Analysis

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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