Techniques of Financial Analysis: a Modern Approach - Essay Example

ACCOUNTING & Details Submitted Financial Accounting: Assumptions of ratio analysis One of the assumptions of ratio analysis states that linear relationship exists between financial ratios. Ratios serve as screening devices, reveal matters that need further investigation and they indicate areas of potential weaknesses and strength. Ratios are used in combination of other elements of financial analysis. Limitations of ratio analysis Ratio analysis gives the connection between past information while users of financial statements are more interested in future and current news. Financial ration analysis bases on numerous assumptions and estimates. Various accounting policies are applied which makes it hard to compare and contrast different companies. Furthermore, different companies conduct management functions in different industries each having exceptional market arrangement and regulation. Such factors are noteworthy that an assessment of two companies that operate in different industries might be misguiding (Gibson 2012, 06). There are no standardized definition of ratios and no standardization to be met for each ratio. Furthermore, there is no rule that is used in understanding of financial ratios. Ratios reflect past transactions, conditions, scenarios and events and do not mirror current financial position of a company. They replicate book values, not factual economic values or price-level effects. The estimation of ratios is not uniform. Quantitative analysis Profitability Ratios Formulas of profitability ratios Profitability ratio can be good indicator how successful a company is. Profitability ratios show the company’s ability to convert sales into profit at diverse stages of operation. Gross Profit Margin –This is one of the most vital ratios used to designate the productivity of a company’s activities. This ratio shows the link between cost of sales and total sales. Gross margin can be calculated by subtracting cost of sales from net sales (Gibson 2012, 16).  The consequent gross profit is then divided by sales to obtain gross margin ratio.  This ratio is a mark of margin accessibility to gratify losses, administrative, selling and other expense to turn up with net profit. Operating Profit Margin – Operating income can be obtained by deducting universal, administrative, or operating, expenditures from a companys gross profit. Management has more power over operating expenses than its expense in terms of cost of sales. For that reason, investors need to scrutinize the operating profit margin vigilantly. Negative and positive patterns in this type of ratio are habitually in a direct way associated with decisions of the management. Pretax Profit Margin – This profitability ratio prefer this ratio of investment analysis because of the reasons analogous to those of operating income. Net Profit Margin- Although definitely a significant number, investors can easily see from a total profit margin breakdown that there are abundant operating and income expense. Operating items in an income statement authenticate a net profit margin (Gibson 2012, 09). It enhances investors to take an expansive glance at any companys profit margins in an organized basis. Operating Profit Margin (%) This type of ratio can be a helpful indication of profitability resulting merely from the foundation operations of the business. This ratio is a clear indication the relationship between operating profit and sales. The return from core operations before taxation, revenue and non operational expenses is an indication of the profit generating capability of the firm from its major business operations.   Net Profit Margin (%) This ratio shows the relationship between net profit and sales. This ratio can be calculated in numerous ways .For instance, net profit can be replaced by earning after tax and interest or earnings before interest expense (Gibson 2012, 66).  Analysts need to look for any non-recurrent expense, income, unusual income or expenses, or gain or loss that relates directly to the central operations of the company.  These items must be left out while measuring the “pure effectiveness” of the business.  