Financial analysis practical work
Replenishment date: 22.01.2015
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Description
Financial analysis
Introduction
In a market economy, the role and importance of analyzing the financial condition of an enterprise is increasing. A reliable and objective assessment of the financial condition is necessary both for the owners and management of the enterprise and for external users (tax authorities, banks, investors, etc.).
The financial condition of an enterprise is characterized by a system of indicators that reflect the state of capital in the process of its circulation and the ability of a business entity to finance its activities at a fixed point in time. The ability of an enterprise to function and develop successfully, to maintain a balance of its assets and liabilities in a changing internal and external environment, to constantly maintain its solvency and investment attractiveness within the acceptable level of risk indicates its stable state, and vice versa, an unstable financial state is expressed in unsatisfactory solvency, in a low efficient use of resources, ineffective allocation of funds, their immobilization. The limit of the unstable financial condition of the enterprise is the state of bankruptcy, i.e. the inability of the enterprise to meet its obligations.
The main purpose of conducting practical classes on the analysis of the financial condition of an enterprise is to master the methodology for its implementation, to ensure that students develop skills in predicting the activities of an enterprise.
A competently conducted analysis will make it possible to identify and eliminate shortcomings in financial activities and find reserves for improving the financial condition of the enterprise and its solvency, predict financial results based on the real conditions of economic activity and the availability of own and borrowed funds.
The workshop is divided into 2 sections. Completing the first section in full gives the student the opportunity to get 40 points.
The second section is more difficult for a higher grade. Completing this section gives the student the opportunity to get 30 points.
Task 1. As of December 31, 20XX, the following information is available about ZZZ
Annual turnover (all sales on credit) 240.000 rub.
Purchases per year (on credit) 140.000 rub
The initial stock is 90.000 rubles.
The final stock is 60.000 rubles.
Trade debtors at the end of the year 40.000 rubles.
Trade lenders at the end of the year 45.000r.
Cash balances at the cash desk and on the account 55.000 rubles.
Long-term loans at the end of the year 80.000 rubles.
Share capital 155.000 rub.
Fixed assets at the end of the year 125.000 rubles.
1. Calculate the company's gross profit and cost of goods sold
2. Calculate Net Current Assets as of the end of the year
Introduction
In a market economy, the role and importance of analyzing the financial condition of an enterprise is increasing. A reliable and objective assessment of the financial condition is necessary both for the owners and management of the enterprise and for external users (tax authorities, banks, investors, etc.).
The financial condition of an enterprise is characterized by a system of indicators that reflect the state of capital in the process of its circulation and the ability of a business entity to finance its activities at a fixed point in time. The ability of an enterprise to function and develop successfully, to maintain a balance of its assets and liabilities in a changing internal and external environment, to constantly maintain its solvency and investment attractiveness within the acceptable level of risk indicates its stable state, and vice versa, an unstable financial state is expressed in unsatisfactory solvency, in a low efficient use of resources, ineffective allocation of funds, their immobilization. The limit of the unstable financial condition of the enterprise is the state of bankruptcy, i.e. the inability of the enterprise to meet its obligations.
The main purpose of conducting practical classes on the analysis of the financial condition of an enterprise is to master the methodology for its implementation, to ensure that students develop skills in predicting the activities of an enterprise.
A competently conducted analysis will make it possible to identify and eliminate shortcomings in financial activities and find reserves for improving the financial condition of the enterprise and its solvency, predict financial results based on the real conditions of economic activity and the availability of own and borrowed funds.
The workshop is divided into 2 sections. Completing the first section in full gives the student the opportunity to get 40 points.
The second section is more difficult for a higher grade. Completing this section gives the student the opportunity to get 30 points.
Task 1. As of December 31, 20XX, the following information is available about ZZZ
Annual turnover (all sales on credit) 240.000 rub.
Purchases per year (on credit) 140.000 rub
The initial stock is 90.000 rubles.
The final stock is 60.000 rubles.
Trade debtors at the end of the year 40.000 rubles.
Trade lenders at the end of the year 45.000r.
Cash balances at the cash desk and on the account 55.000 rubles.
Long-term loans at the end of the year 80.000 rubles.
Share capital 155.000 rub.
Fixed assets at the end of the year 125.000 rubles.
1. Calculate the company's gross profit and cost of goods sold
2. Calculate Net Current Assets as of the end of the year
Additional Information
Task 2. The assets of the enterprise amount to 254 million rubles. Sales proceeds - 246 million rubles. return on assets 20%. What is the return on sales.Task 3. The following data relate to the YYY company as of the end of the reporting period on December 31, 20XX, the following data are available:
Retained earnings 53.000 rub.
Share capital ??
Long-term loan 70.000 rub.
Cash balance ??? R.
Stock for resale 50.000 rub.
Vehicles 18.000 rub.
Machine tools and mechanisms 45.000 rub.
Investments (short-term) 10.000 rub.
Current taxation 15.000 rub.
Lenders 60.000 rub.
Debtors 80.000 rub.
Land and equipment 85.000 rub.
Bank overdraft 12.000 rub.
Total net current assets 55.000 rub.
Based on the above information, prepare the balance sheet as at 31 December 20XX, calculate the missing indicator and the following ratios:
- current liquidity ratio,
- quick liquidity ratio,
- long-term debt / equity.
Analyze the data obtained.
Task 4. You are given an abbreviated income statement and balance sheet of a company engaged in the sale and installation of communication equipment. It is necessary to calculate the coefficients given in the tables and draw conclusions based on the results obtained.
Gains and losses report.
31.12.X1. 31.12.X0g
Sales revenue 60000 50000
Cost of sales 42000 34000
Gross profit 18000 16000
Operating expenses 15500 13000
Interest payable 2200 1300
Profit before tax 300 1700
Tax 350 600
Loss / profit after tax (50) 1100
Dividends paid are 600 in each of the periods presented.
Statement of the financial position of the company
31.12.X1. 31.12.X0g
Long-term assets:
• Intangible
• material
500
12000
-
11000
Short-term assets:
• reserves
• receivables
• cash and bank
14000
16000
500
13000
15000
500
Total 43000 39500
Capital and reserves
• share capital
• Share premium
• Revaluation reserve
• Accumulated profit
1300
3300
2000
7350
1300
3300
2000
8000
long term duties
• Debt securities
6000
5500
Short-term liabilities
• Trade payables
23500
19400
Total 43000 39500
Calculate the following indicators and draw a conclusion based on the results.
Indicator 20X1 20X0 Growth topics
Current liquidity ratio
Quick liquidity ratio
Inventory turnover period
Accounts receivable repayment period
Accounts payable period
Gross margin ratio
Net profit ratio (before tax)
Interest coverage
Dividend coverage
Return on capital used
Financial dependence ratio.
Section 2.
The task. The following results of the analysis already carried out are given.
You are required to prepare an analytical report, clearly interpreting and evaluating the information provided.
Notes:
• Use grouped ratios as the basis for the structure of your report
• Avoid re-listing the data. You can express your wishes for additional information, and give possible conclusions depending on the possible options for this information.
• The report should look like this:
REPORT
To: _Directors of the company XXX__
From: Financial Analyst / Certified Accountant
Date: XX-XX-20XX
Topic: Interpretation and evaluation of generalized indicators for a five-year period
Показатели 20X1г 20X2г 20X3г 20X4г 20X5г
Profitability
Operating profit ratio
(Операционная прибыль/выручку) % 7,80 7,50 7,00 7,20 7,30
Return on assets
(Operating profit / net assets)% 16,30 17,30 16,20 18,20 18,30
Interest and Dividend Coverage Ratios