors 800 1,742 2,580 Other Creditors 15 23 29 Total Current Liabilities 1,315 2,686 4,169 Long Term Liabilities 450 675 878 Total Liabilities 1,765 3,361 5,047 Paid-up Capital 1,500 1,500 1,500 Retained Earnings 245 479 763 Total Owner's Equity 1,745 1,979 2,263 Total Owner's Equity & Liabilities 3,510 5,340 7,310 INCOME STATEMENT Sales 10,000 15,000 19,500 Cost of Goods Sold 7,000 10,950 14,430 Gross Profit 3,000 4,050 5,070 Operating Expenses 2,000 3,015 3,900 Net Income Before Taxes 1.0001 1,035 1,170 Taxes 300 311 351 Net Income After Taxes 700 725 819 Purchases 6,000 9,000 11,700 You are required to: (a) Critically analyze the financial statements (b) Identify source of the problem of the company (c) Give a reply to your customers giving him any suggestions
