Financial Statement Analysis Report: UAE Consultancy Services Finance

This report provides a comprehensive financial statement analysis of New Age Consultancy Services, a UAE-based consultancy. The analysis includes interpretations of the income statement, balance sheet, and cash flow statement over three consecutive years. The income statement analysis highlights revenue trends, cost management, and net income fluctuations. The balance sheet assessment focuses on asset and liability valuation, revealing the company's financial stability and capital structure. The cash flow statement interpretation examines cash inflows and outflows from operating, investing, and financing activities. Furthermore, the report incorporates a detailed ratio analysis, including profitability ratios (net profit and gross profit), liquidity ratios (current ratio), and solvency ratios (debt-to-equity and operating ratios) to evaluate the company's financial performance and market position. The conclusion emphasizes the importance of financial statements in assessing business performance and highlights the positive financial trends of New Age Consultancy Services.

Financial Statement

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Interpretation of financial statements..........................................................................................3
Income statement........................................................................................................................3
Balance sheet...............................................................................................................................4
Cash flow statement....................................................................................................................5
CONCLUSION................................................................................................................................7

INTRODUCTION
Financial statement this term define as those reports which is formulated for the purpose
of interpreted position of organization by showing balance of asst and liability of organization.
This includes balance sheet, incomer statement as well as cash flow statement. To understand
relevance of financial statement New Age Consultancy Services had been taken. This is UAE
based organization which provides consultancy services to those entrepreneur who run or wants
to establish their business in medical, oil or food sector. This report has been formulated for
define relevance of financial statement by interpreting balance sheet, cash flow and income
statement of New Age Consultancy Services in effective manner.
MAIN BODY
Interpretation of financial statements.
Financial statements consider as essential business documents. With the help of theses
statements manager as well as external stockholders able to recognize market position of
organization. Financial statement help in evaluating earning capacity of organization for
particular period of time. New Age Consultancy Services successfully run its business in market
sector by managing their financial statement in systematic manner. With the use of formulation
of theses financial statement internal as well as external parties able to analysis its performance.
Following are their interpretation of financial statement of New Age Consultancy Services
(Abernathy Guo, Kubick and Masli, 2019).
Income statement
Profit and loss statement is define as document which formulate for the purpose of
finding out net profit and loss an organization able for specific period of time. It includes all the
essential business expense which required to run business operations of New Age Consultancy
Services as well as all the source of earning which help in increases cash inflow of business
organization. With the use of income statement manager able to recognize their tax liability as
well as those items which may cause of incurring more expenses.
New Age Consultancy Services successfully run its business in consultancy business
they provides best kind of consultancy services to those entrepreneur who newly start their
business in medical , oil & gas or food and beverage sector. They able to generate 2.09 AED in 3
consecutive years. Which showcase that organizat6ion not able to increase their sales rate within

3 years. However as compare to first years of consultancy business cost incurred of first year is
comparatively high other years. Which represent that management department of New Age
Consultancy Services able to formulate those financial strategies which help in reduce cash
outflow activities. As amount of total expenses of second year valued at 291000 AED and on the
other side in third year of running business organizations total cost is valued at 286000 AED.
Which means that organization effective control and manage their expenses in order to maintain
their rate of return (Craja, Kim and Lessmann, 2020).
Net income of New Age Consultancy Services was valued in first year 1.716 AED, in
second year it increases from 1.716 to 1.7999 and the rate of earning had been increases from
1.7999 to 1.804, this showcase that even though New Age Consultancy Services not able to
enhance their revenue rate but however by reducing their cost or expense incurred for running
business thus organizat6ion able to successfully increase their rate of net income, which help in
maintain position of organization in the market.
New Age Consultancy Services 's value of gross profit for consecutive years was same
however organization incurred highly operating expenses as compare to second and third year.
Their value of operating expenses was evaluated at 374000, 291200 and 286287 which means
that as compare with first year they able to reduce their operating expenses. Rate of earning from
running operating business activities was valued at 1716000 , organization able to generate more
net profit as compare to their first year. As New Age Consultancy Service's of net profit was
evaluated at 82 % IN FIRST YE4AR AND 86 % in upcoming 2 years.
Balance sheet
This statement is formulated for the purpose of finding out value of asset as well as
organizations long and short term business liabilities. On the basis of formulating balance sheet
manager recognize value of current asset and liabilities (Hasibuan. and Syahrial,2019).
New Age Consultancy Services value of liabilities in first year was evaluated at 374000
as they don't took any kind of long term loan or take debenture. Management department not
issue any share they have retain earning which evaluated at 1716000. On the other side New Age
Consultancy Services don't have any fixed assets in their balance sheet, their value of assets is
209000. Value of asset and liabilities is equal which means that organization have sufficient
capital to pay their current liabilities. Balance sheet help in measuring business performance as
well as useful for stakeholder to recognize position of business organization for specific period

