Trimester: July / January 2021__ - November / April 20____

Examination: End Term Examination

Programme code: P04 Class: Trimester: I
Programme: MBA FS FY/SY/TY (SVU 2021)
Name of the
Name of the Constituent College: department/Section/Center:
K. J. Somaiya Institute of Management MKG/FIN/OPER/HR/DST/ECO/GEN
MGT/BA
Course Code 117P04C106
Name of the Course: Financial Statement Analysis

Question  Solve all the questions. All questions carries equal marks Max.
No.  Strat new question in new page Marks(25)
 Students can use calculator

Q1 The balance sheet of Suvarnan Textile Ltd as on 31 March 2020 and profit 5
and loss accounts for the year ended on that date is given below-

Balance Sheet- (Rs in million)

Equity share capital 1100

Retained Earnings 12150
Long term debts 14100
Trade Payables 8190
Bank loan short tem 14500
50040
Net Fixed assets 11830
Cash 910
Trade receivables 17630
Inventory 19040
Other current assets 630
50040
Profit & Loss Account - (Rs in million)

Sales 59150
Cost of sales 38850
Operating expenses 14630
Depreciation 2170
EBIT 3500
Interest 980
Profit before tax 2520
Tax 840
Profit after Tax 1680
Additional Information- (i) Face value per share Rs 10 (ii) Market price per
share Rs 210.
 Based on the aforesaid information, you are required to calculate the Z
score. What does the Z score indicate?

Q2 The excerpts from the profit and loss account of MG Retails Ltd for the last 5
two years are given below-

Particulars 2019 (Rs in 2020 (Rs in

million) million)
Sales 230 440
Cost of goods sold 135 280
Operating Expenses 26 35
Depreciation 15 20
Interest 25 40
Profit before tax 29 65
Tax 9 20
Profit after tax 20 45
You are required to

a) Calculate the year on year growth of sales and net profit

b) The growth of profit has exceeded the growth sales. Identify the
reasons by using suitable profitability and expenses ratio.

Q3 Amanda’s Anchors is planning to expand its operation and for that they 15
required loan from bank. Amada Anchors has applied for a loan from a local
bank. The bank is basing its decision on the following information-

Ratios Industry
Average
Current Ratio 1.5
Quick Ratio 0.80
Receivable turnover ratio 18
Inventory turnover ratio 20
Total Debt to assets ratio 0.56
Interest Coverage Ratio 6.52
Net Profit margin 10.25%
Return on assets 11.5%
Return on equity 20.30%

Amanda’s Anchores
Income Statement
For the year ending December 31, 2020 (Rs in millions)
Sales 60
Cost of Goods sold 35
Gross Profit 25
Operating expenses 10
 Operating Income 15
Interest Expenses 2.5
Income before tax 12.5
Income tax expenses 6.5
Net Income after tax 6
Amanda’s Anchores
Balance Sheet (Rs in millions)

As on Dec 31, 2020 As on Dec 31, 2019

Cash 7.5 6.0

Accounts receivables 3 2

Inventory 3 2

Prepaid Insurance 0.5 0.5

Total current assets 14 10.5

Property and Equipment 60 55

Less- Accumulated 14 11
Depreciation
Net Property & Equipment 46 44
Total Assets 60 54.5

Accounts payables 6 6

Other current liability 4 4.5

Total current liabilities 10 10.5

Bonds payable 15 15

Equity Capital 25 25
Retained earnings 10 4

Total Liabilities & Equity 60 54.5

Required-

a) From Amanda’s Anchors data, calculate the ratios for which the
bank has an industry average. After calculating first comment on
company’s performance and then compare Amanda’s ratios with the
industry average, should the bank approve the loan? Why or Why
not? All calculations and analysis must be part of your answer.

b) Compare the various ratios of company with industry average and

based on these ratios, describe the strengths and weaknesses of the firm.