Return on Assets/Investment (ROA/ROI) (%) This can be computed as a percentage of net profit to total assets of a company. Year 2008 2009 2010 2011 2012 Return on Asset Ratio 13.21 4.60 17.89 17.56 10.30 This ratio gives the measure of the general effectiveness of the company in generating profit with the given investment/assets. The higher this ratio, the more the profitability  Return on Equity (ROE) (%) This is calculated as a percentage of net profit to total equity. Measures the profit earned by the organization on the owners capital. This ratio plays a critical function in the equity holders’ investment decisions. Investors favor an increase in this ratio (Gibson 2012, 06). The Dupont Analysis It is a ratio of net sales to equity. ROE equals the product of the net profit margin and the equity turnover, which implies that a company can increase its return on equity by either becoming more profitable or using its equity in more efficient way   Equity turnover ratio Capital structure affect equity turnover ratio. Specifically, a firm can raise its equity turnover by employing a higher fraction of debt capital. It is a fraction net sale to equity.  A firm can amplify its equity turnover by escalating its total assets turn over or by rising its financial leverage ratio (Gibson 2012, 56).   Operating Expense Analysis It is articulated as a percentage of operating expenses to sales. Operating expense ratio is used to verify the effectiveness of expenses incurred sales generating process Efficiency ratio Efficiency ratios measure how well a company manages its liabilities and how effectively the company utilizes its assets. Inventory Turnover: Inventory turnover gives an illustration of how healthy a company manages its stock or inventory levels. When inventory turnover is too small, it suggests that a company may be overbuilding or overstocking its inventory or that it may be better placed in selling products to clients. Contrary, higher inventory turnover is favorable (Gibson 2012, 06). Inventory Turnover = (Cost of Sales) / (Average Inventory) Year 2008 2009 2010 2011 2012 Inventory Turnover Ratio 301.71 530.00 33.58 11.07 Accounts Receivable Turnover. The accounts receivable turnover ratio measures effectiveness of the companys credit policies. If accounts receivable turnover is minimal, it may point out that the company is having trouble collecting from its clients and is being too kind giving way credit. Higher receivable turnover is preferable. This ratio can be obtained as follows: Accounts Receivable Turnover = Revenue / (Average Accounts Receivable) Accounts Payable Turnover. Accounts payable turnover it measures how a company manages paying its own bills. High accounts payable turnover may be an indication that a firm not in a position to receiving positive payment terms and conditions from its own suppliers. Lower payable turnover is a sign of good health thus preferred. It can be calculated as follows: Accounts Payable Turnover = (Cost of Sales) / (Average Accounts Payable) Total Asset Turnover: Total asset turnover is a collection of all efficiency ratios that are used to show how effective management is at using both long-term and short-term assets. The higher the total asset turnover, the healthier a company is. Total Asset Turnover = (Revenue) / (Average Total Assets) Liquid ratios A companys liquidity is its capacity to meet its short-term obligations, and it is a main indication of financial health of a company. Measurement of liquidity is possible using several ratios. Current ratio: The current ratio is the most decisive test of liquidity. It is an indication of a companys aptitude to achieve its current liabilities with its current assets. A current ratio greater than or equal to 1 shows that current assets should be in a position to satisfy short-term obligations. A current ratio of less than one may mean the firm has liquidity problems. It can be obtained as follows: Current Ratio = (Current Assets) / Current Liabilities Year 2008 2009 2010 2011 2012 Current Ratio 5.69 4.36 3.30 3.39 4.40 Quick Ratio: The quick ratio is a more thorough assessment of liquidity than the current ratio. Having a quick ratio more than one indicates that a company should have minute difficulty with liquidity. The more elevated the ratio, the more liquid a corporation is. Quick Ratio = (Cash + Short-Term or Marketable Securities+ Accounts Receivable) / (Current Liabilities) Cash Ratio- It is a measures of the capability of a firms cash, alongside