Financial Statement Analysis of ABC Learning: A Case Study

This case study examines the financial statements of ABC Learning from 2002 to 2007, employing various analytical techniques to assess the company's financial health and identify potential areas for improvement. The study utilizes DuPont analysis, common size analysis, trend analysis, and Beneish M-score to analyze key financial ratios and trends. The results reveal fluctuations in profitability, dividend payouts, and return on equity, but no evidence of financial manipulation. The study concludes with recommendations for improving the company's financial performance, including stabilizing dividend payouts, reducing costs, managing long-term debt, and leveraging financial resources.

AUDITING AND ASSURANCE-
BAP 41

 Introduction
 Literature review
 Application of: Du Pont analysis
 Common size analysis
 Trend analysis
 Beneish M-score
 Results analysis
 Summary
 Recommendations
 Conclusion
 Appendices
 Referencing
TABLE OF CONTENT

 Analysis between 2002-2007 regarding ABC learning
 There will be an analytical review
 Analytical procedure will be followed
 There will be implementation of techniques like
 DuPont analysis
 Common size
 Trend analysis
 Beneish M-score
 Through these techniques, fi nancial statements will
be analysed and reviewed
INTRODUCTION

 Analytical review will be taken place
 This review makes analysis through fi nancial ratios
and makes required signifi cant changes
Steps to be followed for analytical procedure:
 Preliminary analytical review
 Substantive analytical review
 Final analytical review
LITERATURE REVIEW

 Through this technique, value of assets are
measured at gross value and not on net value
DU PONT ANALYSES

 Common size analysis is used for measuring in
percentage terms in accordance with sales as a 100%
 This is analysed on the basis of diff erent percentage
 It makes comparison more easy and simplifi ed
COMMON SIZE

 This is a technique which makes analyses about the
future period considering the past data.
 It predict about the future data
 It uses past data and hence any mis-interpretation in
the past data would adversely aff ect the future
fi gures
TREND ANALYSIS

 This technique cross examines the data so
manipulated
 It has eight formulas as discussed below
BENEISH M-SCORE ANALYSIS

 The analysis for the company by application of
diff erent techniques are as follows:
 ROE: it is quite fl uctuating
 Dividend was not stable throughout the year
 Profi ts were also not stable
 There was no case of manipulation
RESULT ANALYSIS

 Dividend has large variations throughout the year
 There was no evidence for any form of manipulation
of fi gures
 Return on equity was not stable and later declined
 The profi ts also increased initially but later on started
falling
SUMMARY

 Company must try to stabilise or increase dividend
with passage of time.
 Company must try to reduce cost expenses and by
excluding any wastage or duplication of activities
 Company must also manage its long term debts and
borrowings
 It must also use facilitation of fi nancial leverage
RECOMMENDATIONS

 There is vast increase in profi tability
 There is also decrease in organisational costs and expenses
 Company has implemented internal and external audit
procedures which are useful for maintaining the organisation
authenticity and relevancy
 There are no fi nancial manipulation and facts and fi gures are
presented in true and fair manner
CONCLUSION

APPENDIX

 Herciu, M., Ogrean, C. and Belascu, L., 2011. A Du Pont analysis
of the 20 most profitable companies in the
world. Group, 13(1.58), pp.18-93.
 Ganguly, A., Chaudhuri, R.R. and Sharma, P., 2015. Analysis of
trend of the precipitation data: A case study of Kangra District,
Himachal Pradesh. International Journal of Research–
Granthaalayah, 3(9), pp.87-95.
 Sharma, R., 2012. Comparing and Analyzing Financial
Statements to Make an Investment Decision: Case Study of
Automotive Industry.
REFERENCES