REVIEW QUESTION ON FINANCIAL STATEMENTS ANALYSIS

School: Kampala University, Uganda - Course: BUSINESS FINANCE - Subject: Accounting

REVIEW QUESTIONS QUESTION ONE (a) "A careful analysis of financial statements can help decision makers evaluate an organization‟s past performance and predict its future performance". REQUIRED: Using your knowledge on ratio analysis, how far do you support the quoted statement? (b) Malolo Company Limited is a retailing company of processed fish fillets. You are provided with the extracts from the MaloloCompany‟s draftfinancial statements for two (2) years as follows. Extracts from Statement of Profit and Loss and Other Comprehensive Income for the years ended 30th September. 20212020 TZS.000,000TZS.000,000 Turnover from operations4,2503,806 Cost of sales(2,140)(2,405) Gross profit2,1101,401 Sales & Distribution costs(930)(520) Administrative expenses(260)(158) Operating profit920723 Interest expenses(180)(90) Profit before tax740633 Income tax expense(296)(254) Profit for the period444379 Extracts from Statement of Financial Position as at 30th September. 20212020 TZS.000,000TZS.000,000 Assets:Non-Current assets 1,4061,120 Current assets Inventories206122 Trade receivables426366 Cash-26

Total Current Assets632514 Total assets2,0381,634 Equity and liabilities: Equity Ordinary shares @ TZS 1.5528455 Preference shares120166 Share premium50- Revaluation reserve8080 Retained earnings546503 Total equity1,3241,204 Current liabilities Bank overdraft50- Trade payables308103 Current tax payables356327 Total liabilities714430 Total equity and liabilities2,0381,634