with investments that are without difficulty changed into cash, to pay its near-term obligations. A higher Quick ratio and a higher cash ratio usually indicate that the company is in better financial shape (Shim & Siegel 2007, 21). Cash Ratio = (Cash + Marketable Securities) / (Current Liabilities) Gearing ratio This ratio compares owner’s capital to borrowed funds. It is used mainly in the analysis of a company’s capital structure and assessment of the company’s financial position in the long run (Shim & Siegel 2007, 11). Higher degree of a company’s leverage shows the company to be more risky. Examples of Gearing Ratio include the debt-to-equity ratio calculated as (total debt / total equity ) Year 2008 2009 2010 2011 2012 Debt Equity Ratio 1.15 0.76 0.55 0.35 0.17 Qualitative analysis: The Company has a gearing ratio less than one. The company is not at risk of experiencing bankruptcy. It has a current ratio greater than one hence it can easily meet its short term obligations. Besides, it has high inventory turnover. It does not overstock its stock. The company has low effectiveness of generating profit. The return on assets is less than twenty percent. Financial Management: 1. Sources of finance can be categorized into: Internal sources refer to ways raising funds from within the organisation, whereas external funds are raised from sources from outside the business. There are 5 internal sources of finance: Sale of Stock.this is the funds that comes in as a result of selling off unsold stock Advantages It is a quick way of gathering finance Disadvantage Business will have to obtain a reduced price for the stock. This is money borrowed at an agreed charge of interest over a pre-determined period of time Bank loan Bank loans are either medium or long-term sources of finance Advantages The laid down repayments are stretched over a period of time which is excellent for budgeting Disadvantages Bank loan may require security on the loan Bank overdraft Bank overdraft is a short-term cause of funding (Shim & Siegel 2007, 21). Advantages It is cheaper than a bank mortgage in the short term Disadvantages It can be costly if used over a longer period of time Share issue This source also involves an issue of additional shares Advantages In this case no interest is payable in this case Disadvantages Ownership of the corporation could vary over time as this is a long-term source of finance. Trade credit Advantages Business can dispose the goods first and pay for them later on. Moreover, no interest is demanded as no money is paid within contracted time. Disadvantages Businesses need to cautiously administer their cash flow to make sure they will have finances accessible when the arrears are due to be paid.In addition; no cash discount is administered in this case. Owner’s investment This is money that comes from the savings of the owner. Advantage: In this source of finance ,no interest is payable. Disadvantage: These alternatives is limited to the amount an owner can invest. 2. Sourced from (Helfert 2009, 123) Where; Dc=Annual Dividends for Common Shares Dp=Annual Dividends for Preferred Shares Fc=Floatation Costs of Common Share G is the Constant Growth Rate of Common Share Dividends K=Current Market Interest Rate Mc=Market Value of Common Equity Fp is Floatation Costs of Preferred Shares Md=Market Value of Debt Mp=Market Value of Preferred Shares Mr=Market Value of Retained Earnings Pc=Market Price of Common Shares Pp=Market Price of shares preferred T=Rate of tax V is given by Firm’s Total Value (Debt + Preferred Shares + Retained Earnings+ Common Equity) WACC = {105/170000105}{9/100}+{97/170000105}{0.1/(1-0.12)*50000000} WACC = 33200.753 3. Explain (c250 words) the advantages and disadvantages of this new policy. 