The comparative Financial Position Statements and Income Statements for Muscat n
ID: 2560535 • Letter: T
Question
The comparative Financial Position Statements and Income Statements for Muscat nfrastructure Development Company are given below Comparative Financial Position Statements of- Muscat Infrastructure Development Co. (Amount in RO. in Millions) Particulars 2013 2014 2015 2016 Liabilities and Equities Share Capital Reserves & Surplus Long-Term Debt Short-Term Borrowing Other Current Liabilities 24 2.4 3.0 3.0 1.4 1.3 1.4 1.8 7.9 | 10.7 | 1122 1.2 2.1 2.5 2.5 1.3 3.0 Total6.7 Assets Net Fixed Assets Currents Assets 2.7 3.5 4.7 5.1 0.6 1.6 0.7 2.3 3.0 0.8 2.6 3.7 0.5 - Cash and Bank - Receivables . Inventory 1.5 67 7.9 10.7 122 Total Comparative Income Statements of Muscat Infrastructure Development Co. (Amount in RO. in Millions) Particulars 2013 201420152016 Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Profit Interest Profit Before Tax 4.0 6.1 7.8 91 3.1 0.9 1.6 1.9 2.1 0.4 4.5 5.9 7.0 0.7 1.3 0.4 0.3 0.8 0.4 0.8 Profit After Tax 0.2 0.4 0.S 0.5Explanation / Answer
1) Muscat Infrastructure Development Company
Common Size Financial Position statement (Amt in RO. in Millions)
The percentage of common size statement of every year is calculated by dividing the value of every item of every year by total assets of respective year and multiplied by 100.
Muscat Infrastructure Development Company
Common Size Income statement (Amt in RO. in Millions)
The percentage of common size statement of every year is calculated by dividing the value of every item of every year by sales of respective year and multiplied by 100.
Comment : The net profit after tax of the company has been increased from 2013 to 2014 but after that it decrease to 5.49% in 2016 from 6.56% in 2014. The total liabilities of the company has increased from 2013 to 2016 and share capital decreased consequently which shows the financing from borrowings has increased.
2) Statement showing various ratios of company (Amt in RO. in Millions)
I have assumed other current liabilities equal to Accounts payable for calculating creditors payment period. It is assumed that all net sales are credit sales.
3) Strengths and weaknesses of the firm :
The company's current ratio and acid test ratio is more than the minimum required which shows that company's liquidity position is good. The company's net profit and gross profit margin has decreased over the years whereas the return on equity and capital employed has increased over the years from 2013 to 2016. The company's solvency position is also good. As the debt equity ratio is less than 1 and its interest coverage ratio is high. But the company's inventory holding period is high which is required to be reduce.
Particulars 2013 2013(%) 2014 2014(%) 2015 2015(%) 2016 2016(%) Liabilities and Equity Share Capital 2.4 35.82 2.4 30.38 3.0 28.04 3.0 24.59 Reserves and Surplus 0.6 8.96 1.0 12.66 1.1 10.28 1.4 11.48 Long-term debt 1.2 17.91 1.3 16.46 2.0 18.69 2.3 18.85 Short-Term Borrowing 1.2 17.91 1.4 17.72 2.1 19.63 2.5 20.49 Other Current Liabilities 1.3 19.40 1.8 22.78 2.5 23.36 3.0 24.59 Total (A) 6.7 100 7.9 100 10.7 100 12.2 100 Assets Net Fixed Assets 2.7 40.30 3.5 44.30 4.7 43.93 5.1 41.80 Current Assets Cash and Bank 0.5 7.46 0.6 7.60 0.7 6.54 0.8 6.56 Receivables 1.5 22.39 1.6 20.25 2.3 21.49 2.6 21.31 Inventory 2.0 29.85 2.2 27.85 3.0 28.04 3.7 30.33 Total 6.7 100 7.9 100 10.7 100 12.2 100