FNF Final Exam

Finance for Non-finance Level-1 Batch 5
Final Exam
Name - Thandar Swe Zin
Facebook Account Name -Thandar Swe Zin
Batch No -5
Student ID -FNF-5-0109
Email Address - thandarswezin820@gmail.com
Phone Number - 09767662293

Section A;
1. E
2. B
3. A
4. C
5. A
6. A, B
7. F
8. D
9. D
10. D
1. In order to reduce the cost of goods sold, supplier analysis is extremely important for all kinds of
organizations. First, companies need to spend some expenses on research and development in
choosing suppliers. Investigation is important and we need to find out who are famous and
trustworthy suppliers in our chosen business and make a list of those. Then we need buy goods
from them. The best supplier needs to be on time in delivery and have order accuracy with
suitable prices and less damaged goods. After comparing prices and profits, we will find out who
is the best supplier for us. Having a long lasting relationship with our supplier is also needed. We
can also ask our friends or relatives for help. If they know someone in their community who can
help us. Then we don’t need to pay too much time for building trust since we have mutual
friends and that can help us to have longer period to settle their debt as understanding. Relying
on only one supplier is impossible. If our only supplier doesn’t have enough products to sell, we
can lose our loyal customers and it can decrease our customer satisfaction. Therefore, supplier
analysis is important and we need to take all these factors into consideration.
2. Machine cost-500000, Transportation cost-20000, staff- 10000, installation charge- 10000, water
bottle – 100000,
Useful life- 8 years, estimated scrap value- 20000
Total cost of asset-640000
Depreciation- Cost of asset- estimated scrap value
Useful life
Depreciation= 640000-20000/ 8= 77500 for 1 year
3. ABC Company
Year 1 Year2 Year3

Net income 5000 5000 4000
Revenue 8000 7000 6000
Profit Margin 0.62 0.71 0.67
Revenue 8000 7000 6000
Ave. Asset 10000 10000 8000
Asset Turnover 0.8 0.7 0.75
Ave. Asset 10000 10000 8000
Ave. Equity 6000 6000 4000
Financial Leverage 1.67 1.67 2
ROE 83.3% 83.3% 100%
4. In 2018, current ratio- 1.06, quick ratio- 0.92, Cash ratio -0.6,
This mining company has a good current ratio, but they need to try more to increase their cost of
current asset to reduce certain amount of worries. Current ratio 1.06 means their cost of asset is
one time greater than the cost of liability and they can pay back all their debts by selling their assets
if needed. But it is impossible to sell all of their inventories and get all of the receivables at once.
Standard current ratio is 1.59 so they need to increase the cost of asset to be better.
Quick ratio 0.92 means fairly good quick ration. It means they can’t pay back all of their money for
liabilities if they don’t take the cost of inventory into account. So this company needs to reduce
some expenses or avoid taking loans from banks which makes the cost of liabilities greater. Standard
of this ratio is around 1.06 so they need to adjust with this standard ratio to have better financial
health.
Cash ratio 0.6 means good ratio since standard is 0.41 in 2018. If we compare all these 3 ratios, we
will find out which kinds of things we need to reduce to maintain our company’s financial health.
Reference-https://www.google.com/search?client=firefox-b-
d&q=Mining+industry+industrial+standard+2018
Section C
Profit and Loss Statement of ABC Company
Year 1 Year 2 Year3
Total sales 10000 15000 15000

Sale Returns 0 100 0
Net Sales 10000 14900 15000
COGS 5000 7000 7000

Gross Profit 5000 7900 8000
GP Margin 50% 53% 53.3%
Operating 3000* 6000* 5000*
Expenses
Net Profit 2000 1900 3000*

NP Margin 20% 9.39% 13.3%
Interest 0 0 500
Tax 0 500 500
Depreciation 0 0 0
Net income 2000 1400 2000
In ABC Company, we see that year 1 has the least amount of sales and the rest of 2 years have the same
amount 15000. For Gross profit, comparing year 1 and year 2, Year 3 has the greatest Gross profit since
in year 2, this company had to return 100of their total sales. For operating expenses, year 1 had the
least amount. But in year2, this company couldn’t manage very well in operating expenses so it reached
6000. Even though in year 1 they don’t need to pay any taxes, the amount of taxes become increased in
later years. It seems to me that this company doesn’t pay too much attention into accounting since for
their fixed assets such as building, land and vehicles, they have to calculate the cost of deviation from
the beginning year. But they don’t describe any numbers for depreciation. So it is impossible for them to
get the exact amount of their profits. Statement of profit and loss is really important for shareholders
and for themselves. For shareholders, by looking at this statement, they consider whether they should
invest in this company or not. And it is even more important and balance sheet. And it is important for
company as it is a financial statement that sums up revenues, costs and expensed during specific period
of time. Finally, we can see that this company got the highest net income in year 1 and year3.

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Finance for Non-finance Level-1 Batch 5

Name - Thandar Swe Zin

Facebook Account Name -Thandar Swe Zin

Email Address - thandarswezin820@gmail.com

Phone Number - 09767662293

Useful life- 8 years, estimated scrap value- 20000

Total cost of asset-640000

Depreciation- Cost of asset- estimated scrap value

Depreciation= 640000-20000/ 8= 77500 for 1 year

Year 1 Year2 Year3

Profit and Loss Statement of ABC Company

Year 1 Year 2 Year3

Total sales 10000 15000 15000

COGS 5000 7000 7000

Net Profit 2000 1900 3000*

Net income 2000 1400 2000

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