10 Marks Quality management has a tendency of ensuring that quality products of high are maintained .Management personnel becomes more attentive of problems that affect the individuals work environment. Lower costs are experienced due to a decrease in waste and fewer faulty products. It also improves business reputation (Shim & Siegel 2007, 21). It also ensures that customer satisfaction is high. Faults and problems are marked and sorted quickly. It involves many people and spending of money. Sometimes, quality management is not an efficient process. Besides, quality management is costly. The introduction of quality control policy involves training workers and disrupting current production. Inventory control policies facilitate accuracy of inventory information by ensuring that accurate records are kept showing material in inventory and its location. Total quality management helps in requisition tracking that would be filled incorrectly. Inventory control ensures that mistakes are identified and appropriate action taken to correct them. Moreover, it ensures that results are evaluated by tracking requisition similar to those with problems. When correct actions are effectively implemented, standard inventory procedure are changed to include actions that solve the problem. Inventory control ensures quick requisition processing. When a company implements total quality management methods, the cause of action taken reduces delays by identifying bottlenecks that slow down the processing of requisition. The challenges can be removed by changing the procedures and constant working of the bottlenecks until the average time for requisitions reaches the desired level. Effective inventory control changes demand and avoids excess inventory. The total quality control policy involves planning improved inventory flexibility by looking at inventory procedure to identify problems to possible solutions and quick adjustment. Taking inventory record yearly serves to reconcile records with real quantity of items in storage and their location. For a quality inventory, system serves to confirm that few errors exist. Besides, keeping the require amount of stock ensures lower storage cost and ensure flexibility and efficiency. A company keeps what is needed and when needed. The disadvantage of stock control is that a company might run out of stock if there is hitch in the system. The company’s achievements are reliant on the effectiveness and efficiency of the suppliers. In this case, meeting inventory needs can be expensive and complicated. Total quality management offers both long-term and short-term benefits. It can take years to perfect and execute, most organizations are apprehensive about the long term benefits. Some of the advantages of Quality Management in the long run include high moral, improved customer loyalty, reduction in costs and trust, better market access and improved productivity (Shim & Siegel 2007, 121). Practicing Quality Management decreases the chance of committing mistakes and producing substandard products that can damage the name and recognition of a company. It also increases the reputation and position of an organization in the public while saving its time and money in the long run. Economic resources are saved that can be used for projects with better returns. Generally, Quality Management policy implementation enhances employee fulfillment, creates a sense of passion, and helps to develop professional approach to jobs. Possibly the most useful of all short-term benefits is its capacity to raise teamwork and increase companionship in a production unit (Shim & Siegel 2007, 81). Improvement in a companys Quality management can be at the charge employment as technology acts as a significant factor. This has the ability to demoralize and demotivate communities and reduce the good will that the surrounding and clientele communities have on the company. The fact that Quality management has the capacity to replace jobs with technology is both a stimulating and terrifying choice, and the ramifications of it have to be taken into consideration.  Dedicating much of the time to the outcome and client satisfaction may at times be a basis of a project to running into surplus costs without any likely indication of returns. Additionally, it can effect in the short of confidence of the management in the level workers. Finally, the cost of analysis and implementation is exponential restraining it to only economically sound companies. It is apparent that any Quality Management policy will intrinsically have specific advantages or disadvantages depending on your viewpoint and worldview (Shim & Siegel 2007, 21) 4) Incremental Cash flows the difference between Cash Inflows and summation of Cash Outflows and Taxes. The rate of interest being 30%, then the table below gives present values and cash flows during the relevant years Cash flows Present Value Years 50 50.000 0 35 26.923 1 35 20.710 2 35 