Financial Analysis Statement : An Assessment Answer

Answer:

Income Statement:-


In the books of BreathScreen Inc.

Income Statement:-

for the year ended on 31st December,2013

 

Particulars

Amount

Amount

 

 

 

($)

 

Sales Revenue

 

 23,000,000

 

Other Operating Revenue

 

                -

 

Total Revenue

 

 23,000,000

 

Cost of Goods Sold

 

  (8,100,000)

 

Gross Profit

 

 14,900,000

 

License Fees

    (3,000,000)

              -  

 

Less: Prepaid Fees

       (250,000)

  (2,750,000)

 

Salaries

 

  (3,700,000)

 

Manufacturing Overhead Expenses

 

  (2,000,000)

 

Advertisement

 

  (2,000,000)

 

Depreciation on Machinery

 

  (3,000,000)

 

Amortization on Trademark

 

     (600,000)

 

Net Operating Income

 

      850,000

 

Interest Received

 

      200,000

 

Revaluation Surplus

 

   4,600,000

 

Earnings before Interest & Taxes

 

   5,650,000

 

Finance Cost

 

     (300,000)

 

Profit Before Income Tax

 

   5,350,000

 

Income Tax Expenses @ 17%

 

     (909,500)

 

Net Profit for the Period

 

   4,440,500

Balance Sheet:-

In the books of BreathScreen Inc.

Balance Sheet:-

for the year ended on 31st December,2013

 

Particulars

Amount

Amount

 

Current Asset:

 

 

 

Accounts Receivable

 

        9,600,000

 

Cash in Hand

 

      18,690,500

 

Closing Stock

 

          900,000

 

Prepaid Expenses

 

              250,000

 

Total Current Assets

 

      29,440,500

 

Fixed & Non-Current Assets:-

 

 

 

Machinery

   13,500,000

 

 

Add: Installation Cost

     1,500,000

 

 

 

   15,000,000

 

 

Less: Accumulated Depreciation

    (3,000,000)

      12,000,000

 

Trademark

 

      10,000,000

 

Technology

 

        2,000,000

 

Total Fixed & Non-Current Assets

 

24000000

 

TOTAL ASSETS

 

      53,440,500

 

Current Liabilities:

 

 

 

Accounts Payable

 

           3,000,000

 

Total Current Liabilities

 

        3,000,000

 

Non-Current Liabilities:-

 

 

 

Loan from Bank

 

        6,000,000

 

Total Current Liabilities

 

        6,000,000

 

TOTAL LIABILITIES

 

        9,000,000

 

Equity Capital:

 

 

 

Share Capital

 

      40,000,000

 

Retained Earnings

                  -

 

 

Add: Net Profit After Tax

     4,440,500

        4,440,500

 

Total Equity Capital

 

      44,440,500

 

TOTAL EQUITY & LIABILITIES

 

 53,440,500.00

Cash Flow Statement under Indirect Method:-

In the books of BreathScreen Inc.

Cash Flow Statement:-

for the year ended on 31st December,2013

 

Particulars

Amount

Amount

 

Cash Flow from Operating Activities:-

 

 

 

Net Operating income

 

       850,000

Less :

Tax Expenses

 

      (909,500)

 

Net Operating Loss After Tax

 

       (59,500)

Add:

Depreciation & Amortization:

 

 

 

Depreciation on Machinery

  3,000,000

 

 

Amortization of Trademark

     600,000

      3,600,000

Add:

Increase in Current Liabilities:

 

 

 

Increase in Accounts Payable

3000000

3000000

Less:

Increase in Current Assets:

 

 

 

Increase in Accounts Receivable

 (9,600,000)

 

 

Increase in Closing Stock

    (900,000)

 

 

Increase in Prepaid Expenses

    (250,000)

 (10,750,000)

 

Net Cash Outflow from Operating Activities

 

   (4,209,500)

 

Cash Flow from Financing Activities:-

 

 

 

Issue of Share Capital in Cash

 

  34,000,000

 

Loan from Capital

 

    6,000,000

 

Finance Cost

 

      (300,000)

 

Interest Received on Bank Account

 

       200,000

 

Net Cash Inflow from Financing Activities

 

  39,900,000

 

Cash Flow from Investment Activities:-

 

 

 

Purchase of Machinery

 

 (13,500,000)

 

Installation of Machinery

 

   (1,500,000)

 

Purchase of Technology

 

   (2,000,000)

 

Net Cash Inflow from Financing Activities

 

 (17,000,000)

 

Net Cash Increase/(Decrease) for the Year

 

  18,690,500

Add :

Opening Cash Balance

 

0

 

Closing Cash Balance

 

  18,690,500


 

Bibliography:-

Christensen, T. E., Baker, R. E., & Cottrell, D. M. (2014). Advanced Financial Accounting. The McGraw-Hill Companies, Inc

Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia

Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D., & Tan, R. (2012).Financial Accounting. Pearson Higher Education AU

Weil, R. L., Schipper, K., & Francis, J. (2013). Financial accounting: an introduction to concepts, methods and uses. Cengage Learning


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