Coursework Brief: Global Innovations Ltd$.$ Case Study

Background: Global Innovations Ltd$.$ is a mid$-$sized technology company specializing

in developing sustainable energy solutions. The company was founded in $2015$ and

has experienced significant growth over the past few years. As a newly appointed

financial analyst at Global Innovations Ltd$.,$ you have been tasked with preparing and

analysing key financial statements for the company's board of directors.

Financial Information: Use the following financial data for Global Innovations Ltd$.$ to

complete the assigned tasks. All figures are in millions of British Pounds.

Year $2023($in million $)$:

Revenue: $450($amount for the year $\frac{1}{1}\frac{?}{2023}-\frac{31}{12}\frac{?}{2023})$

Cost of goods sold: $270($amount for the year $\frac{1}{1}\frac{?}{2023}-\frac{31}{12}\frac{?}{2023})$

Operating expenses: $90($amount for the year $\frac{1}{1}\frac{?}{2023}-\frac{31}{12}\frac{?}{2023})$

Interest expense: $15(($amount for the year $\frac{1}{1}\frac{?}{2023}-\frac{31}{12}\frac{?}{2023}$

Tax rate: $25\%$

Depreciation: $30($amount for the year $\frac{1}{1}\frac{?}{2023}-\frac{31}{12}\frac{?}{2023})$

Accounts receivable: $60($as on $\frac{31}{12}\frac{?}{2023})$

Inventory: $45($as on $\frac{31}{12}\frac{?}{2023})$

Property, plant, and equipment $($net$)$: $320($as on $\frac{31}{12}\frac{?}{2023})$

Accounts payable: $40($as on $\frac{31}{12}\frac{?}{2023})$

Short$-$term debt: $50($as on $\frac{31}{12}\frac{?}{2023})$

Long$-$term debt: $180($as on $\frac{31}{12}\frac{?}{2023})$

On $\frac{1}{1}\frac{?}{2023}$ the company had:

Common stock: $100$

Retained earnings: $160$

Long$-$term debt: $40$

Accounts payable: $0$

Accounts receivable: $0$

Short term debt: $0$

Cash: $0$

Inventory: $0$

Additional information:

The company purchased new equipment for $50$ million in cash during the

year. This is included in the property, plant and equipment $($net$)$ figure above.

During the year the company issued $30$ million in new common stock.

The company paid dividends of $20$ million for the year.

Questions:

$($a$)$ Prepare and present the following financial statements for Global Innovations

Ltd$.$ for the year $2023$: a$)$ Income Statement b$)$ Statement of Financial Position

$($Balance Sheet$)$ c$)$ Statement of Cash Flows $($using the indirect method$)$

Can you check my answers $($the $3$ statements below$)$:

a$)$ Income Statement

Global Innovations Ltd$.$

Income statement for the year ended $31$ December $2023$

$$m

Sales revenue $450$

Cost of sales $(270)$

Gross profit $180$

Operating expenses $(90)$

Depreciation $(30)$

Operating profit $60$

Interest on borrowings $(15)$

Earnings before taxation $($EBT$)45$

Taxation $(11\mathrm{.}25)$

Profit for the period $/$ Net income $33\mathrm{.}75$

b$)$ Statement of Financial Position $($Balance Sheet$)$

Global Innovations Ltd$.$

Statement of financial position as at $31$ December $2023$

$$m

ASSETS

Non$-$current assets

Property, plant and equipment $320$

$320$

Current assets

Inventories $45$

Trade receivables $60$

Cash $($Socf$)148\mathrm{.}75$

$253\mathrm{.}75$

Total assets $573\mathrm{.}75$

ECQUITY AND LIABILITIES $$

Equity

Common stock $(/$Ordinary shares$)130$

Retained earnings $173\mathrm{.}75$

$303\mathrm{.}75$

Non$-$current liabilities

Long$-$term debt $180$

Current liabilities

Trade payables $40$

Short$-$term borrowings $50$

$90$

Total liabilities $270$

Total equity and liabilities $573\mathrm{.}75$

c$)$ Statement of Cash Flows $($Using the indirect method$)$

Global Innovations Ltd$.$

Statement of cash flows for the year ended $31$ December $2023$

$$m

Cash flows from operating activities

Profit before taxation $($after interest$)45$

Depreciation $30$

Interest payable $15$

Increase in trade receivables $(60)$

Increase in trade payables $40$

Increase in inventories $(45)$

Cash generated from operations $25$

Interest paid $(15)$

Taxation paid $(11\mathrm{.}25)$

Dividend paid $(20)$

Net cash from operating activities $(21\mathrm{.}25)$

Cash flows from investing activities

Payments of equipment tangible non$-$current assets $(50)$

Net cash used in investing activities $(50)$

Cash flows from financing activities