15.930 3 35 12.254 4 35 9.426 5 NPV = - Initial Investment cost + CF1/(1 + k)1 + CF2/(1 + k)2 + ... + CFn/(1 + k)n Net Present Value = -50+(-26.923)+(-20.710)+(-15.930)+(-12.254)+(-9.426) = -122.989 Internal rate of return is that rate that makes net present value to be zero. The formula for IRR is: 0 = - Initial Investment cost + CF1/(1 + r)1 + CF2/(1 + r)2 + ... + CFn/(1 + r)n (Bragg 2013, 84) Net present value is the difference between present value and the initial cost of investment. PV = FV / (1+r)n PV is Present Value FV is Future Value r is the interest rate n is the number of years (Bragg 2013, 24) Since there are no revenues, IRR will be zero. Management accounting Question1. Marginal costing has number advantages. In marginal costing, contribution per unit is invariable dissimilar to profit earned for each unit sold, which may vary with changes in sales volumes. Moreover, it is easy to operate and is useful in decision-making process. Besides, marginal costing takes fixed cost as period cost and are changed in full to the period under consideration. In spite of that, there is no over or under absorption of overheads, thus no adjustment is required in the income statement (Bragg 2013, 184). On the other hand, marginal costing has different disadvantages as it can easily lead to misleading results. It is extremely difficult to plainly segregate all costs into variable and fixed since all costs are variable in the long run (Helfert 2009, 223). Therefore, such kinds of segregation may sometimes lead to misguided results and conclusions. Moreover, it provides a distorted image of profits as it presumes that closing stock is made up of variable costs only and sidelines fixed cost. Semi-variable costs are ignored in the assessment. Marginal cost analysis takes for granted time factor since association of performance is made between two periods based only on contribution. Besides, challenges of recovery of overheads overlay. Variable costs are in most cases apportioned on projected foundation and not on accruals basis. The following are the benefits of absorption cost system. Absorption costing strategy avoids the sorting out of costs into variable and fixed costs. It is appropriate for organizing external reports and for stock evaluation tasks. This costing scheme is in harmony to matching and accrual accounting approaches that necessitates matching costs with proceeds for a particular accounting time. Absorption costing scheme shows accurate profit computation that marginal costing in circumstances where there is seasonal sales and production. Moreover, it distinguishes fixed cost in production cost and is suitable for determining prices of products (Helfert 2009, 23). The pricing based on absorption cost system ensure that all necessary costs are fully covered. Apportion and allocation of fixed factory overheads to cost centers of resources in this system makes it easy for the manager to be more responsible and aware for services and costs provided to others. Absorption cost has a number of demerits. It cannot be helpful in decision-making. It does not help in accommodating predominantly offered price for the merchandise. It considers fixed manufacturing overheads as product cost. This adds to the outlay of output. Managerial quandaries are usually resolved only with the aid of variable costing scheme. Absorption costing scheme cannot be used in management of cost and planning. It is not helpful in fixing the chore for incurrence of costs. Lastly, some current products cost can be computed from the income statement by producing products for stock. If administration evaluation is based on operating proceeds, profitability can be provisionally raised by increasing fabrication (Helfert 2009, 233). 