Question

Basic company facts:
*Name of the firm: Britannia
*Category of the firm: FMCG
*State of incorporation: Kolkata, West Bengal, India.
*Year of foundation: 1918
*Primary & secondary SIC codes: N/A
*Independent auditor: BSR & Co
*Shares listed in: Bangalore stock exchange, national stock exchange, OTCEI, madras stock exchange, Delhi stock exchange, MCX stock exchange etc.
*Stock ticker symbol: BRITANNIA

1. Summarize the basic information on your company’s income statements for the most recent three years. If an item was not reported, indicate by placing N/A (for not applicable) in the space provided.

Basic Income Statement Information	Most Recent Year	Next Most Recent Year	Second Most Recent Year
Sales (total revenues)
Cost of goods sold (COGS)
Gross margin
Total other revenues, expenses, gains and losses (other than COGS)
Income (loss) before taxes
Income taxes
Net income (loss)

2. “Special items” are not typical and do not appear on all income statements. Identify any special items that appear on your company’s income statement. The follow include special items that might appear on your company’s income statement:

  • Income (or loss) for discontinued operations
  • Extraordinary gain (or loss)
  • Cumulative effect of a change in an accounting principle

If any of these special items appeared on any of the income statements for the last three years, indicate the year and the amount, and explain the underlying event/transaction that caused the item to arise.

Basic Income Statement Information	Most Recent Year	Next Most Recent Year	Second Most Recent Year
Income (or loss) for discontinued operations
Extraordinary gain (or loss)
Cumulative effect of a change in accounting principle

Please explain why.

3. Find your company’s Net Income EPS for the current year. Indicate each EPS and the number of shares used to calculate them.

a. Basic EPS =	Number of shares =
b. Diluted EPS =	Number of shares =

Do your basic and diluted EPS figures differ, by how much do they differ? What reason(s) can you give for this difference? Reasons for the difference are normally found in the EPS footnote.

NOTE Earnings per share (EPS) is one of the most commonly used measures of a company’s profitability. In its simplest form, EPS is calculated by dividing net income by the number of common shares outstanding. Though an intuitive concept, the computation can become quite complex. Two EPS figures-basic and diluted-are required to be disclosed on the income statement. They differ essentially in the number of shares considered outstanding. Basic EPS uses only those shares actually outstanding during the period. Diluted EPS uses shares outstanding as well as shares that could become outstanding under certain circumstance, e.g., stock options are exercised.

Answer 1

Based on the publicly available information, following information can be collected;

Basic Income Statement Information	Most recent year	Next most recent year	Second Most recent year
Sales	9,304.06	8,414.37	7,947.90
Cost of Goods sold	6068.32	5439.99	4831.54
Gross margin	3,235.74	2,974.38	3,116.36
Total Other revenue, expenses, gains, losses
Depreciation	119.76	96.43	86.89
Interest	1.45	1.34	1.25
Other Expenses	1,825.26	1,770.23	1,984.54
Other Income	155.93	144.78	98.21
Exception Item	0	0	-10.33
Income (loss) before tax	1,445.20	1,251.16	1,131.56
Tax	497.31	407.47	382.47
Net Income (loss)	947.89	843.69	749.09

2. There were no special items that were mentioned in the statements.

3.

	Most recent year	Next most recent year	Second Most recent year
Number of shares	120,059,148.00	120,000,815.00	119,975,815.00
Basic EPS	78.95191793	70.3070225	62.43675027

  Diluted EPS were same as Basic EPS