Task

The following information has been extracted from the accounts of R Ltd., a manufacturer and distributor of home cordless phone in Hong Kong.
000)	Profit and Loss accounts for the year ended 31 December
				R Ltd
				2010
Sales				4,800
Cost of sales				3,000
Gross Profit				1,800
Less: Expenses
Wages				500
Selling and administration				80
Advertising				220
Other overheads				275
				1,075
Profit before interest and tax				725
Less: debenture interest				25
profit before tax				700
Taxation				100
Profit after tax				600
Dividends-preference shares				-12
- ordinary shares				-108
				480

	Balance Sheet as at 31 December
			RLtd	R Ltd
(000)
Fixed Assets			300	450
Current Assets
Stock			1,230	450
trade debtors			600	1,000
Bank			450	250
			2,280	1,700
Current Liabilities
trade creditors			350	405
Property tax payable			100	95
			450	500
Net current assets			1,830	1,200
Total assets less current liabilities			2,130	1,650
Financed by:
1 ordinary shares			300	300
8% preference share			150	150
reserves			1,430	950
			1880	1400
Long term liabilities
10% Debenture			250	250
			2,130	1,650

 Note:

There was no new issue of shares throughout the year of 2009 and 2010

The market prices per share on 31 December for 2010 and 2009 were $19.6 and $19 respectively.

 Required                                  

Analyse the financial statements using relevant techniques, such as ratios, to assess the financial viability of R Ltd

Carry out a performance audit for R on the 2009 and 2010 financial results with respective reference to the internal and external factors, for external factors please specifically consider the impact of the industry and market that R is in.                                           

Use appropriate calculations to improve the quality of the financial information provided and calculated in (a) above.

Based on (a) , (b) and (c) above make recommendation on the strategic portfolio of R. (Please use BCG model for your recommendation. Assuming that the home cordless phone sector in Hong Kong is very keenly competitive and innovative. New product is launched in the market very quickly. R has 15% of the market share and finds it is quite difficult to hold or gain market share.) 

Posted Date: 2/27/2013 1:07:49 AM | Location : United States

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