You have been appointed as a Senior Financial Analyst for a multi-national manufacturing concern. Your appointment was being discussed for so long among board members as majority of them believed that this position is not really required as they already have a team of 4 qualified financial analysts.
Only CFO was convinced to have you onboard and primarily he is impressed by your previous experiences of writing financial performance reports. He also wants you to lead current team of financial analysts.
In your first meeting with CFO, you have been provided with most recent Financial Statements you have been given an assignment to prepare areport on profitability, liquidity, and capital structureof the company. CFO also needs your advice if company should go for debt financing for $2.5M. Below is the extract From Financial Statements that is made by one of your team mates.
Income Statement
2018
2019
Sales
9974
9471
cost of goods sold
5035
3845
Gross Profit
4939
5626
Operating Expanses
Salaries expanse
1654
594
Rent Expanse
547
1738
Utility Expanses
858
545
Depreciation Expanse
1159
1359
Operating Profit
721
1390
Interest Expanse
300
900
PBIT
421
490
TAX @20%
84.2
98
PAT
336.8
392
Statement of Financial Position
Cash and Cash Equivalents
432
635
Receivables
344
348
Inventory
305
598
Prepaid Assets
111
731
Non-Current Assets (Fair value)
750
950
Total Assets
1942
3262
Current Liabilities
1050
1560
Non-Current Liabilities
500
550
Equity
1152
Total Equity and Liabilities
All figures are rounded to $000.
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