PART ONE
Task 1.1
Always Better Control plc. has the following details as on 1" January 2015:
| Particulars |
Amount |
| Fixed assets |
200,000 |
| Stocks |
190,000 |
| Bank Balance |
90,000 |
| The Budget for the first quarter are as follows: |
|
| Sales for the months: |
|
| Jan-15 |
300,000 |
| Feb-15 |
600,000 |
| Mar-15 |
700,000 |
| Gross profit margin |
20% of sales |
| Bad debts |
1% of sales |
| Variable selling overheads |
10% of sales |
| Fixed selling overheads |
$25,000 |
| Variable administrative overheads |
2% on sales |
| Fixed administrative overheads |
$15,000 |
| Credit terms for sales, purchase and overheads(there is no outstanding debtors or creditors on 1st january 2015) |
1 month credit |
Prepare a profit statement to show the profit for the quarter ended 31" March 2015 and prepare a cash budget for January 2015 to March 2015.
Task 1.2
CIMA defines relevant costs as 'costs appropriate to aiding the making of specific management decisions'. With this view explain the importance of relevant information in pricing decisions.
Task 1.3
Consider two projects. Each requires an immediate cash outlay of $10,000. Project A will return $13,000 at the end of two years. Project B will return $6,500 each year at the end of year 1 and 2. Assume the discount rate is 15% and ignore depreciation and taxes. Evaluate the project by using the capital investment appraisal tools. Critically analyse the better project.
PART TWO
SCENARIO
LEG's Financial Statement for the period ending 31" March
|
(Dollars in thousands)
|
2016
|
2015
|
2014
|
|
Assets
|
|
|
|
|
Cement Assets:
|
|
|
|
|
Cash and Cash Equivalents
|
$272,640
|
582,540
|
$321,390
|
|
Receivables
|
12,090
|
3,480
|
7,550
|
|
Inventory
|
738,630
|
857,090
|
668,200
|
|
Prepaid Expenses
|
54,880
|
54,030
|
39,670
|
|
Total Current Assets
|
1,078,240
|
997,140
|
1,036,810
|
|
Property. Plant & Equipment (at Cost):
|
|
|
|
|
Land and Buildings
|
531,270
|
383,350
|
312,670
|
|
Fixtures and equipment
|
476,460
|
411,230
|
251,920
|
|
Leasehold improvements
|
16,460
|
15,120
|
12,340
|
|
Construction in progress
|
---
|
46,370
|
32,800
|
|
Less Accumulated Depreciation
|
(248,430)
|
(183,890)
|
(135,020)
|
|
Property, Plant & Equipment, net
|
775,760
|
672,180
|
474,710
|
|
Total Assets
|
$1,854,000
|
$1,669,320
|
$1,511,520
|
|
liabilities and Stockholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts Payable
|
$377,970
|
$244,150
|
$259,040
|
|
Advance Payment on Orders
|
4,460
|
2,030
|
3,500
|
|
Income Tax Payable
|
70,800
|
53,020
|
103,970
|
|
Other current obligations
|
154,510
|
139,950
|
148,790
|
|
Total Current Liabilities
|
607,740
|
439,150
|
515,300
|
|
Long term debt
|
78,000
|
84,130
|
76,740
|
|
Stockholders' Equity
|
|
|
|
|
Common stock; 20.1M, 20.1M & 20.0M shares, respectively as par
|
2,010
|
2,010
|
2,000
|
|
Additional Capital, net
|
311,360
|
307,810
|
293,080
|
|
Retained Earnings
|
983,810
|
875,160
|
624,400
|
|
Loa Treasury Stock, at cost
|
(128,920)
|
(38,940)
|
--
|
|
Total Stockholders' Equity
|
1,168,260
|
1,146,040
|
919,480
|
|
Total Liabilities and Equity
|
$1,854,000
|
$1.669,320
|
$1,511,520
|
Task 2.1
Discuss the Cash flow analysis of LEG Plc. in detail from the given financial statement for the period 2014 to 2016
Task 2.2
You are required to analyse the performance of LEG Plc. for the last 4 years by using Comparative balance sheet analysis for the 3 years period.
Task 2.3
From the financial statement of LEG Plc. calculate the following ratios and comment on their performance throughout the period.
a. Asset coverage ratio
b. Debt ratio
c. Debt to equity ratio
d. Equity ratio
e. Long term debt to Capitalization ratio
f. Long term debt to Total Asset ratio