Financial Statements Analysis

Final Exam

Lecturer: Dr. Aulia Fuad Rahman, SE., M.Si., Ak. Time: two days
Assistant Lecturer: Ali Mohamed Alsawayeh Ph.D Date: 12/12/ 2019
Notice: exam assessments will based on accurate answer; high level of writing skills. All questions
Must be answered. The exam papers below are (2 pages in total).

Student Name:……………………………………Student ID:…………………………….

Q1a: Critically discuss, why the traditional financial analysis such as; return on investment
(ROI) and return on assets (ROA) are considered to be inadequate in assessing company’s
financial performance?

Q1b: Indofood is Indonesian manufacturing company selling various products. The following
information obtained from its trail balance in the ended month of October 31/10/2019:
Account Deb Credit
purchases 420000
lands 300000
Bank 250000
Returns purchases 15000
Discount permitted (on sales) 8000
Earned discount 12000
Returns Sales 25000
Purchasing allowances 5000
Cars 80000
Debtors 30000
Creditors 40000
Other Revenues 610000
Fire Insurance 12000
Telecommunication expenses 4000
Administration team salaries 32000
Bonuses and salaries for men sales 45000
Purchases transportation expenses 14000
Sales transportation expenses 18000
Stock first terms 80000
Advertising expenses 11000
Sort-term notes payable 53000
Sale allowances 7000
Capital ?
Ending inventory 70000

During October, the company sold products ( 25000 units) and the cost of each unit is= (26).

i. Prepare the income statement for the company in the ended month?
ii. Prepare the financial statement (balance sheet) with the information provided?
iii. Find what is the capital?

1
Q2a: What is the liquidity?
Q2b: Why liquidity measurements are important?
Q2c: What is the best measurement of a company’s liquidity?

Q3a: Gudang Garam can achieve high return on equity (ROE) but a low price to earning ratio
(PE) at the same time. Provide in details about the possible reasons based on the discounted
abnormal earnings valuation method?

Q3b: Multiple Choice Question (MCQ):

1. When preparing a projected income statement, which of the following additional
information other than the financial statements would probably not be relevant?
a) The competitive environment
b) New vs old store mix
c) Expected capital expenditure
d) Expected level of micro economic activity
2. What is the correct order of the follow steps in preparing a projected income
statement (not all steps may be shown)?
a) Project the future net sales
b) Project the future net income
c) Project the future cost of goods sold
d) Project the future interest expense
3. What is the correct order of the follow steps in preparing a projected balance sheet
(not all steps may be shown)?
a) Project the future cash
b) Project the future account receivables
c) Project the future account payable
d) Project the future property, plant and equipment

Q4a: What is the main purpose of equity evaluation?

Q4b: What are the most used earnings forecasting methods?

*Notes:
Date Submission: December 12th 2019.
Time: 12 Afternoon.
Place: E Building, 3rd Floor, Room 3.5.