Q1. .. by taking into consideration the following instructions. (50 Marks)
Instructions:
- Select a company listed in Muscat Securities Market/GCC Market (preferably other than banking and investment companies or Holding companies). [You may refer to http://www.msm.gov.om/]
- Collect financial reports of the chosen company for three consecutive
- Use annual financial statements for Avoid using quarterly statements.
- Provide references for the data collected (use Coventry Harvard style of referencing). Company websites can also be used for data
- From the financial statements and additional information collected by you complete the below mentioned
TASKS
- 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)
- On the basis of literature review and from the above computations analyse; Profitability position and Financial position of the chosen
(Literature Review: 10 marks; analysis: 20 marks (profitability position-10 marks & financial position-10 marks); Total 30 marks)
- Compare and contrast Vertical analysis and Horizontal analysis (10 Marks)
Q2. Mars Hypermarket LLC is planning to expand and open new stores in Sultanate of Oman. Currently they are considering two options, one is to start a new store in Barka and other is to take over an existing store in Ibra. But due to recent developments they will be able to fund only one store as the overall revenue trends are subdued. The required rate of return is 10%. Details of cash inflows of 5 years of the two projects along with additional information is given in the table below,
| Details | New Store at Barka | Take-over existing store at Ibra |
| Suppliers availability | Not available. To be initiated | Already existing |
| Consumer trends | Growth expected at 10% | Stagnated |
| Population growth | 12% | 5% |
| Competition | Strong | Moderate |
| Initial cost | 200,000 | 200,000 |
| Cash flows | ||
| Year 1 | 60,000 | 20,000 |
| Year 2 | 80,000 | 60,000 |
| Year 3 | 100,000 | 80,000 |
| Year 4 | 60,000 | 120,000 |
| Year 5 | 40,000 | 80,000 |
- Evaluate the projects using, Net Present value Method and Internal Rate of Return method. (10 marks)
- Based on the above analysis and on the basis of the relevant literature review, which project would you recommend and The students have to consider the non-financial information provided in the case and other relevant non-financial factors while recommending a project.
(Recommendation based on calculations (with Literature review) – 10 marks and discussion non- financial factors (with Literature review) – 10 marks = total 20 marks)
Q3. Your company, a leading cement manufacturer has asked you to submit a cost-volume-profit analysis report for the two products being produced in your company. 20 marks
| Product A | Product B | ||||
| RO | RO | RO | RO | ||
| Sales |
240000 |
300,000 | Sales |
200000 |
300000 |
| Less: Variable Cost | Less: Variable Cost | ||||
| Fixed Cost | 30000 | 270000 | Fixed Cost | 70000 | 270000 |
| Budgeted Profit | 30000 | Budgeted Profit | 30000 | ||
You are required to:
- Calculate break – even point of each
- The company prefers to maintain a desired profit of RO 10,000. Identify the sales volume to maintain the desired
- Compute margin of safety for both
- The business is expected to go through ups and downs in the demand hence you need to state which product is likely to earn greater profit in conditions of heavy demand for the product and low demand for the
- Evaluate the importance of the role of CVP analysis in taking business decisions with appropriate literature
(Calculations of BEP, Desired Profit and Margin of Safety 10 marks; Discussion on which product is likely to earn higher profit 5 marks; Role of CVP analysis 5 marks: Total 20 marks)
