SEMESTER SPRING 2014
Financial Statement analysis (FIN621)
ASSIGNMENT NO. 02
DUE DATE: August 04, 2014
Total Marks: 10 Marks
LEARNING OBJECTIVES:
After attempting this assignment whole-heartedly, the students will be able to:
Calculate the accounting ratios based on missing data
Evaluate and analyze the company’s strategies for improving cash funds.
Question #1:
ABC Techno Labs is engaged in manufacturing fertilizer, chemicals and pesticides
products in Pakistan. The company is known for cost-effective products and has gained a
tremendous growth during last 15 years. Due to its research and devolvement, patents and
dozens of successful products available in the market; the profit has increased 20% or
more annually. The company has never paid any dividends but it has a higher price per
share in the market. The company occasionally suffered from cash shortage due to heavy
research expenditures and rapid growth. In order to cope with this problem of cash
shortage, the company has decided to (1) reduce the credit period to 20 days instead of 45
days to its debtors (2) reduce its research and development expenditure by 30% annually.
Required:
In the light of above decided actions; evaluate and analyze (in detail) the above case in
perspective of:
1. Short term creditors of the company.
2. Credit customers of the company.
Discuss with logical arguments.
Question: # 2
If sales are 8 times of closing stock; Gross Profit Ratio is 30% and Net Profit is 25% of
gross profit and closing Stock is 0.4 million then prepare the Income Statement of ABC
company as below (also show complete working):
ABC Company Limited
Income Statement
For the year Ended 20XXX
Sales
Cost of sales
Gross Profit
Expenses
Net Profit
IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome
uploading difficulties. This extra time should only be used to meet the
emergencies and above mentioned due dates should always be treated as final
to avoid any inconvenience.
IMPORTANT INSTRUCTIONS:
Complete calculations are required for every part of the problem.
All the students are recommended to attempt the assignment their own.
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
Make sure to upload the solution file before the due date on VULMS.
Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
Use the font style “Times New Roman” or “Arial” and font size “12”.
It is advised to compose your document in MS-Word format.
You may also compose your assignment in Open Office format.
Use black and blue font colors only.
Note related to load shedding: Please be proactive
Dear students!
As you know that Post Mid-Term semester activities have started and load
shedding problem is also prevailing in our country. Keeping in view the fact, you
all are advised to post your activities as early as possible without waiting for the
due date. For your convenience; activity schedule has already been uploaded on
VULMS for the current semester, therefore no excuse will be entertained after
due date of assignments, quizzes or GDBs.
