Solve the following two tasks;Task A: Financial Statement AnalysisThe Directors of Helena Beauty Products (LTD) have being presented with the following abridged financial statements. They have requested the accounts manager to provide a report over the past five years of the financial statements. Income statement and Statement of Financial Position will be attached You are required to prepare financial statement analysis report to the management. You report should include the following data;Prepare common size index financial position statement for the above period and give a critical comment on the same.Compute the below given ratios and analyze them. Your analysis should include graphs representing the trend of each ratio. Further your report should include the financial strengths and weaknesses of the firm with the available information. (each ratio should have a graph)Liquidity ratios (current ratio and acid test ratio)Solvency ratio (Dept-equity, interest coverage ratio)Profitability ratio (gross profit margin, net profit margin, return on capital employed, within on equity)Activity ratio (inventory holding period, debtor collection period, creditors payment period)Task B: Project Risk AnalysisTelematics PLC is considering two mutually exclusive projects, cables and satellite. The possible NPVs for each project and their associated probabilities are as follows;Two tables will be attached. Calculate Expected NPVCalculate the standard deviation of NPVAppraise the management about this project with your comments

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REPORT

TO

FROM

DATE

Financial Statement Analysis for the years 2016/2017

–

Summary

Profitability Ratio

Efficiency Ratio

Recommendation

Appendix (calculation of ratio analysis)

Task A: Financial Statement Analysis

The Directors of Helena Beauty Products (LTD) have being presented with the following abridged

financial statements. They have requested the accounts manager to provide a report over the past five

years of the financial statements.

Income Statement for the year ended 30th September

Sales Revenue

(-) cost of

sales

Gross Profit

(-) Expenses

Operating

Profit

Interest

Payable

Profit before

tax

Interest

payable

Profit For the

year

2013

$000

3600

(2160)

2014

$000

3840

(2250)

2015

$000

2600

(1560)

2016

$000

2860

(1716)

2017

$000

3146

(1888)

1440

(1360)

80

1590

(1500)

90

1040

(730)

310

1144

(803)

341

1258

(883)

375

(105)

(116)

(128)

80

90

205

225

247

(15)

(20)

(50)

(55)

(61)

65

70

155

170

186

Statement of Financial position as at 30th September

Non-current

Asset

Property,

Plant and

equipment

Current

Asset

Inventories

Trade

receivables

Cash at

Bank

Total Assets

2013

$000

2014

$000

2015

$000

2016

$000

2017

$000

1900

1860

2100

2310

2541

400

750

500

960

550

850

605

935

666

1029

8

4

6

7

8

1158

1464

1406

1547

1703

3058

3324

3506

3857

4244

Equity and

Liabilities

Equity

$ 1 ordinary

shares

Share

premium

Ac

Retained

Earnings

Current

liabilities

Total

equity &

liabilities

1650

1700

1800

1980

2178

–

116

125

138

152

1018

1058

1185

1304

1434

2668

2874

3110

3422

3764

390

450

396

435

480

390

3058

450

3324

396

3506

435

3857

480

4244

Industry Averages

Current Ratio

Acid test Ratio

Debt to equity

Interest cover

GP margin

NP margin

ROCE

ROE

Inventory

holding period

Debtor

collection

period

Creditor

payment period

2013

3.5:1

2.5:1

36%

8 times

40%

4%

9%

3%

50 days

2014

2.86:1

1.76:1

42%

5 times

35%

3%

5%

2%

45 days

2015

3:1

2:1

35%

6 times

45%

5%

7%

4%

43 days

2016

3.2:1

2.1:1

40%

6 times

48%

6%

8%

5%

41 days

2017

3.5:1

2.5:1

44%

7 times

49%

8%

8%

6%

40 days

60 days

65 days

59 days

57 days

55 days

90 days

85 days

90 days

90 days

89 days

You are required to prepare financial statement analysis report to the management. You

report should include the following data;

Prepare common size index financial position statement for the above period and give a

critical comment on the same.

Compute the below given ratios and analyze them. Your analysis should include graphs

representing the trend of each ratio. Further your report should include the financial strengths

and weaknesses of the firm with the available information. (each ratio should have a graph)

–

Liquidity ratios (current ratio and acid test ratio)

Solvency ratio (Dept-equity, interest coverage ratio)

–

Profitability ratio (gross profit margin, net profit margin, return on capital employed,

within on equity)

Activity ratio (inventory holding period, debtor collection period, creditors payment

period)

Task B: Project Risk Analysis:

Telematics PLC is considering two mutually exclusive projects, cables and satellite. The possible

NPVs for each project and their associated probabilities are as follows;

Cable

NPV ($m)

10

20

25

Probability of occurrence

0.1

0.5

0.4

Satellite

NPV ($m)

15

20

40

Probability of occurrence

0.6

0.2

0.2

Required:

1. Calculate Expected NPV

2. Calculate the standard deviation of NPV

3. Appraise the management about this project with your comments

…

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