Financial Statement Analysis and Modeling

Financial Statement
Analysis and
Modelling

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Analyse the financial performance of Milton in the year 2024 by calculating benchmark ratios.
.....................................................................................................................................................3
Recommend strategies for Milton to outperform the industry average in 2024..........................4
Critique the assumptions used in modelling, are they perfectly realistic or would you
recommend some changes to improve the quality of the projection?.........................................5
Present the charts for supporting the analysis..............................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The financial statements are analysed for finding out the monetary performance of the
company. It helps in the decision making and helps the business in improving the effectiveness
and efficiency of the working of the company (Almeida-Filho and et.al., 2021). In the following
report, the company is Milton and the financial statement of future year 2024 are being analysed
for evaluating the performance of the business entity. The objective of the report, is to assume
the strategies that the business could outperform and set an example for the industry. Also, some
of the assumptions are taken in respect of the decisions and financial modelling.
MAIN BODY
Analyse the financial performance of Milton in the year 2024 by calculating benchmark ratios.
Liquidity ratios:
Ratio Formula Calculation Answer
Current ratio Current assets /
Current Liabilities
563517.25 / 464742.95 1.21: 1
Acid Test Ratio (Current assets –
Inventory) / Current
Liabilities
(563517.25 –
365032.89) /
464742.95
= 198484.36 /
464742.95
0.43: 1
That the current ratio is 1.21 and the quick ratio is 0.43 which is less than the efficiency that it
has to be. The ideal existing and the quick ratio should be 2: 1, which is required to be increased
by the company.
Profitability Ratio:
Ratio Formula Calculation Answer
Gross Profit Margin (Gross Profit / Sales)
* 100
(1142179.04 /
2144153.03) * 100
53.27 %
Net Profit Margin (Net Profit / Sales) *
100
(254990.48 /
2144153.03) * 100
11.89%
Operational (Operating Expenses / (762906.33 / 35.58%