Case Analysis: Al Ismail Fashions (AIF) is a garment company, located in Alkhwair Muscat, which consists primarily of much smaller garment makers. AIF was started 13 years ago by Ahmed and Salim, who have over 15 years of experience with a major garment manufacturer. And the partnership initially blended very well. Ahmed is extremely creative with a real talent for merchandising. Mainly as a result of his knowledge, the AIF is known for its quality and “in” fashions. Salim has contributed to merchandising and marketing ideas but has mainly assumed the duties of the firm’s chief operating officer. Ahmed has had little interest in the financial aspects of the company as he preferred to work on fashion designing and the development of marketing strategies. A few months ago, however, he decided that he had better become more involved with the company’s financials. Ahmed wants to analyze the financial statement of the company to know the current financial performance and positions of the company. The following are the financial details of the AIF. Liabilities OMR Assets OMR Equity share capital 27,800 Furniture 4,000 Accounts Payable 1,550 Cash in hand 4,500 Reserves and surplus 2,550 Bills receivables 3,750 Bills payable 950 Land 9,000 Long term borrowings 6,520 Marketable securities 850 Outstanding Salaries 850 Cash in bank 5,250 Loan from Bank 3,450 Building 6,600 Preference share capital 5,265 Prepaid expenses 850 Bank overdraft 825 Cars & Trucks 3,350 Tax outstanding 590 Account Receivables 1,150 Inventory 2,150 Income earned but not received 430 Machinery 6,250 Equipment 2,220 Total 50,350 Total 50,350 Other information Particulars OMR Sales 330,000 Cost of goods sold 155,000 Administration expenses 33,000 Selling & Distribution exp. 44,000 Interest received 12,200 Rent Received 2,000 Commission received 1,750 1- Calculate the ratios of Return on Equity
1. Case Analysis:
Al Ismail Fashions (AIF) is a garment company, located in Alkhwair Muscat, which consists primarily of much smaller garment makers. AIF was started 13 years ago by Ahmed and Salim, who have over 15 years of experience with a major garment manufacturer. And the partnership initially blended very well. Ahmed is extremely creative with a real talent for merchandising. Mainly as a result of his knowledge, the AIF is known for its quality and “in” fashions. Salim has contributed to merchandising and marketing ideas but has mainly assumed the duties of the firm’s chief operating officer. Ahmed has had little interest in the financial aspects of the company as he preferred to work on fashion designing and the development of marketing strategies. A few months ago, however, he decided that he had better become more involved with the company’s financials. Ahmed wants to analyze the financial statement of the company to know the current financial performance and positions of the company. The following are the financial details of the AIF.
|
Liabilities |
OMR |
Assets |
OMR |
|
Equity share capital |
27,800 |
Furniture |
4,000 |
|
Accounts Payable |
1,550 |
Cash in hand |
4,500 |
|
Reserves and surplus |
2,550 |
Bills receivables |
3,750 |
|
Bills payable |
950 |
Land |
9,000 |
|
Long term borrowings |
6,520 |
Marketable securities |
850 |
|
Outstanding Salaries |
850 |
Cash in bank |
5,250 |
|
Loan from Bank |
3,450 |
Building |
6,600 |
|
|
5,265 |
Prepaid expenses |
850 |
|
Bank overdraft |
825 |
Cars & Trucks |
3,350 |
|
Tax outstanding |
590 |
|
1,150 |
|
|
|
Inventory |
2,150 |
|
|
|
Income earned but not received |
430 |
|
|
|
Machinery |
6,250 |
|
|
|
Equipment |
2,220 |
|
Total |
50,350 |
Total |
50,350 |
|
Other information |
|
|
Particulars |
OMR |
|
Sales |
330,000 |
|
Cost of goods sold |
155,000 |
|
Administration expenses |
33,000 |
|
Selling & Distribution exp. |
44,000 |
|
Interest received |
12,200 |
|
Rent Received |
2,000 |
|
Commission received |
1,750 |
1- Calculate the ratios of Return on Equity
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