of time. Manager on the basis of formulating balance sheet able to find out value of their asset
and business liabilities.
In second year assets valued at 3806000 which includes cash, and account receivables.
Organizations liabilities side also showcase the same balance as their value of creditors has been
decline as compare with first year. Their value of retain earning also been increase from 1716000
to 3514800. In third year asset valued at 3888800 and on the other side liabilities also valued at
the same amount. Which represent that New Age Consultancy Service's able to successfully run
their organization in market field as the value of their balance sheet has been increase as well as
they use essential business policies which help in evaluating value of payable current and
increase retain earning and of assets which will useful in increase cash inflow of organization
(Lin, Martinez, Wang and Yang 2018.).
Cash flow statement
This statement has been formulated for the purpose of finding out value of cash inflow as
well as cash outflow business activities. Which will useful and help for managers to formulate
those business policies through which they can effect use and manage their cash resources. Cash
flow is useful in determine the ability of organization to generate profit from using and applying
different types of business activities. This will beneficial for formulating business policies on the
basis of that manager took decision.
In first year cash flow operating activities valued at 1.89 and their balance of cash from
investing activities valued at 200 AED, their first year balance valued at 2 MM AED. On the
other side value of cash generate from operating activities evaluated at 1.89 and in second year
they generate 200000 cash from investing business activities and value of opening cash balance
was 3.716 MM AED. Which showcase that organization able to generate same amount of cash
from their operating and investing business activities in both consecutive years. However they
value of cash balance has been increases as compare with first year.
Due to increment in the cash generate activities , organization able to generate more cash
from operating their consultancy business as the amount of cash revenue had been increase from
1716000 to 17988000. In order to maintain the availability of cash reserve organization focus on
controlling cost, thus the amount of cash outflow activities has been reduce from 792000 to
704287.

This showcase that management department of New Age Consultancy Services work in
effective manner to control their wastage of cash outflow activities. This statement help in
recognizing those business activities through which they can easily generate more cash. On the
basis of that organization able to manage and run their business in effective manner. Manager
formulate cash flow statement as it useful in effectively manage and recognize operating ,
financing and investing business activity in effective and systematic manner (Monahan, 2018).
Ratio analysis
Profitability ratio: This ratio has been calculated for the purpose of determining ability
of organization to generate profit from their operating business activities. Net profit and gross
profit are part of profitability ratio. Manager use to evaluate net profit ratio for determine and
recognize relation between net sales and profits. Value of net profit in first year was 82 % and in
upcoming consecutive second and third year it remain same. Which means that ability of Net
profit ratio to generate profit by their consultancy services has been increases (Sakaji, Murono,
Sakai Bennett and Izumi, 2017).
Net profit ratio:
Particular Formula 1st year 2nd year 3rd year
Net profit ratio Net profit /
Net
revenue*100
1716000/
2092628 = 82
1798800/
207906 = 86
1803713/2097
340 = 86
Gross profit ratio: This ratio used for calculate and analysis relation between gross
profit and sales.
New Age Consultancy Service's value of gross profit has been increases from first year to
previous year was the ratio has been increase from 92 to 94 %. This depicts that management
department of consultancy services use their resources in effective manner for maintain their
position in market.
Particular Formula 1st year 2nd year 3rd year
Gross profit
ratio
Gross profit/
Sales*100
209000 /
2092628 = 92
209000 /
207906 = 91
209000 / 2097340 = 94

