Download UNIVERSITY OF NAIROBI SCHOOL OF BUSINESS MASTER OF

UNIVERSITY OF NAIROBI
SCHOOL OF BUSINESS
MASTER OF SCIENCE IN FINANCE
DAC 511: CORPORATE FINANCIAL REPORTING AND ANALYSIS
JAN-APRIL 2013
GROUP ASSIGNMENTS
DUE DATE 8TH MARCH 2013
INSTRUCTIONS
1. The assignments should be done in groups assigned in class .
2. The assignments must be handed in typed
3. The assignment are due latest by Saturday 8th March 2013
Question One
Dix year end statements of financial position and statement of incone are shown below
(amounts in sh’000):
2012
2011
2010
Cash
30,000
35,625
36,800
Accounts recievables, net
88,500
62,500
49,200
111,500
82,500
53,000
9,700
9,375
4,000
277,500
255,000
229,500
518,000
445,000
372,500
128,900
75,250
49,250
97,500
102,500
82,500
Comon stock ,sh10 par value
162,500
162,500
162,500
Retained earnings
129,100
104,750
78,250
518,000
445,000
372,500
2012
2011
672,500
530000
Merchandie inventory
Prepaid expenses
Non current assets, net
Total assets
Accounts payable
Long term notes payable
Total liabilities and equity
Statement of income
Sales
Cost of goods sold
(410,225) (344,500)
Other operating expenses
(208,550) (133,900)
Interest expense
(11,100
(12,300)
(8,525
(7,845)
638,400
498,625
Net income
34,100
31,375
Earnings per share
Sh.2.1
Sh.1.93
Income taxes
Total costs and expenses
Additional information
2012
2011
Common stock price December 31
Sh.15
Sh.14
Annual dividend per share
Sh.0.60
Sh.0.30
Required:
a) Compare the year end liquidity position of the company using the
following ratios:
Current ratio, Acid test ratio
Comment on the ratio results
(4 marks)
b) Assumming all the sales were on credit compute the following ratios for
2012 and 2011 :
Average collection period, Accounts recievable turnover,
Inventory turnover, Average sale period
Comment on the changes in the ratios from 2011 to 2012
(5 marks)
c) Compare the long term risk and capital structure position as at the end
of 2012 and 2011 by computing the following ratios:
Total debt ratio, Times interest earned ratio
Comment on these results
(4 marks)
d) Evaluate the efficiency and profitability of the company for the years
ended 2012 and 2011 by computing the following ratios:
Net profit margin, Total assets turnover, Return on total assets
Comment on the results
(6 marks)
e) Evaluate on the value and quallity of the company’s equity by
computing
the following ratios:
Return on common equity, Price earnings ratio, Dividend yield
Comment on the results
(6 marks)
Total 25 marks
Question Two
You are planning to analyze Wenwa Company’s December 31 2012 statement of
financial position. the folowing information is available:
1. Beginning and ending balances are identical for both accouts recievable and
inventory
2. Net income is sh.1,300,000
3. Times interest earned is 5 (income taxes are zero). company has 5% bonds
outstanding issued at par
4. Net profit margin is 10%. Gross profit margin 30%. Inventory turnover is 5
5. Average collection period is 72 days
6. Sales to end of year working capital is 4. Current ratio is 1.5
7. Acid test ratio is 1.0 (excludes prepaid expenses)
8. Plant and equipment is sh.6,000,000. It is one-third depreciated
9. Dividend paid on 8% non participating prefered are sh40,000. Thereis no
change in common shares. The prefered shares were isssued two years ago at
par.
10. Earnings per share are sh.3.75
11. Common stock has a sh.5 par value and was issued at par.
12. Retained earnings at January 1, 2011 are sh.350,000
Required:
a) Given the information available , prepare the company’ statement of
financial position at December 31, 2012 (include the following account
classifications: cash, inventory, prepaid expenses,plant and
equipment(net), current liabilities and shareholder’s equity (20 marks)
b) Determine the amount of dividend paid on the common stock in year
2012
(5 marks)
(Total 25 marks)