You are requested to refer to the financial statements for to KPL Company K.S.C.C. and perform the following: 1) Perform the Horizontal Analysis (as a %) using 2018 as the base year. 2) What can you conclude about the company's overall health/performance compared to the Industry average with regards to the following (fill the table): Line Item 2019 % 2020 % Conclusions Ind. Avg. 113% Cash 138% Total Inventory Accounts Receivable Total Liabilities 117% 78% 102% Cost of Goods Sold Gross Profit 102% Net Income 104% 3) On the excel sheet provided, calculate all of the ratios included in the equation sheet provided on the next page. 4) You were not able to find the industry averages for Kuwait for the above ratios. However, what conclusions can you make from the ratios? NOTE: ALL YOU WORKINGS MUST BE DONE ON THE EXCEL SHEET USING EQUATIONS Ratio Formula Ratio Formula Liquidity Current Gross profit margin Total current assets Total current liabilities Current assets - inventories Current liabilities Net return on assets Quick, or Acid Test Gross retuun on assets EBIT Total operating revenue Net income Total average assets EBIT Total average assets Net income to stokholders Average common equity Asset Management Inventory Tumover Return on common equity Days sales outstanding Fixed assets tumover Cost of goods sold Inventories (average) Receivables Sales per day Annual sales Net fixed assets (average) Annual sales Total assets (average) Total assets turnover Debt Management Debt ratio Interest coverage Total debt Total assets EBIT Interest charges Profitability Net profit margin Net income Total operating revenue Based on all your calculations and conclusions above, what is your assessment of the new CEO's performance so far? List as many strengths/pros and weaknesses/cons on his performance as you can below: Areas of Strength Areas of Weakness D Income Statement 2018 2019 2020 95% 51,359,000 55,448,400 100N Revenue Total Revenue Cost of Revenue, Total Gross Profit 102% 54,790,600 54,790,600 39,876,250 51,359,000 38,918,300 55,448,400 40,315,550 15,132,850 102% 12,441,850 14,914,350 102% 111 117% 94% Selling/General/Admin. Expenses, Total Interest Expense (income). Net Operating Total Unusual Expense (income) Other Operating Expenses, Total Total Operating Expense Operating income Interest Income (Expense, Net-Non-Operating Total Gain (Loss) on Sale of Assets Net Income Before Taxes 6,008,750 (18,400) 6,157,100 (253,000) 50,811,600 547,400 (1,803,200) 1,946,950 5,761,500 (101,200) 1,582,400 (242,650) 46,876,300 7,914,300 923,450 158% 6,621,700 (178,250) 822,250 (264,500) 47,316,750 8,131,650 1,490,400 10% 535 27% 142% 692,300 8,837,750 9,620,900 5% 143N 35,650 169% 374,900 8,464,000 14 Provision for Income Taxes Net Income After Taxes Minority interest o Net Income 656,650 (66,700) 589,950 393,300 9,227,600 (272,550) 8,956,200 8,464,000 15% 1 13% 2 3 -6% 4 5 12% -6 12% 2 8 12% 59 12% 70 1 12% 101% 8% 23 J 24 0% 35 92% 76 1 KPL Company K.S.C.P. All Amounts in KWD Balance Sheet 2018 2019 2020 Horizontal Analysis Industry Average 1135 106% 117% 1383 81 3,768,550 9,685,300 5,294,600 7,031,100 20,595,350 20,399,850 19,683,400 18,838,150 931,500 568,100 41,953, 150 48.171,200 118,206,200 120,065,750 (83,993,700)| (87,946,250) 34,211,350 32,124,100 46,921,150 47,296,050 123,086,800 127,590,200 4,365,400 10,565,050 25,847,400 21,476,250 633,650 51,239,400 121,280,150 190, 151,950) 31,128,200 48,458,700 130,826,300 113% 89N 87% 88N 95% 95% 4 Assets 5 Cash 6 Short Term Investments 7 Accounts Recevable 8 Total Inventory 9 Prepaid Expenses 10 Total Current Assets 11 Property/Plant/Equipment. Total Gross 12 Accumulated Depreciation - Total 13 Property/Plant/Equipment - Total-Net 14 Long Term Investments 15 Total Assets 16 17 Liabilities 18 Accounts Payable 19 Accrued Expenses 20 Notes Payable/Short Term Debt 21 Other Current liabilities. Total 22 Total Current Liabilities 23 Long Term Debt 24 Total Long Term Debt 25 Total Debt 26 Minority interest 27 Other Liabilities-Total 28 Total Liabilities 8,415,700 9,367,900 69% 1,639,900 1,848,050 243% 731,400 77% 2,634,650 306% 99% 8,115,5SO 1.644,500 723,350 4,692,000 15.293,850 1.583,800 1.583,800 841,800 3,280,950 6,268,650 24,843,450 5.800,600 3,521,300 21,564,800 1.443,000 1,443,000 7.987,900 3,207,350 5,925,950 100% 14,582,000 1.521.130 1,521,130 731,400 6,471,050 100% 10% 152N 6,488,300 109% 30,698,100 27,541,350 78% 29 39,877,400 40,013, 100 100% 36,824,150 37,033,450 100% 43% 30 Shareholders Equity 31 Common Stock - Total 32 Additional Pald-In Capital 33 Retained Earnings (Accumulated Delicit) 34 Treasury Stack-Common 35 Unrealized Gain (Loss) 36 Other Equity - Total 37 Total Equity 39,848,650 36,295,400 5.951,250 15,900) 9,841,700 140,250) 14 567,050 16.900) 1% 16,990,100 39,100) 9,087,300 201,250 11.443,650 856% 41,400 -4% 92,388,700 102,746,750 103,286,100 103% 38 