mfrd assign2 mar 2010 - financial analysis

7/28/2019 MFRD Assign2 Mar 2010 - Financial Analysis

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3. KDC

KDCs vision is to become a leading confectionery and food manufacturer. Inachieve its vision, the Company has been aggressively expanding its marketreach through mergers and acquisition. For instance, KDC has signed anagreement to buy a 51.2% stake or 2.6mn shares in Vinabico Confectionery inDecember 2007 of which 13.3% or 1.2mn shares was acquired in January 2008.It has planned to merge with its sister company, NKD, in the second half of 2008to further strengthen its foothold. Management also plans to merge with Kido IceCream, which is 40% owned by KDC and currently dominates over 60% of thedomestic ice cream market, although a concrete time frame for this merger hasyet to be confirmed. Besides that, it has actively diversified its product offeringsby acquiring a 35.4%stake in Tribeco to penetrate the soy drink market followedby an acquisition of 30% stake in Nutifood, a local nutrition food manufacturer.KDC has also recently formed a strategic alliance with Cadbury Schweppes to betheir sole distributor of chewing gum and candies in Vietnam for a two yearperiod prior to further production development.

As required by law, Kinh Do prepares a set of annual financial statements. Theexcerpt from the balance sheet statement and the profit and loss statement fromthe financial year 2007 and 2008 are shown below:


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Interest expense 31,710 52,364


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Source:

http://kinhdo.vn/Investors/1-cong-ty-co-phan-kinh-do.html

Role

You are a Financial Controller for Kinh Do Corporation. You are tasked by theboard of directors to do a detailed study of the companys budgeting, costing andpricing, investment decision and as well as financial performance compared withmajor competitor and the industry as a whole. Your final report should addressthe following issues as well:

Tasks

Explain the purpose of the main financial statements (such as profit and lossstatement, balance sheet and cash flow statement) of Kinh Do Corporation (4a)

Describe the differences between the formats of financial statements (profitand loss statement and balance sheet) for different types of business such assole proprietor, partnership and limited company(4 b)

Describe the information needs of different decision makers (internal andexternal users)

(2 c)

Describe the impact of finance on the financial statements(2 d)

Analyse financial statements using appropriate ratios and comparisons, bothinternal and external

(4 c)Hints:

.. Calculate ratios for the year ended (showing your workings) for KinhDo Corporation;.. Analyse the financial performance and position of Kinh Do for the yearended and compared to the previous year;


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.. Compare Kinh Do results against its competitor and against theindustry average.


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mfrd assign2 mar 2010 - financial analysis

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