Current ratio: This ratio is part of liquidity ratio. Manager use to calculate this ratio for
their purpose of analysing relation between current asset and current liabilities. Ideal current ratio
valued at 2 :1. New Age Consultancy Services abler to generate current ratio 0.55 in first year
and has been incre4se in second and third year of running business,. Which showcase that
organization essential use their current asset for fulfilling short term debt liability in third year.
Particular Formula 1st year 2nd year 3rd year
Current ratio Current assets/
Current
liabilities
209000 /
374000 = 0.55
38026000 /
2912000 = 1.3
388800 /286287 = 1.35
Debt to equity ratio: Manager use to calculate this ratio for the purpose of recognizing
relation between debt and equity. With the help of calculating this ratio manager able to find out
the ability of organization to pay their debt by using their equity funds. New Age Consultancy
Services 's value of debt to equity ration in first year was measured at 0.12. It was increase in
1.08 in second year. Which means that organization need to use large source of equities for the
purpose of fulfilling their debt business liabilities. This ratio useful in determine the requirement
of financing funds by using debt and equity shares (Williams and Dobelman, 2017).
Particular Formula 1st year 2nd year 3rd year
Debt to equity
ratio
Total debt /
Equity
209000 /
1716000 =
0.12
3806000 /
3514800 =
1.08
3888800 / 3602513 = 0.107
Operating ratio: This ratio is also part of profitably ratio. The main objective of this
ratio is to calculated and measure the relation between operating expenses and net profit. On the
basis of that manager able to evaluate ability of organization to pay their operating expense by
using revenue of sales. New Age Consultancy Services operating ratio valued at 0.17, 1.40 and
0.13 which showcase that organization able to effectively cover up their operating expanses.
Particular Formula 1st year 2nd year 3rd year
Operating Operating 374000 / 291200/ 286287/ 2097340 = 0.13

ratio expenses / Net
sales/*100
2092628 =
0.17
207906 = 1.40
CONCLUSION
From the above analysis it has been concluded that manager use to formulate financial
statement through which they can evaluate financial performance for particular period of time.
New Age Consultancy Services able to successfully run their consultancy services business as
their profitability and efficiency ratio has been increase as well as their position of financial
market is maintain for long period of time-due to increment in their operating and financial cash
related business activities.

REFERENCES
Books and journals
Abernathy, J. L., Guo, F., Kubick, T. R. and Masli, A., 2019. Financial statement footnote
readability and corporate audit outcomes. Auditing: A Journal of Practice &
Theory.38(2). pp.1-26.
Craja, P., Kim, A. and Lessmann, S., 2020. Deep learning for detecting financial statement
fraud. Decision Support Systems. 139. p.113421.
Hasan, M. M. and Taylor, G., 2020. Financial statement comparability and bank risk-
taking. Journal of Contemporary Accounting & Economics, 16(3), p.100206.
Hasibuan, R. P. S. and Syahrial, H., 2019, August. Analysis of the implementation effects of
accrual-based governmental accounting standards on the financial statement qualities.
In Proceeding ICOPOID 2019 The 2nd International Conference on Politic of Islamic
Development (Vol. 1, No. 1, pp. 18-29).
Lin, S., Martinez, D., Wang, C. and Yang, Y. W., 2018. Is other comprehensive income reported
in the income statement more value relevant? The role of financial statement
presentation. Journal of Accounting, Auditing & Finance. 33(4). pp.624-646.
Monahan, S. J., 2018. Financial statement analysis and earnings forecasting. Foundations and
Trends® in Accounting.12(2). pp.105-215.
Sakaji, H., Murono, R., Sakai, H., Bennett, J. and Izumi, K., 2017. Discovery of rare causal
knowledge from financial statement summaries. In 2017 IEEE Symposium Series on
Computational Intelligence (SSCI) (pp. 1-7). IEEE.
Williams, E. E. and Dobelman, J. A., 2017. Financial statement analysis. World Scientific Book
Chapters. pp.109-169.