What are Quantitative factors?
Quantitative factors:
These are the factors relevant to our decision that are difficult to measure in terms of money.
In some decision making situations quantitative factors are more important. quantitative factor
analysis provide investors with a moiré comprehensive picture of a company, knowing these less
tangible characteristics of a company can pay off in big returns or help prevent big losses.
Following are the main quantitative factors of VIP:
In this part the financial numbers are put into a spreadsheet format. We must analyze the
financial statements of VIP Company to:
determine the financial soundness of the firm and
Measure historical cash generation capacity.
The analysis allows him to draw some conclusions about the relative risk and creditworthiness of
VIP as a potential borrower.
It also raises some additional questions about what can be
reasonably anticipated in the future.
Financial Statements
BALANCE SHEET
ASSETS
Cash
Marketable Securities
Accounts Receivable
Inventory
Other Current Assets
Prepaid Expenses
Current Assets
Net Fixed Assets
Other Non-current Assets
Account receivable:
The account receivable in the first year was 67,350 but in the second year it decreased to 61,872
and in the third it decreased more to 54,114. The effect of the decrease results in decrease net
sale.
Inventory:
The inventory in the first year was 74,720 but in the second year it decreased to 56,972 and in
the third it decreased more to 53,468. The effect of the decrease results in decrease net sale.
Fixed Assets:
The fixed assets in the first year were 44,762 but in the second year it decreased to 41,127 and in
the third it decreased more to 38,406. The cause of the decrease is due to increase in depreciation
expense.
Balance sheet
2010
2011
2012
39,615
26,720
10,429
230
35,542
20,468
8,072
2,116
15,060
18,998
8,388
3,447
7,120
84,114
5,433
68,631
5,255
51,148
33,247
19,794
53,041
16,452
12,732
29,184
11,232
12,970
24,202
Total Liabilities
Common Stock
Surplus & Reserves
Retained Earnings
Total Net Worth
137,155
33,000
24,000
11,151
65,151
97,815
30,000
24,400
22,491
76,491
75,350
30,000
24,000
32,580
86,580
Liabilities & Net Worth
202,306
174,306
161,930
LIABILITIES & EQUITY
Due Banks, Short-term
Accounts Payable
Accruals
Taxes Payable
Other Current Liabilities
Current Portion L T Debt
Current Liabilities
Long-term Debt
Other Liabilities, Long-term
Long-term Liabilities
Banks due, accounts payable and accruals are decrease in 2011 & 2012 as compare to
2010 but the tax rate is increasing this is due to increase in the cash flows inward the company
as we analyses the cash we realized that there is heavy flow of cash this increase the tax.
Total liabilities are decreasing the main reason behind this is the company purchases assets
and makes its on reserves company have to pay less to out payments
Retain earning is increasing the main factor behind this is the decreasing in the liabilities
company have to pay less and save more for its going concern.
Account Payable:
The account payable in the first year was 26,720 but in the second year it decreased to 20,468
and in the third it decreased more to 18,998. The cause of the decrease is that they are paying
their loans and payables on time which is good sign.
Long Term Loans:
The long term in the first year was 33,247 and in the second year it decreased to 16,452 and in
the third it decreased more to 11,232. . The cause of the decrease is that they are paying their
loans on time which is good sign for the company and it shows that they can easily get the
further loans in the future.
Capital Equity:
Capital equity in the first year was 65,151 and in the second year it increased to 76,491and in the
third it increased more to86, 580. Due to increase in capital equity, the retain earning will also
increase.
Capital Debt:
Capital debt in the first year was 53,041and in the second year it increased to29,184 and in the
third it increased more to24,202.Due to payment of major long term loan, capital debt will
decrease.
INCOME STATEMENT
Net Sales
Cost of Goods Sold
% of Sales
Selling, General, Admin. Exp.
% of Sales
Gross Margin
% of Sales
Depreciation
Interest Expense
Other Income/(Expenses), Net
Earnings Before Taxes
% of Sales
Income Taxes
Extraordinary Items
Net Income
After analyzing the income statement we get that in 2011 & 2012 the sales is decreasing but a
Question arise why the net profit is increasing in 2011 &2012?
The answer is here this is due to decrease in selling and admin expenses and also declining in
the interest rate this shows that company lend less amount of money these year so less cost of
finance is to pay.
Depreciation is increasing in 2011 & 2012 this means that company purchased new plant and
machinery this year this will increase its productivity and also generate good revenues.
Income tax is increasing due to increase in the income before tax the high income higher the tax.
Assets
Fixed Assets
Beginning Net Fixed Assets
Less: Depreciation
Subtotal
Ending Net Fixed Assets
2010
2011
2012
41,127
6,539
34,588
38,406
3,818
38,406
7,000
31,406
36,406
5,000
38,406
7,000
31,406
38,406
7,000
In last we discuss the assets as we analyses above we discuss that the depreciation is increasing
in 2011 & 2012 this is reflected in this statement the assets value is increasing also in 2010 &
2012 by review the ending value of the total assets. As we see that the opening of assets is
declining but at the end of each year the company purchases new assets.