You are requested to refer to the financial statements for to KPL Company K.S.C.C. and perform the following: 1) Perform the Horizontal Analysis (as a %) using 2018 as the base year. 2) What can you conclude about the company's overall health/performance compared to the Industry average with regards to the following (fill the table): Line Item 2019 % 2020 % Conclusions Ind. Avg. 113% Cash 138% Total Inventory Accounts Receivable Total Liabilities 117% 78% 102% Cost of Goods Sold Gross Profit 102% Net Income 104% 3) On the excel sheet provided, calculate all of the ratios included in the equation sheet provided on the next page. 4) You were not able to find the industry averages for Kuwait for the above ratios. However, what conclusions can you make from the ratios? NOTE: ALL YOU WORKINGS MUST BE DONE ON THE EXCEL SHEET USING EQUATIONS Ratio Formula Ratio Formula Liquidity Current Gross profit margin Total current assets Total current liabilities Current assets - inventories Current liabilities Net return on assets Quick, or Acid Test Gross retuun on assets EBIT Total operating revenue Net income Total average assets EBIT Total average assets Net income to stokholders Average common equity Asset Management Inventory Tumover Return on common equity Days sales outstanding Fixed assets tumover Cost of goods sold Inventories (average) Receivables Sales per day Annual sales Net fixed assets (average) Annual sales Total assets (average) Total assets turnover Debt Management Debt ratio Interest coverage Total debt Total assets EBIT Interest charges Profitability Net profit margin Net income Total operating revenue Based on all your calculations and conclusions above, what is your assessment of the new CEO's performance so far? List as many strengths/pros and weaknesses/cons on his performance as you can below: Areas of Strength Areas of Weakness D Income Statement 2018 2019 2020 95% 51,359,000 55,448,400 100N Revenue Total Revenue Cost of Revenue, Total Gross Profit 102% 54,790,600 54,790,600 39,876,250 51,359,000 38,918,300 55,448,400 40,315,550 15,132,850 102% 12,441,850 14,914,350 102% 111 117% 94% Selling/General/Admin. Expenses, Total Interest Expense (income). Net Operating Total Unusual Expense (income) Other Operating Expenses, Total Total Operating Expense Operating income Interest Income (Expense, Net-Non-Operating Total Gain (Loss) on Sale of Assets Net Income Before Taxes 6,008,750 (18,400) 6,157,100 (253,000) 50,811,600 547,400 (1,803,200) 1,946,950 5,761,500 (101,200) 1,582,400 (242,650) 46,876,300 7,914,300 923,450 158% 6,621,700 (178,250) 822,250 (264,500) 47,316,750 8,131,650 1,490,400 10% 535 27% 142% 692,300 8,837,750 9,620,900 5% 143N 35,650 169% 374,900 8,464,000 14 Provision for Income Taxes Net Income After Taxes Minority interest o Net Income 656,650 (66,700) 589,950 393,300 9,227,600 (272,550) 8,956,200 8,464,000 15% 1 13% 2 3 -6% 4 5 12% -6 12% 2 8 12% 59 12% 70 1 12% 101% 8% 23 J 24 0% 35 92% 76 1 KPL Company K.S.C.P. All Amounts in KWD Balance Sheet 2018 2019 2020 Horizontal Analysis Industry Average 1135 106% 117% 1383 81 3,768,550 9,685,300 5,294,600 7,031,100 20,595,350 20,399,850 19,683,400 18,838,150 931,500 568,100 41,953, 150 48.171,200 118,206,200 120,065,750 (83,993,700)| (87,946,250) 34,211,350 32,124,100 46,921,150 47,296,050 123,086,800 127,590,200 4,365,400 10,565,050 25,847,400 21,476,250 633,650 51,239,400 121,280,150 190, 151,950) 31,128,200 48,458,700 130,826,300 113% 89N 87% 88N 95% 95% 4 Assets 5 Cash 6 Short Term Investments 7 Accounts Recevable 8 Total Inventory 9 Prepaid Expenses 10 Total Current Assets 11 Property/Plant/Equipment. Total Gross 12 Accumulated Depreciation - Total 13 Property/Plant/Equipment - Total-Net 14 Long Term Investments 15 Total Assets 16 17 Liabilities 18 Accounts Payable 19 Accrued Expenses 20 Notes Payable/Short Term Debt 21 Other Current liabilities. Total 22 Total Current Liabilities 23 Long Term Debt 24 Total Long Term Debt 25 Total Debt 26 Minority interest 27 Other Liabilities-Total 28 Total Liabilities 8,415,700 9,367,900 69% 1,639,900 1,848,050 243% 731,400 77% 2,634,650 306% 99% 8,115,5SO 1.644,500 723,350 4,692,000 15.293,850 1.583,800 1.583,800 841,800 3,280,950 6,268,650 24,843,450 5.800,600 3,521,300 21,564,800 1.443,000 1,443,000 7.987,900 3,207,350 5,925,950 100% 14,582,000 1.521.130 1,521,130 731,400 6,471,050 100% 10% 152N 6,488,300 109% 30,698,100 27,541,350 78% 29 39,877,400 40,013, 100 100% 36,824,150 37,033,450 100% 43% 30 Shareholders Equity 31 Common Stock - Total 32 Additional Pald-In Capital 33 Retained Earnings (Accumulated Delicit) 34 Treasury Stack-Common 35 Unrealized Gain (Loss) 36 Other Equity - Total 37 Total Equity 39,848,650 36,295,400 5.951,250 15,900) 9,841,700 140,250) 14 567,050 16.900) 1% 16,990,100 39,100) 9,087,300 201,250 11.443,650 856% 41,400 -4% 92,388,700 102,746,750 103,286,100 103% 38