Scribd
Upload
11 views9 pages

Financial Analysis and Earnings Summary

The document outlines the financial performance of a company, detailing profit before tax, adjustments, and maintainable earnings, resulting in an adjusted profit before tax of 2,130,000.00 and maintainable earnings of 1,554,900.00. It also discusses the company's market value, share price, and factors affecting its price-to-earnings ratio, including its operations, profitability, and market presence. Additionally, it includes projected cash flows and net working capital calculations for future years.

Uploaded by

danicaleroux
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
11 views9 pages

Financial Analysis and Earnings Summary

The document outlines the financial performance of a company, detailing profit before tax, adjustments, and maintainable earnings, resulting in an adjusted profit before tax of 2,130,000.00 and maintainable earnings of 1,554,900.00. It also discusses the company's market value, share price, and factors affecting its price-to-earnings ratio, including its operations, profitability, and market presence. Additionally, it includes projected cash flows and net working capital calculations for future years.

Uploaded by

danicaleroux
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

2,022.

00

Note Profit before tax 2,480,000.00


Adjustments

1 Lettuce contract (700,000.00)

2 Lawsuit (50,000.00)

3 Insurance claim (100,000.00)

4 Staff annual competition -

5 Tomatoe contract 1,000,000.00

6 Electricity charge (500,000.00)

Adjusted Profit before Tax 2,130,000.00


Tax @ 27% (575,100.00)
Maintable earnings 1,554,900.00

Price Earnings
Mamas Kota PE 12.00

Operaqting since 1996 (1.00)

Much higher earnings (1.00)

Listed company (1.00)

African franchises (1.00)

Businesswoman of the year 1.00

Farm 1.00

Adjusted PE 12.00

100% Market Value 18,658,800.00


30% Value 5,597,640.00
Conclusion
0.5

Contract will not will not renewed, thus not a recurring income 1

Will not be recurring, once off income 1

Once off event as wheather services predict that such a flood


will not occur in the foreseeable future 1

No adjustement as it will be a recurring expense 1

Contract for the next 5 years, recurring income 1

Electricity wil remain for the foreseeable future 1

1
0.5

Share price/Earnings Per Share 1


Has been in operation much longer than Queens, thus reduce PE
as they have much more experinace 1

Mama's has after tax earnings of R12 864 213, which is much
higher than Queens after tax earnings of R2 170 000. Thus
reduce PE as they are more profitable and have more resources 1
Mamas Kota is listed company which means that the tradability
and marketability of their shares is better than Kasi Queen
Skhambane 1

Mamas Kota has franchise across the African continent which


means they have a bigger clientele and a diverse customer base 1
Lerato won businesswoman of the year which has attracted
many investors to Kasi Queen Skhambane. Thus increase PE 1

Kasi Queen Skhambane has a farm from which they obtain


premium fresh ingredients for their products, thus ensuring they
have the best raw material at all times 1

0.5

Maintainable earnings x Adjusted PE 0.5


0.5
0.5

Marks available 17
Max marks 15
Communication 1

Total marks for question 16


0.5 for value and 0.5 for reason

P
P

Max 4

P
P
P
2022 2023 2024 2025

Maintainable earnings 1,533,600 1,610,280 1,674,691 1,766,799


Add back
Interest expense 240,000 240,000 240,000

Depreciation 60,000 63,600 67,416

Tax in interest expense (64,800) (64,800) (64,800)

NWC movements (63,920) (66,477) (69,136)

Capital expenditure (750,000) (795,000) (842,700)

Total 1,031,560 1,052,014 1,097,579


Terminal value 22,160,650
Cashflows 1,031,560 1,052,014 23,258,229

NPV @ 11.25% 20,035,347.00


MV of debentures (2,022,702.38)
100% 18,012,644.62
30% 5,403,793.39

Conclusion

Net Working Capital cal


Inventory 1,530,000.00
Trade and other payables 1,830,000.00
Current liabilities (1,762,000.00)

Balance 1,598,000.00 1,661,920.00 1,728,396.80 1,797,532.67


Movement (63,920.00) (66,476.80) (69,135.87)

Terminal value
D1 1,213,922.75
g 6%
Ke 11.25%

D1/Ke-g 22,160,649.61

MV of Debentures
N= 7.00
I/Y= 11.25
PMT= (240,000.00)
FV= (1,900,000.00)

Comp PV 2,022,702.38
1.5 P

Will be valued separately 1 P (0.5 for amount + 0.5 for reason)

FCFF requires us to add


back non-cash transactions 1 P (0.5 for amount + 0.5 for reason)

1 P

0.5 P

0.5 P

1 P
1 P

0.5 P

0.5 P

1.5 P 0.5 P for growing with 4%


1

0.5
0.5
0.5

0.5 P

0.5
0.5
0.5
0.5
Total marks for question 16

You might also like