Financial statements - Assignment
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Added on 2021-06-14
Financial statements - Assignment
Added on 2021-06-14
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Assignment 2
ContentsQuestion 1........................................................................................................................................3Part 1............................................................................................................................................3Part 2............................................................................................................................................6Part 3............................................................................................................................................6Part 4............................................................................................................................................7Question 2........................................................................................................................................8Part 1............................................................................................................................................8Part 2............................................................................................................................................8Part 3............................................................................................................................................9Question 3......................................................................................................................................10Part 1..........................................................................................................................................10Part 2..........................................................................................................................................10Part 3..........................................................................................................................................10
Question 1Part 1Variance analysis of the financial statementsThis analysis provides a comparison between financial statements of two years by makingcalculations of change in financial figures from one year to another [ CITATION Mar04 \l1033 ]. It also calculates the percentage change in the financial figures from one year to another.Variance analysis for income statement20172016Variance $Variance %Increase or (decrease)Sales $ 3,080 $ 2,660 $ 420 15.789%Cost of Goods Sold $(2,350) $(2,010) $ (340)-16.915%Gross Profit $ 730 $ 650 $ 80 12.308%Other Expenses $ (350) $ (390) $ 40 10.256%Interest $ (300) $ (120) $ (180)-150.000%Net Profit $ 80 $ 140 $ (60)42.857%Variance analysis for financial position20172016Variance $Variance %Increase or (decrease)Assets Current assetsTrade and other receivables $ 772 $ 660 $ 112 16.970%Inventory $ 680 $ 510 $ 170 33.333%Total current assets $ 1,452 $ 1,170 $ 282 24.103%Non-current assetsProperty, plant and equipment $ 1,810 $ 1,500 $ 310 20.667%Intangible assets $ 40 $ - $ 40 ∞ %Total non-current assets $ 1,850 $ 1,500 $ 350 23.333%Total assets $ 3,302 $ 2,670 $ 632 23.670%Liabilities and equityLiabilitiesCurrent liabilitiesTrade and other payables $ 835 $ 795 $ 40 5.031%Current borrowings - Bank Overdraft $ 52 $ 40 $ 12 30.000%Total current liabilities $ 887 $ 835 $ 52 6.228%Non-current liabilities
Non-current borrowings - Secured loan $ 1,500 $ 1,000 $ 500 50.000%Total liabilities $ 2,387 $ 1,835 $ 552 30.082%Net Assets $ 915 $ 835 $ 80 9.581%EquityShare capital $ 300 $ 300 $ - 0.000%Retained earnings $ 615 $ 535 $ 80 14.953%Total Equity $ 915 $ 835 $ 80 9.581%This variance analysis raise various concerns related to the significant variancea.Organization’s revenue increased by the 15.79%, on the other hand, this increase is notreflected by an increase in gross profit. Gross profit of the organization shows increase onby12.31% due to a significant increase in the cost of goods sold by 16.92%.b.Inventory and receivables of the organization both showing a significant increase of33.33% and 16.97% respectively. These balance sheet balances do not have a tendency forsuch significant increase.c.Increase in Plant, property, and equipment and bank liabilities is because of newinvestment by the way of bank liabilities.Trend analysis is the financial analysis of calculating trends of historical financial balances[ CITATION Gua16 \l 1033 ]. Under this analysis, any significant change in such trend isobserved by the auditor of the organization.Trend analysis for income statement2017201620152014Sales100.00%100.00%100.00%100.00%Cost of Goods Sold-76.30%-75.56%-76.02%-73.97%Gross Profit23.70%24.44%23.98%26.03%Other Expenses-11.36%-14.66%-13.11%-10.69%Interest-9.74%-4.51%-3.40%-0.15%Net Profit (Loss)2.60%5.26%7.48%15.19%Trend analysis for financial position2017201620152014AssetsCurrent assetsTrade and other receivables23.38%24.72%25.38%39.92%Inventory20.59%19.10%20.56%21.42%Total current assets43.97%43.82%45.95%61.34%
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