Question

Please review the financial statement of this company, as attached, and explain in detail what the financial performance of the company was during the past year. Thanks.

Pro Forma Income Statement Report Item Quarter 2 Quarter 3 Quarter 4 Quarter 1 Gross Profit Revenues - Rebates - Cost of Goods Sold = Gross Profit 0 0 161,552 400 83,298 77,854 3,409,078 29,975 1,809,410 1,569,693 Expenses 120,000 500,000 7,822 266,459 151,252 717,644 170,512 Research and Development + Quality Costs + Advertising + Sales Force Expense + Sales Office and Web Sales Center Expenses + Web Marketing Expenses + Marketing Research +Shipping +Inventory Holding Cost + Excess Capacity Cost + Depreciation = Total Expenses Operating Profit 170,000 60,288 216,896 501,978 585,524 44,000 69,000 50,720 5,428 65,100 ooo 0 46,000 2,828 18,206 367,367 45,971 2,123,550 -2,045,696 65,100 -65,100 Miscellaneous Income and Expenses 0 290,512 -290,512 45,971 1,749,805 -180,112 0 0 0 -290,512 -2,045,696 -180,112 -65,100 14,024 +Licensing Income - Licensing Fees + Other Income - Other Expenses = Earnings Before Interest and Taxes + Interest Income - Interest Charges = Income Before Taxes -Loss Carry Forward = Taxable income - Income Taxes = Net Income Earnings per Share 34,468 -214,580 -51,077 -290,512 -2,045,696 0 0 -290,512 -15 -51,077 -5 -214,580 -2,045,696 -56 5

Answer 1

Evaluating financial performance of company:

1.On the basis of Operating Profit:

The company incurs operating loss in first quarter , thereafter in the second and third quarter the operating increased, but at the end of the year, that is last quarter the company could able reduce the operating loss.which means company will perform better in the future ( company will be profitable in near future).

2. On the basis of Revenue

The start making revenue from the third quarter itself and in the last the could able make good revenue figures, more than 21 times compared to last quarter. Its also a good sign for financial performance.

3.On the basis of Total Expense:

Total expense incurred in the last quarter is less than total expense incurred in the third quarter , which showing the company is good at cost management.

4. On the basis of net operating cash flow:

The first quarter of company starts with negative cash flow thereafter increase in second quarter and a significant increase in third quarter. But the company could able the decrease the level of negative cash flow significantly in last quarter. The company performance standard is getting high.

5. On the basis of common stock:

The company had issued common stock and rise money from the public ,which means there is positive attitude in the public about the company and its performance and the future of the company.

6. company could able increase cash balance of 1 of third quarter to 332,492 at the end of the year ( last quarter) which means company is financially getting stronger.

7. Total asset base of the company getting increased, quarter after quarter.The company has making strong asset base.

Hope this would help u , thank u.