Carbacid

Carbacid Analysis
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FOREWORD
ABOUT THE AUTHOR

My name is Fundi Mwaniki. I am an Analyst by name, design and passion. Why by name? Fundi means a
craftsman, carpenter and my favourite, a Problem Solver, in my mother tongue. Why by design? By design
because I have always had a knack for numbers since my childhood and it was no surprise, I chose to
undertake Bachelor of Business Science in Finance and Certified Public Accountant courses at Strathmore
University. Why by passion? The last four years, through my work experiences, I have come to appreciate
that numbers only come to life when you combine them with effective communication either through written
or verbal communication. My over-arching goal is to use presentation and storytelling as effective
communication tools to help people extract value from numbers.
ABOUT THE REPORT

About 4 years ago, an idea came to mind: Is it possible to use the power of data visualization to present
numbers in annual reports published by companies listed on the Nairobi Securities Exchange (NSE). Not
only to present but also, in a manner that would help others achieve a better understanding of their
performance. That’s what this report is about, it aims at helping you, the reader gain a better understanding
of how a listed company has performed in the past. How is it performing currently? With this information on
historical trends, is it possible to ask WHAT IF this happens, how will performance be in the next financial
period? Because that, in my view, is the value-add of an analyst, the ability to break down the past, identify
patterns and try to peer into the future with a set of assumptions of course. I hope you enjoy and share
feedback so that we both can learn from each other.
DISCLAIMER
The views expressed in this publication are those of the writer where particulars are not warranted. This
publication, which is in compliance with Section 2 of the Capital Markets Authority Act Cap 485A, is meant
for general information only and is not a warranty, representation, advice or solicitation of any nature.
Readers are advised in all circumstances to seek the advice of a registered investment advisor.
DEFINITIONS
1. Revenue – Gross Income from operations of a business activity. For example, for a beverage company/business, it is the
product of unit price and the quantity sold
2. Cost of Sales/Cost of Finished Goods/Cost of Goods Sold – Often called COGS (Cost of Goods Sold), is the total
cost of a finished good that was incurred to transform the raw material to the finished form. For businesses that render
services such as Banks, the cost is the interest expense on customer deposits.
3. Gross Profit – The revenue less Cost of Goods Sold yields Gross Profit. It is the first indicator of Profitability and simply
answers the question, do we have something left over after making a product and selling it to the customer. Are we better
of producing it because it yields a Gross Profit or do we stop Production since we have a Gross Loss, since the COGS is
higher than Revenue
4. EBITDA – Earnings Before Interest, Tax, Depreciation and Amortisation tells us if a company is profitable before you
charge the following items: 1) Non-cash expenses - Depreciation & Amortisation 2) Interest expense payable to
debtholders and 3) Tax – In this case, Corporation Tax at 30% (Kenyan rate). Why is it important? It strips out the effects
of a company’s capital structure and is often considered a proxy for cashflow
5. Net Profit – Also called bottom line, is the value generated by a company after paying debtholders’ interest, equity
holders' dividends and the revenue authority, tax.
6. VA – Vertical Analysis or Margin Analysis is analysis of a line item expressed as a ratio of itself to Revenue. For example,
Gross Profit Margin is the ratio of Gross Profit to Revenue. It is interpreted as for every shilling sold how many cents are
left over as Gross Profit
7. YoY – Year-on-Year Analysis is analysis of Current Year values vs Prior year to establish whether there was growth or
decline

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