ASSIGNMENT BRIEF -
The Joythi family are the owners of Jayam Ltd, a medium sized company dealing in crockery. Upon the eath of their father a year ago, the older brother Paran took over as the managing director, but some of the family are concerned with the current performance of the business. They have been doing some investigating and they produce a table showing the industry and previous year's ratiostogether with industry averages for 2016 (refer Appendix A). JayamLtd 's comparative financial statements for the years ended 31 March 2016 and 2015 are provided below.
Note: Analysis ratios for use with the Cunningham textbook are listed in Appendix B
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Jayam Limited Comparative Statement of Financial Performance for the year ended 31 March 2016
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2016
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2015
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$'000
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$'000
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Sales (all on credit)
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4,200
|
4,500
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Cost of Goods Sold
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2,940
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3,000
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Gross Profit
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1,260
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1,500
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|
|
|
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Selling Expenses
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305
|
256
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Administration Expenses
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487
|
501
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Interest
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142
|
135
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934
|
892
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Net Profit before Tax
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326
|
608
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Income Tax Expenses
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114
|
201
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Net Profit after Tax
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212
|
407
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Dividends
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300
|
300
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Retained Earnings
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(88)
|
107
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Jayam Limited Comparative Statement of Financial Position as at 31 March 2016
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2016
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2015
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$'000
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$'000
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Shareholders' Funds
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|
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Contributed Share Capital
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3,000
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3,000
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Retained earnings
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1,568
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1,656
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4,568
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4,656
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Represented by:
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Current Assets
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|
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Bank
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35
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165
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Marketable Securities
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126
|
134
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Accounts Receivable
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441
|
595
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Inventory
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790
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613
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Prepaid Expenses
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56
|
62
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1,448
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1,569
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Current Liabilities
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|
|
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Bank Loan (Current Portion)
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170
|
170
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Accounts Payable
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655
|
489
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Accrued expenses
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89
|
78
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|
914
|
737
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Working Capital
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534
|
832
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Non-current assets
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|
|
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Equipment
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1,449
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1,667
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Property
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3,421
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3,169
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4,870
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4,836
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Less Long Term Liabilities
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|
|
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Term Loan
|
836
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1,012
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Net Assets
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4,568
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4,656
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Required:
a) Complete the ratio analysis figures for the 2016 in the template in your Assignment 2 Answer booklet.
b) Report
You are required to write a report to the Joythi family on the financial performance of Jayam Ltd. in 2016 and the financial position at year end. You should base your report on the financial statements, the ratios for the two years and the selected industry averages.
Your discussion should focus on the following areas:
(i) Return on Owners' Equity
(ii) Operating Performance
(iii) Liquidity and Financial Flexibility
Your conclusion should identify two significant problem areas at Jayam Ltd. and advise what action should be taken by management to address the problems identified.
Attachment:- Assignment.rar