2. Absorption Costing Income Statement Sales (600000 units×£1250 per unit) = £750000000000 Less cost of goods sold: Beginning inventory £0 Add Cost of goods manufactured (6,000 units×£12 per unit) £72,000’000 Goods available for sale £72,000’000 Less ending inventory £12,000,000 Cost of goods sold £60,000,000 Gross Margin (£100,000 – £60,000) £140,000,000 Less selling and administrative expenses Variable selling and administrative expenses (5,000 × £3 per unit) £15,000,000 Fixed selling and administrative expenses £10,000,000 £25,000,000 Net operating income (£40,000 – £25,000) £15,000,000 Marginal Costing Income Statement Sales (5,000 units×£20 per unit) £100,000,000 Less variable expenses: Variable cost of goods sold: Beginning inventory £0 Add variable manufacturing costs (1,000 units×£7 per unit) £42,000,000 Goods available for sale £42,000,000 Less ending inventory (1,000 units×£7 per unit) £7,000,000 Variable cost of goods sold £35,000,000 Variable selling and administrative expenses (5,000 units × £3 per unit) £15,000,000 £50,000,000 Contribution margin (£100,000 − £50,000) £50,000,000 Less fixed expenses: Fixed manufacturing overhead £30,000,000 Fixed administrative and selling expenses £10,000,000 £40,000,000 Net operating Income (£50,000,000 − £40,000,000) £10,000,000 3. Explain all the key assumptions used in the preparation Marginal Costing involves discernment of the marginal cost that is directly distinctive and changes with the volume of products manufactured by differentiating between variable costs and fixed costs and finally ascertaining its result on profit. The fundamental assumptions underlying marginal costing are as follows: Total variable cost the stage of activity has direct proportionality to each other. Conversely, variable cost per unit remains fixed at all the stages of activities. Selling price per product produced by the corporation does not change at the every single level of economic events. Every one of the products produced by the institution are sold off into the consumers. Supposition of absorption costing are as follows: This method presumes that purchasers and final consumers do not react to prices at all when making expenditure decisions to buy products. It proposes that consumers will purchase the foretasted product sales in spite of the cost that is charged to them. 4. List of enquiries I could have asked the reason why marginal costing does not include fixed manufacturing costing derived from inventories. Further, I would ask the reason why an outcome statement by marginal costing would be more significant to the management than those prepared under absorption cost. Additionally, I would be interested and vastly enthused to know why chart of accounts would be expanded while using marginal costing. Despite all that, I would finally find out why net operating income is different in while looking at both costing systems. Actual Results (1) Static-Budget Variances (2) = (1) – (3) Static Budget (3) Units sold Revenue 12,000 £252,000a 3,000,000 U £ 48,000,000 U 15,000 £300,000c Variable costs 84,000d 36,000,000 F 120,000f Contribution margin Fixed costs Operating income 168,000 150,000 £ 18,000 12,000,000 U 5,000,000 U £ 17,000,000 U 180,000,0000 145,000,0000 £ 35,000,0000 £17,000,000 U Total static-budget variance Where F is favorable and U is unfavorable Explanation of the variance There were no correct set principles by which to make judgments on performance. The prepared budget did not stand for the most probable outcome for the business hence the budget did not provide motivation for the budgeted operations. A probable conflict that also may have existed between the budgeted aim of evaluation and budget motivational purposes. List of References GIBSON, CHARLES H. (2012). Financial Reporting and Analysis + Thomsonone Printed Access Card. South-Western Pub. SHIM, J. K., & SIEGEL, J. G. (2007). Handbook of financial analysis, forecasting, and modeling. Chicago, IL, Wolters Kluwer/CCH. BRAGG, S. M. (2013). Financial analysis a controllers guide. Hoboken, N.J., Wiley. http://rbdigital.oneclickdigital.com. HELFERT, E. A. (2009). Techniques of financial analysis: a modern approach. New Delhi, Tata McGraw-Hill. Appendix 1 Cash Flow Statement                                 Cash inflows             2008 2009 2010 2011 2012               £m £m £m £m £m             Opening Bank Balance 500 767 518 609 656 Revenue from Debtors 1,339 1,609 2,639 2,809 2,713 Share Issue Income 0 50 0 0 0 Bank Interest 0 0 0 2 10 Investment Disposal Income 0 0 0 0 11   1,839 2,426 3,157 3,420 3,390             Cash outflows                       Paid to Creditors 798 989 1,819 1,910 1,766 Production Cost/Investment 0 175 0 0 0 Wage Costs 46 49 76 76 77 Factory Cost 650 0 0 0 0 Redundancy Costs 0 0 0 0 0 Automation Investment 30 12 60 17 0 Loan Repayments 0 200 150 150 150 Tax Payments 0 85 27 126 137 Loan Interest 33 11 7 0 0 Dividend Costs 0 0 40 6 28 Investments Purchased 0 0 1 87 0   