BA Financial Management and Analysis 
Assignment: June 09
Submission date: to be advised.
Marks: 100 (30% of course assessment) 

Mirabel Limited

You have just joined the company after completing your BA. The company is in the paper industry.  It has a consistent growth record over several years. Its financial statements for 20X6, 20X7 and 20X8 are summarised overleaf. 

At the end of 20X8, the share was trading at £4.25 on the alternative investment market of the London Stock Exchange. 

All term finance facilities include a clause that allows early repayment.  Industry average ratios for the year 20X8 were as below:

Industry average ratios: 20X8	
			
ROCE		0.20	
GM		0.40	
OM		0.18	
Current Ratio	1.27	
Stock days	75	
Debtor days	35	
Creditor days	50	
Gearing		0.80	
P/E		16.00	

Required:

The Managing Director of the company has asked you to write a report to him covering the following:  
(a) the performance of  the company  in 20X8 compared to 
(i)  its performance in 20X7 and (ii) the industry as a whole.
(b) the cashflow of the company during 20X8. Assume the depreciation of 20X8 was the same as in 20X7 at £63,000.
(c) improvements possible on its operations and balance sheet toward improving overall profitability and market value.

Note:  (i) Marks will be deducted for poor presentation and inadequate referencing.
(ii) plagiarism-any work taken from anywhere without acknowledgement- will be 
heavily penalised as also collusion- similarity with other's' assignments.

Answer not to exceed 6 word processed pages including exhibits. 

MIRABEL LIMITED	( All figures in £'000)			
						
Profit and Loss Statements	20X6	20X7	20X8	
Turnover			701	837	975	
Cost of Sales		394	478	590	
Gross Profit 		307	359	385	
Distribution expenses      	106	111	125	
Administrative expenses	104	113	122	
Operating Profit		97	135	138	
Interest charges		33	30	62	
Profit before tax		64	105	76	
Taxation			18	27	20	
Profit after tax		46	78	56	
Proposed Dividend		15	20	33	
Transferred to P&L Reserves	31	58	23	
						
Balance sheet as at 31st December 			
Assets Employed					
Net Fixed Assets		653	623	889	
Current Assets					
Stocks			41	43	105	
Debtors			123	116	145	
Prepaid Expenses		10	12	16	
Cash			0	25	65	
		Sub-total	174	196	331	
Current liabilities					
Bank Overdraft		86	0	0	
Trade creditors		43	45	45	
Accrued expenses		14	18	22	
Taxation			18	27	20	
Dividends			15	20	33	
		Sub-total	176	110	120	
Net current assets		-2	86	211	
Total assets - current liabilities 	651	709	1,100	
Creditors> 1 year					
10% Secured Loan Stock	300	300	300	
 Short term Unsecured loan			368	
Net Assets		351	409	432	
						
Financed by 					
Share capital (par value £1)	200	200	200	
Profit and Loss Account	151	209	232	
Shareholders' Funds	351	409	432	
						
Notes:						
Share price in £ at end year	3.49	3.49	4.25	
Fixed assets are stated at historic costs net of depreciation	
Raw material purchases  	190	253	325	
Credit purchases 		187	255	318