Financial accounting presentation on Artistic Denim

Presented By: Sidra Afzal Qurratulain Maira Ahmed

DUPONT ANALYSIS ON ARTISTIC DENIM

DuPont Analysis also known as the DuPont identity, DuPont equation, DuPont Model or the DuPont method.The Du Pont identity breaks down Return on Equity (that is, the returns that investors receive from the firm) into three distinct elements.

a)Profitability (Masure by Profit Margine)

b)Operating Efficiency (Measured by Asset Turnover)

c)Financial Leverage (Measured by Equity Multiplier)

Return on EquityReturn on Equity = Net Profit Margin X Asset Turnover X Equity Multiplier

Return on Equity = Net Profit * Sales * Asset Sales Assets Shareholder’s Equity

Return on Equity = Net Profit (or Profit after Tax) Shareholder’s Equity

Net profit margin for the FY 2015:N.P Margin= net profit/ sales

= 743546/6998644 = 10.6%

Net profit margin for the FY 2014:N.P Margin= net profit/ sales

=852497/6467591 =13.18%

Asset turnover for the FY 2015:Asset turnover= sales/assets

=6998644/7586987 =92.2

Asset turnover for the FY 2014:Asset turnover= sales/assets

= 6467591/7623904 = 84.83

Equity multiplier for the FY 2015:Equity multiplier = asset/ equity

= 139 %

Equity multiplier for the FY 2014:Equity multiplier = asset/ equity

=142 %

Return on equity for the FY 2015Return on equity=net profit margin* asset turnover* equity multiplier

= 0.106* 0.922 *1.39 =13.6%

Return on equity fot the FY 2014Return o equity=net profit margin* asset turnover * equity multiplier

= 0.1318 * 0.8483 * 1.43 = 15.87%

Altman Z-score Analysis

The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The Z-Score Test lets you use statistical techniques to predict the likelihood of bankruptcy within the next two years.Dr. Altman's test was developed using 66 companies, The test achieved an accuracy rate of 95%.The financial ratios come directly from a company's financial statements.

Z-score Bankruptcy model:Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + .999T5

Where

T1 = (Current Assets − Current Liabilities) / Total AssetsT2 = Retained Earnings / Total AssetsT3 = Earnings Before Interest and Taxes / Total AssetsT4 = Equity / Total LiabilitiesT5 = Sales/ Total Assets

Altman Guidelines

Altman Z Score Analysis On Artistic Denim

T1 = (CURRENT ASSETS − CURRENT LIABILITIES) / TOTAL ASSETs2015: T1 = (2883781-1887718) / 7586987 =13%

2014:T1 = (3260042-3695349) / 7623904 = 5%

T2 = RETAINED EARNINGS / TOTAL ASSETS2015:T2 =4617000 / 7586987= 60.8%

2014:T2 = 3963000/ 7623904 =51.9 %

T3 = EARNINGS BEFORE INTEREST AND TAXES / TOTAL ASSETS

2015:T3 =867627/ 7586987=11.4%2014:T3 =12.2%

T4 = EQUITY / TOTAL LIABILITIES2015:T3 =5456653/ 2130334= 2.562014:T4 =4802782/ 2821122 = 1.702

T5 = SALES/ TOTAL ASSETS2015:T5 =6998644/7586987

=92.22014:T5 = 6467591/7623904

= 84.83

2015:

Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + .999T5 = 1.2(0.13) + 1.4(0.608) + 3.3(0.114) + 0.6(2.56) + 0.999(0.922) = 0.156 + 0.8512 + 0.03762 + 1.536 + 0.92 = 3.5

2014Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + .999T5

=1.3(0.05) + 1.4(0.519) + 3.3(0.122) + 0.6(1.702) + 0.999(0.84) = 0.065 + 0.7266 + 0.4026 + 1.0212 + 0.8392 =3.05