1,722 1,907 2,548 2,764 2,797             Balance Before Loan 117 518 609 656 594             New Loan 650 0 0 0 0             Closing Bank Balance 767 518 609 656 594   Appendix 2 Cash flows Present Value Years 50 50.000 0 35 26.923 1 35 20.710 2 35 15.930 3 35 12.254 4 35 9.426 5 NPV = - outlay + CF1/(1 + k)1 + CF2/(1 + k)2 + ... + CFn/(1 + k)n Net Present Value = -50+(-26.923)+(-20.710)+(-15.930)+(-12.254)+(-9.426) = -122.989 The modus operandi for IRR is: 0 = - outlay + CF1/(1 + r)1 + CF2/(1 + r)2 + ... + CFn/(1 + r)n (Bragg 2013, 184) PV = FV / (1+r)n PV is Present Value FV is Future Value r is the interest rate n is the number of years Appendix 3 Actual Costs Incurred (Actual Input Qty. × Actual Price) Actual Input Qty. × Budgeted Price Flexible Budget (Budgeted Input Qty. Allowed for Actual Output × Budgeted Price) Direct Materials £200,000,000 £214,000,000 £225,000,000 £14,000 F £11,000 F Price variance Efficiency variance £25,000 F Flexible-budget variance Direct £90,000,000 £86,000,000 £80,000,000 Mfg. Labor £4,000 U £6,000 U Price variance Efficiency variance £10,000 U Flexible-budget variance direct manufacturing and Direct materials labor variances. 2008-2012 Actual Results Price Variance Actual Quantity Budgeted Price Efficiency Variance Flexible Budget   (1) (2) = (1)–(3) (3) (4) = (3) – (5) (5) Units 550 550 Direct materials £12,705.00 £1,815.00 U £10,890.00a £990.00 U £9,900.00b Direct labor £ 8,464.50 £ 104.50 U £ 8,360.00c £440.00 F £8,800.00d Total price variance £1,919.50 U Total efficiency variance £550.00 U Appendix 4 Statement of Financial Position                         2008 2009 2010 2011 2012               £m £m £m £m £m Non Current Assets           Cost 680 867 927 944 944 Depreciation (68) (148) (226) (298) (362) Net Book Value 612 719 701 646 582 Investment Value 0 0 0 89 79   612 719 701 735 661             Current Assets           Inventories 7 0 113 204 280 Trade Receivables 120 133 224 231 222 Bank Balance 767 518 610 657 594   894 652 947 1,093 1,096             Total Assets 1,506 1,371 1,649 1,827 1,757                         Current Liabilities           Tax 85 27 126 137 78 Creditors 71 82 156 157 144 Dividend Cost 0 40 6 28 28 Bank Overdraft 0 0 0 0 0   157 149 287 322 249             Equity           Share Equity 500 550 550 550 550 Total Retained Profit (Loss) 199 222 511 804 958   699 772 1,061 1,354 1,508             Total Liabilities and Equity 1,506 1,371 1,649 1,827 1,757             Appendix 5 Income Statement                             2008 2009 2010 2011 2012                   £m £m £m £m £m                 Sales 1,459 1,622 2,730 2,817 2,703   Cost of Sales* (908) (1,056) (1,855) (1,897) (1,754)   Gross Profit (Loss) 550 567 875 919 950                 Overheads             Fixed Overheads 100 116 185 183 168   Stock Upkeep Cost 0 1 0 17 31   Promotion 50 60 149 149 409   Research and Development 0 194 20 27 16   Market Research 15 15 15 15 15   Depreciation 68 80 78 72 65     (233) (466) (447) (463) (703)                 Operating Profit (Loss) 317 101 429 456 246                 Investment Disposal Income 0 0 0 0 11   Interest on Current Account 0 12 8 9 10   Interest on Loans (33) (23) (15) (8) 0     (33) (11) (7) 2 21                 Pre Tax Profit (Loss) 284 90 421 458 258                 Tax (85) (27) (126) (137) (78)   Post Tax Profit (Loss) 199 63 295 321 181                 Cost of Dividends 0 (40) (6) (28) (28)                 Year Retained Profit (Loss) 199 23 290 293 153                               *Cost of Sales Breakdown             Opening Stock 0 7 0 113 204   plus Materials Costs 869 1,000 1,892 1,912 1,753   plus Wages 46 49 76 76 77   minus Closing Stock (7) 0 (113) (204) (280)   Cost of Sales 908 1,056 1,855 1,897 1,754                               S1             Opening Stock 0 0 0 36 83   plus Materials Costs 481 560 682 689 620   plus Wages 24 26 26 27 26   minus Closing Stock 0 0 36 85 90   Cost of Sales 505 585 672 667 640                 N2             Opening Stock 0 7 0 41 48   plus Materials Costs 388 440 570 576 533   plus Wages 22 23 25 25 26   minus Closing Stock 7 0 41 43 81   Cost of Sales 404 470 554 599 526                 W3             Opening Stock 0 0 0 35 73   plus Materials Costs 0 0 640 647 600   plus Wages 0 0 24 24 25   minus Closing Stock 0 0 35 75 109   Cost of Sales 0 0 629 631 588   Read More