Case 4

Anandam GROUP 6

Manufacturing Ranialda Hendri A191086

Chiesa Jordan A191080
Company: Analysis Tazkia Karima A19097
Kim Sehee A191073
of Financial Adma Wahyu DS A19107

Statements
Introduction
ANANDAM MANUFACTURING COMPANY

Established in 2012, Anandam was in the

business of garment manufacturing,
specializing in formal party dresses for girls up
to 12 years of age. Agarwal, a qualified textile
engineer who had worked for almost 12 years
in a local garment manufacturing company,
had left his job to open this small
manufacturing unit, together with some of the
skilled labourers he had known for many years.
He was aware that competition was stiff in the
sector, as both small-scale units and
large-scale manufacturing units were present.

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Assignment Questions:

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No 1. Cash Flow Statement
Statement of Cash Flow
2015 2014
Cash /Cash equivalents beggining balances 100 40

Cash Flows from operating activities

Net income 840 672
Depreciation 660 400
Increase in inventories -750 -1180
Increase in account receivables -600 -1200
Increase in current liabilities 1052 1468
Net cash flow from operating activities 1202 160

Cash Flow from investing activities

Purchase of New Equipment -1000 -2,860
-1000 -2,860

Cash Flow from financing activities

Proceed from Equity Share Capital 400 400
Proceed from Long-Term Borrowings 640 510
Net cash flow from financing activities 1040 910

Net increase in cash 1242 -1790

Net increase in Cash/Cash equivalents 6 60

Cash /Cash equivalents ending balances 106 100 4
 common size analysis is that it allows investors to
identify drastic changes in a company’s financial
statement. It mainly applies when the financials are
No 2 compared over a period of two or three years. Any
significant movements in the financials across several
years can help investors decide whether to invest in
the company.
based on the income statement
gross profit and profit after tax has
a significant increase. already
mentioned in this case
But Financial liquidity and funding
problems started increasing with
the growth of the business.
Agarwal began to face funding
problems

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No 3
Calculation of trend analysis
among the present year

trend analysis compares the

movement in each line item
across time periods in order to
draw actionable insights. It
basically indicates the change
either in terms of amount or as a
percentage change year over
year

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No 3

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No 4 Ratios to Analyze Financial Statement

Profitability Liquidity Turnover Leverage Market

Valuation
1. Gross Profit 1. Cash Ratio 1. Inventory 1. Debt/Asset 1. Earning Per
Margin 2. Current Turnover Ratio Share
2. Net Profit Ratio 2. Receivable 2. Debt/Equity 2. Price-Earnin
Margin 3. Acid-Test Turnover Ratio g Ratio
3. Return on Ratio 3. Account 3. Debt/Capital 3. Dividend Per
Asset Payable Share
4. Return on Turnover 4. Dividend
Investment Payout Ratio

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No 5 Ratios Computation
Anandam Manufacturing Co.
Ratios Sector Average
2012-2013 2013-2014 2014-2015
Liquidity Ratio
Current Ratio 2.30 : 1 2.54 1.79 1.60
Acid Test Ratio 1.20 : 1 1.31 0.93 0.79
Turnover Ratio
Receivable Turnover Ratio 7 times - 4.8 4
Receivables Days 52 days - 76 91
Inventory Turnover Ratio 4.85 times - 3.11 2.56
Inventory Days 75 days - 117 143
Total Asset Turnover Ratio 1.1 0.78 0.86 0.87
Fixed Asset Turnover Ratio 2 1.05 1.92 1.70
Current Asset Turnover Ratio 3 3.03 1.55 1.80
Interest Coverage Ratio 10 9.67 7.08 4.53
Working Capital Turnover Ratio 8 5 3.5 4.77
Leverage Ratio
Long-Term Debt/Total Debt 24% 74% 42% 47%
Debt-to-Equity Ratio 35% 64% 112% 136%
Profitability Ratio
Gross Profit Ratio 40% 38% 41% 40%
Net Profit Ratio 18% 18% 14% 11%
Return on Equity 22% 23% 25% 22%
Return on Total Assets 10% 14% 12% 9%
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No 6 Ratio Sector Average
Anandam Manufacturing Co.
2012-2013 2013-2014 2014-2015 Assessment
Liquidity Ratio
Current Ratio 2.30 : 1 2.54 1.79 1.60
Acid Test Ratio 1.20 : 1 1.31 0.93 0.79
Turnover Ratio
Receivable Turnover Ratio 7 times 6.67 3.2 6.67 ok
Receivables Days 52 days 54 113 54 ok
Inventory Turnover Ratio 4.85 times 3.88 1.89 2.13
Inventory Days 75 days 93 191 169
Total Asset Turnover Ratio 1.1 0.8 0.9 0.9 ok
Fixed Asset Turnover Ratio 2 1 2 2 ok
Current Asset Turnover Ratio 3 3 2 2
Interest Coverage Ratio 10 9.7 7.1 8.5
Working Capital Turnover Ratio 8 5 5 5
Leverage Ratio
Long-Term Debt/Total Debt 24% 74% 42% 47%
Debt-to-Equity Ratio 35% 64% 112% 136%
Profitability Ratio
Gross Profit Ratio 40% 38% 41% 40% ok
Net Profit Ratio 18% 18% 14% 11%
Return on Equity 22% 23% 25% 22% ok
Return on Total Assets 10% 14% 12% 9% ok
Return on Fixed Asset 24% 19% 27% 18%

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No 7
Problems Faced :
• No system to track the credit period extensions for collecting the accounts payables of the customers
• Orders of the company had delayed the delivery or were not dispatched at all
• Owner has been borrowing long & short term funds and never thought strategically about the financing
of the operations of the company.
• Increasing competition among India market

Reccomendations :
• Speed up accounts receivables collections
• Implement billing system
• Loan should be a planned management decision
• Production output increase without increasing cost
• Loan and performance re-evaluation.

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THANK YOU

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