23 Jul FIN303 Jan 2017 TMA Querstion Solution
In this assignment, you are expected to:
Compute and interpret financial ratios
Evaluate investment proposals
Apply knowledge to decide appropriate financing plan and dividend policy
___________________________________________________________________________
Modern Furnitures was established in 2000. Its products include household and office furniture. It has grown organically with new designs of furniture as well as through acquisition of other furniture companies. It has high cash balance in order to provide funds for these opportunities. Its financial statements are shown in Exhibit 1 and 2.
Exhibit 1 Income Statement for the year ending December 31, 2016
| Sales Revenue
|
6,000,000
|
| Cost of goods sold
|
-1,800,000
|
| Gross Profit
|
4,200,000
|
| Operating expenses
|
-2,000,000
|
| Depreciation
|
-200,000
|
| EBIT
|
2,000,000
|
| Interest
|
-120,000
|
| Earnings before tax
|
1,880,000
|
| Tax (20%)
|
-376000
|
| Net income
|
1,504,000
|
| Dividend payment | -601600
|
| Addition to retained earnings
|
902,400
|
Exhibit 2 Balance Sheet as at December 31, 2016
| Assets
|
|
| Cash and Cash Equivalents
Receivables
|
1,200,000
560,000
|
| Inventory
|
500,000
|
| Total current assets
|
2,260,000
|
| Gross Fixed assets
|
1,350,000
|
| Accumulated Depreciation
|
-550,000
|
| Net fixed assets
|
800,000
|
| Total assets
|
3,060,000
|
Assignment 1
Assignment 1 – Page 3 of 5
| Liabilities and Shareholder equity
|
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