Financial Analysis of a Company

This assignment presents a comparative financial analysis of a company over two years. The analysis utilizes various financial ratios to evaluate the company's liquidity, profitability, and solvency. Key metrics include current ratio, return on sales, debt ratio, and equity ratio. The report concludes by summarizing the overall performance of the company based on the analyzed data, highlighting areas of improvement and concern.

Running head: ACCOUNTING AND FINANCIAL MANAGEMENT
Accounting and financial management
Name of the student
Name of the university
Author note

1ACCOUNTING AND FINANCIAL MANAGEMENT
Table of Contents
Task 1.........................................................................................................................................2
1. Comprehensive income statement for year ended 31st December 2016.........................2
2. Financial Position as on 31st December 2016.................................................................2
3. Statement of changes in equity for year ended 31st December 2016..............................3
Task 2.........................................................................................................................................5
Background of SAA...............................................................................................................5
Recent development...............................................................................................................5
Ratio calculation.....................................................................................................................5
Conclusion..............................................................................................................................6
Reference....................................................................................................................................7

2ACCOUNTING AND FINANCIAL MANAGEMENT
Task 1
1. Comprehensive income statement for year ended 31st December 2016
Particulars Note Amount Amount
REVENUE
Costume revenue - costume hire 75,000.00
Costume revenue - costume sales 20,000.00
Less: Sales return 1 1,700.00
Total revenue 93,300.00
Less: Cost of sales 8,000.00
Gross revenue 85,300.00
LESS: EXPENSES
Salaries 2,800.00
Cleaning 3,000.00
Accounting fees 1,800.00
Insurance 2 416.67
Interest expense 2,100.00
Marketing 2,750.00
Depreciation expenses 3 57,900.00
Total expense 70,766.67
Net income 14,533.33
2. Financial Position as on 31st December 2016
Particulars Note Amount Amount
ASSETS
Current assets
Cash 14,500.00
Accounts receivable 23,600.00
Less: Bad debts 1 1,700.00 36,400.00
Inventory - costumes 6,500.00
Prepaid insurance 2 833.33
Total current assets 43,733.33
Non-Current assets
Building 1,06,000.00
Less: Depreciation 3 10,600.00 95,400.00
Delivery truck 49,000.00
Less: Depreciation 3 9,800.00 39,200.00

3ACCOUNTING AND FINANCIAL MANAGEMENT
Costumes 75,000.00
Less: Depreciation 3 37,500.00 37,500.00
Total non-current assets 1,72,100.00
Total assets 2,15,833.33
LIABILITIES
Current liabilities
Suspense account 400.00
Non-current liabilities
Mortgage payable 1,00,000.00
Add: Interest payable 4 15,000.00 1,15,000.00
Total non-current liabilities 1,15,400.00
Shareholder’s equity
Capital -Peter Pan 1,20,000.00
Less: Drawing 34,100.00 85,900.00
Net income 14,533.33
Total shareholder's equity 1,00,433.33
Total liabilities and equity 2,15,833.33
3. Statement of changes in equity for year ended 31st December 2016
Particulars Amount
Capital - Peter Pan 1,20,000.00
Drawing -34,100.00
Net income 14,533.33
Balance as on 31st December 2016 1,00,433.33
Notes for adjustments –
1. Credit sales return
As the sales made during the year amounting to R 1700 has been returned by the
customer, it will be reduced from the revenue from the costume sales as well as from the
account receivables.
2. Prepaid insurance
Total amount paid for 12 months 1,250
4 month’s insurance (1250*4/12) 466.67

4ACCOUNTING AND FINANCIAL MANAGEMENT
8 month’s insurance (1250*8/12) 833.33
Total 1,250
As the 4 months period that is, 1st September 2016 to 31st December 2016 falls under
the current year, it will be accounted as expense of the current year. On the other hand, As the
8 month’s period that is, 1st January 2017 to 31st August 2017 falls under the next year, the
amount of 833.33 will be treated as current asset.
3. Depreciation
Asset Value
Depreciatio
n Adjusted value
Building 1,06,000.00 10,600.00 95,400.00
Delivery truck 49,000.00 9,800.00 39,200.00
Costumes 75,000.00 37,500.00 37,500.00
4. Interest on mortgage
Interest at 15% will be 100,000*15/100 = 15,000

5ACCOUNTING AND FINANCIAL MANAGEMENT
Task 2
Background of SAA
SAA is the carrier of national flag from South Africa and the most rewarded airline
from the continent. For last 80 years, SAA is engaged in transportation of the cargo as well as
the passengers from the country. The airline provides various related services through the
wholly owned subsidiary and through the group.
Recent development
SAA has revalidated their turnaround strategy for the long-term period and updated
the strategic plan for navigating the economic, political, and the social environment under
which it operates.
Ratio calculation
Ratio Formula
31st March 2016 31st March 2015
Amount
Resul
t Amount Result
Liquidity and efficiency
Current ratio Current assets
9,68
1
0.54
7022.00
0.41Current liabilities
18,06
0
16947.0
0
Acid test ratio Current assets less
inventories 8,954
0.50 6297.00 0.37
Current liabilities 18,060
16947.0
0
Accounts receivable turnover Net sales 28,827 4.49
28513.0
0 5.89
Accounts receivable 6,422 4842.00
Profitability
Return on asset ratio Net Income -1,473
-8.79
-5639.00
-39.17
Total assets 16,761
14396.0
0
Return on sales Net income -1,473 -5.11 -5639.00 -19.78
Sales 28,827 28513.0

6ACCOUNTING AND FINANCIAL MANAGEMENT
0
Solvency
Debt ratio Total liabilities 27,725
1.65
23639.0
0
1.64Total assets 16,761
14396.0
0
Equity ratio Total equity -10,964
-0.65
-9243.00
-0.64Total assets 16,761
14396.0
0
Conclusion
It can be concluded from the above analysis that the performance of the company in
some aspects has been improved as compared to the previous year and in some aspects the
performance has been worsened. However, if the overall performance of the company is
considered, it can be identified that the performance of the company is not at all satisfactory.
The liquidity ratio is indicating that the company is not efficient to pay-off the short-term
obligation. Further, the company is not able to generate profit in both the year. Moreover, the
solvency ratio is indicating that the company is highly leveraged and the solvency level is
significantly low.

7ACCOUNTING AND FINANCIAL MANAGEMENT
Bibliography
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to help investors predict and interpret significant corporate events. Australian journal
of management, 38(3), 553-598.
Bodie, Z. (2013). Investments. McGraw-Hill.
Omar, N., Koya, R. K., Sanusi, Z. M., & Shafie, N. A. (2014). Financial statement fraud: A
case examination using Beneish Model and ratio analysis. International Journal of
Trade, Economics and Finance, 5(2), 184.
Zainudin, E. F., Zainudin, E. F., Hashim, H. A., & Hashim, H. A. (2016). Detecting
fraudulent financial reporting using financial ratio. Journal of Financial Reporting
and Accounting, 14(2), 266-278.