USE the reporting format required by your organisation and/ or clients. If your organisation does not have a specific financial reporting format, ensure that your report is logical and easy to read and understand. You will meet the requirements of this part of the question if you have answered all the elements in a professional manner. Headings, paragraphs and business language helps.

Skills Programme 2 STUDY the financial statements of XYZ Limited below and then ANSWER the following questions: BALANCE SHEET OF XYZ LIMITED AT 28 FEBRUARY 2018 ASSETS Fixed assets Land and buildings Plant and equipment Machinery Less 1230000 Accumulated depreciation other assets Investments Total non-current assets 70000 1300000 Current assets Cash Marketable securities Debtors Inventory (stock) Prepaid expenses R1 930000 EQUITIES AND LIABILITIES Shareholder's capital Distributable reserves Owner's equity Preference share capital Total Shareholder's interest 500000 720000 1220000 100000 1320000 Non-current liabilities Debentures Current liabilities Trade creditors Bank overdraft Arrear expenses TOTAL EQUITY AND LIABILITIES 201820172018201720182017201820172018 2.) Assess the profitability, liguidity, golvency and financid structure of xyz Rimited for tivo years by cakulating the following financial ratios for each year: 211 Net Profit =5,76%=3,7% Percentage 1.3 Working Sopital = W.3.33:1 =1.9:1 churrent)Ratio Ratio Rotes of ieturn on total Copitel (after =9.96%=6.49% Yield Shareholder's =21.94%=12.98 interest 2.1 Assess the profitability liguidity, golvency and fin oncid structure of xyz Aimited for tho years by cakulating the following financial ratios for eoch year: 2.1.2 Net Profit =5,76%=3,7% 2.1.3 Working Capital =43.33:1=1.9:1 2.1 .5 Rates of ieturn on total Copital after =9.96%=6.49% 2.1 .6 Yield Sharholder's =21.94%=12.98% interest Discuss how xyz limited cauld have improved their profitobility in the less profitable year and Provide recommandation to monagenent on how xyz caild be more profitable in the future; * Liss profitable year is zolis - To reduce direct material cost by substitute lower cost on materials where it is passible, Reduce all wost products, elimnate unnessary products, negotiate with suppliers and vendas, buy the product that is needed, not potential needed, be on lookout for discounts and buy bargan's - To reduce indirect monufaturing cost by review production processes and identify areas that can be steamlined. This cculd involve reducing material wast, improving production efficiency and optimizing the use of resarces. Another way to save indirect manufacturing cost is to negotiote better deals with spppliers by bulk purchasing, sarce material from lower-cost supplieis, or negotiating better payment terms. Another way to save on indirect manufaturing cost is to implement energy-efficient practices, such as using energy efficient lighting, H VAC syste and equipment. This con hep to reduce onergy cost and impro envirmental sustainability. Finolly, implementing a cost-saving program con help to reduce indirect manufacturing casts by promoting cast-consciou Sness and encouraging employees to identify hays to save on expenses. This cauld involve offering incentives for cost-saving ideas, implementing budget controls and tracking expenses to identify areas for improvement 2.3 Compile a written report on the informotion that you have gathered in assignment question 2.1, as well as your analytical procedures, comparison and interpretation of the annual finoncial statements of xyz Limited, for the post tho years. Include the following in your report: 1. Giophs, diagrams and tables, where appropriate * Financial analysis of financial statements helps the management to take better decisian by comparing its ratio with other other entity, industry standards or with previais year amounts. Report on Annual financial statements as per the assignment is follows: * Analysis of balance sheet is as follows: - Company has increased the omaint of debt by issuing more debentures of amaint 80,000 . - Land and building has been purchased in 2018 for the amant 125,000. - Fixed assets has been increased ie. plant and machinery by 100,000. - Inventary has been decreased in 2018 by 60 coo which implies that the company has sold it-s gooids in 2018 more quickly than 2017 - Machinery has been purchased of 195,000 which implies that the enlity has been focusing more in investing in the fixed assets. Analysis of incane statement: xyz limited shauld focus on increasing the Gross profit\% by increasing soles or by reducing the cost of indired manufaturing, material cost It should focus more on increasing its working Copital which plays a significont role in day to day business of the entity Comment on the operoting performonce and viability of xyzLTD - The gross profil margin dropped from 21,25% to 20%, demanstroting a deterioration in the firm's profitability. Morecver, the net profit was less profitabie ofter all costs were deducted. - Also the company's copacity to fulfill its short-term obligations has reduced as evidenced by the horking copital rotio's sharp decline from 43.33:1 to 1.9:1. This con be warning sign of prospective cash flow problems. - The company depended more on debt financing in 2018, Which could increase the financial risk and have a negative influence on future profitability, as seen by the debt-to-equite ratios rising from 1:0,30 to 1:0,46. - As a result of the rotes and return folling from 9,96% to 6.49% the company's overall profitability also declined. Indicating that company, the Yield on share holder's interest likewise dropped from 21.94% to 12.98%