COMSATS University Islamabad (Wah campus)

Financial Statement Analysis (MGT-537)

Financial Statement Analysis and Valuation (ACC-556)

BAF-6+8 & BBA-6+7+8 Semester

Assignment 01 (Solution)
 Particulars Y-o-Y analysis Index # trend analysis Common size analysis
2018 2019 %
y-o-y chang %Chang 2018
Assets change e 2018 2019 e % 2019%
Current assets $ $ $            
100.0
Cash & short term investments 75574 74442 -1132 -1.50 0 98.50 -1.50 1.81 1.64
100.0 114.7
Receivables 91642 105166 13524 14.76 0 6 14.76 2.20 2.32
143325 156324 12999 100.0 109.0
Merchandise inventories 4 4 0 9.07 0 7 9.07 34.33 34.45
100.0
Prepaid expenses & other current assets 128676 118537 -10139 -7.88 0 92.12 -7.88 3.08 2.61
172914 186138 13224 100.0 107.6
Total Current assets 6 9 3 7.65 0 5 7.65 41.42 41.02
                   
Property                  
100.0 112.5
Land 210427 236876 26449 12.57 0 7 12.57 5.04 5.22
100.0 113.1
Buildings 305006 345001 39995 13.11 0 1 13.11 7.31 7.60
100.0 121.2
Leasehold improvements 459711 557504 97793 21.27 0 7 21.27 11.01 12.29
178913 202391 23477 100.0 113.1
Fixtures & equipment 6 4 8 13.12 0 2 13.12 42.86 44.61
100.0 107.4
Transport equipment 173576 186485 12909 7.44 0 4 7.44 4.16 4.11
Year to Year 115549 114440 100.0 Change Analysis
Property under capital lease 3 9 -11084 -0.96 0 99.04 -0.96 27.68 25.22
By analyzing the above
409334 449418 40084 100.0 109.7
comparative   9 9 0 9.79 0 9 9.79 98.06 99.05 balance sheet of
year 2018 and 173113 189433 16319 100.0 109.4 2019, a huge
rise of 53.08% in Less: Accumulated depreciation & ammortization 8 3 5 9.43 0 3 9.43 41.47 41.75 notes and
debentures has 236221 259985 23764 100.0 110.0 been observed
in year 2019, Total property , Net 1 6 5 10.06 0 6 10.06 56.59 57.30 meaning that
firm has opted                     long term debt
instead of 100.0 100.1 loans/borrowing
from banks, Excess of cost over net assets acquired 16557 16588 31 0.19 0 9 0.19 0.40 0.37 along with that
100.0
Other assets 66449 59396 -7053 -10.61 0 89.39 -10.61 1.59 1.31
417436 453722 36286 100.0 108.6 100.0
Total assets 3 9 6 8.69 0 9 8.69 0 100.00
                   
Liabilities and Stock holder's equity                  
95.26% of firms notes and debentures going to mature in 2019, which put additional burden on firm’s liabilities. As far as asset side is concerned nominal improvements in assets observed in
fixed assets, which means the new long term borrowing 53.8% which firm has issued are invested in projects and which is also evident from negative amount in investment (1.50) %. Hopefully
firm project pay back income would be evident in upcoming year financial reports.

Index Number Trend Analysis

By analyzing the above comparative balance sheet of year 2018 and 2019, where 2018 is base year with 100 index value and in 2019 it is observed a rise of 53.08% in notes and debentures,
along with that 95.26% of firms notes and debentures going to mature in 2019.Since we have only one year 2019 to see the trend from base year 2018, The overall figures show positive trend in
both assets and liabilities except cash, prepaid expenses and other assets which depicted negative trend in assets and Notes and income tax payables also showing downward trend.

Common Size Analysis

The common size balance sheet analysis shows that in year 2018 firms total assets divided into 41 % current assets and 57 % Non-current assets, same division has been observed in year
2019.While on Liability side we can see that in 2018 the ratio of debt equity is 67% debt and 33% equity, same ratio is observed in year 2019.Which means that firm financing relies on Debt
(borrowings, loans, credits).