National Gas Financial Statement Analysis
Q1. Assume that you are a Financial Analyst working of a leading Auditing Firm. Evaluate the financial performance of a company listed in the Muscat Securities Market (MSM)/GCC Market by taking into consideration the following
instructions.
Select a company listed in Muscat Securities Market Market ,You may refer to http://www.msm.gov.om/]the company name is :NATIONAL GAS
Collect annual financial reports of the chosen company for three consecutive years.
Use ONLY annual financial statements for analysis. Avoid using quarterly statements.
Provide references for the data collected (use Coventry Harvard style of referencing). Company websites can also be used for data collection.
From the financial statements and additional information collected by you complete the below mentioned tasks.
A. Prepare comparative income statements and balance sheet for 3 years using Horizontal and Vertical Analysis
techniques for the both income statements and balance sheet. (10 marks)
B. On the basis of literature review and from the above computations analyses; Profitability position and Financial position of the chosen company. Provide meaningful recommendations for the company to improve the Profitability position and financial position based on the analysis.
(Literature Review about the techniques used for analysis and recommendations
(profitability position- & financial position
Q2. City Cinemas is planning to expand and open new Cinemas in Sultanate of Oman. Currently they are considering two options, one is to start a new cinema in Sohar and other is to take over an existing cinema in Nizwa. But due to recent developments they will be able to fund only one project of the two as the overall revenue trends are subdued. Details of cash inflows for 5 years of the two projects along with additional information is given in the table below
|
Details |
New cinema at Sohar |
Take-over existing cinema at Nizwa |
|
Consumer trends |
Growth expected at 10% |
Stagnated |
|
Population growth |
12% |
5% |
|
Competition |
Strong |
Moderate |
|
Initial cost |
500,000 |
500,000 |
|
Cash flows |
||
|
YEAR 1 |
150,000 |
200,000 |
|
YEAR 2 |
160,000 |
185,000 |
|
YEAR 3 |
190,000 |
160,000 |
|
YEAR 4 |
175,000 |
175,000 |
|
YEAR 5 |
200,000 |
150,000 |
,
A. Evaluate the projects using Internal Rate of Return method.
B. Based on the above analysis and on the basis of the relevant literature review, which project would you recommend and why. The students have to consider the non-financial factors provided in the above scenario and other relevant non-financial factors while recommending a project.
C. Based on appropriate literature review, analyse the non-financial factors provided in the above
scenario and other relevant non-financial factors.
Q3. Your company, a leading fertilizer manufacturer has asked you to submit a cost-volume-profit analysis report for the two products being produced in your company
|
Particulars |
Product A Price per unit (RO) |
Product B Price per unit (RO) |
|
Sales price |
20 |
15 |
|
Material |
10 |
9 |
|
Direct wages |
3 |
2 |
|
Variable expenses |
100% of direct wages |
100% of direct wages |
|
Fixed expenses |
RO 800 |
|
The following scenarios are predicted by the Management:
Scenario 1: 100 units of product A and 200 units of product B
Scenario 2: 150 units of product A and 150 units of product B
Scenario 3: 200 units of product A and 100 units of product B
You are required to:
- Compute the contribution per unit of both Product A and Product Find out total contribution and profits for each of the scenario.
- In your opinion which is the most profitable scenario and justify your recommendation
C. Evaluate the role of CVP analysis in taking business decisions with appropriate literature review.
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