Analysis

Solve the following two tasks;

Task A: Financial Statement Analysis

The Directors of Helena Beauty Products (LTD) have being presented with the following abridged financial statements. They have requested the accounts manager to provide a report over the past five years of the financial statements.

Income statement and Statement of Financial Position will be attached

You are required to prepare financial statement analysis report to the management. You report should include the following data;

Prepare common size index financial position statement for the above period and give a critical comment on the same.

Compute the below given ratios and analyze them. Your analysis should include graphs representing the trend of each ratio. Further your report should include the financial strengths and weaknesses of the firm with the available information. (each ratio should have a graph)

• Liquidity ratios (current ratio and acid test ratio)
• Solvency ratio (Dept-equity, interest coverage ratio)
• Profitability ratio (gross profit margin, net profit margin, return on capital employed, within on equity)
• Activity ratio (inventory holding period, debtor collection period, creditors payment period)

Task B: Project Risk Analysis

Telematics PLC is considering two mutually exclusive projects, cables and satellite. The possible NPVs for each project and their associated probabilities are as follows;

Two tables will be attached.

• Calculate Expected NPV
• Calculate the standard deviation of NPV
• Appraise the management about this project with your comments