Financial - Managerial - & Capital Analysis of Furniture Acquisition.

Financial Analysis of Potential Furniture Acquisition, Managerial Accounting Report Writing, and Cap

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1. Ferri Furniture Company Limited is considering the acquisition of a Furniture company to expand its business. Its chief executive has highlighted two possible targets, Black Cat Limited and Olive Furnishing Services Limited. The following information has been obtained for their most recent financial years:

	Black Cat			Olive Furnishing Service
Income Statement
Sales			68,000		61,500
(-) Cost of Sales			(30,000)		(38,000)
Gross Profit			38,000		23,500
(-) Distribution expenses	16,000			10,000
Administration expenses	10,000		(26,000)	6,500	(16,500)
Profit before tax			12,000		7,000
(-) Taxation			(3,000)		(1,750)
Profit after tax			9,000		5,250
Balance Sheet
Non-current Assets			10,600		8,300
Current Assets
Inventory		18,000		8,000
Account receivables		28,000		10,000
Cash		-		2,000
		46,000		20,000
Current Liabilities
Creditors		26,000		6,000
Bank overdraft		5,000		-
		31,000		6,000
Net current Assets			15,000		14,000
Total Assets less Current			25,600		22,300
Liabilities
Capital and Reserves Common Stock Retained earnings Long-term Loan Total Equity and Long- Term Liabilities			10,000 5,600 15,0 10,000 25,600		12,000 10,300 22,300 - 22,300

As the company’s financial advisor, you have been asked for your assessment of the two companies, from the particular viewpoints of:

1. Liquidity;

2. Profitability;

3. Capital structure;

4. Efficiency.

2. Suppose you have a degree in Managerial Accounting and you are applying for a vacant accountant position in International Company. CEO of the International Company asks you to write a report because he wants to evaluate the skills of your management accounting knowledge.

The points to be included in your report are as follows:

1. Importance and activities of management accounting

2. Differences between management accounting and financial accounting

3. Fraud and internal control

4. Ethics in management accountant

Write a report of about 1,500 words based on the knowledge you have studied. (30 marks)

3. Modern Fashions, a US multinational, has a subsidiary located in Myanmar. Average risk projects in this subsidiary have a weighted average cost of capital of 10%, which includes a foreign exchange risk premium. Modern Fashion is considering two mutually exclusive, average-risk projects for its new Myanmar Facility. Each requires an initial investment of MMK 4 million. The projects are expected to produce the following after-tax cash flows;

Project A (MMK) Project B (MMK)

Year	Net Cash Inflows	Projected Net income	Net Cash Inflows	Projected Net income
1	1,500,000	500,000	2,500,000	1,500,000
2	1,500,000	500,000	1,500,000	500,000
3	1,500,000	500,000	1,500,000	500,000
4	1,500,000	500,000	1,100,000	100,000