This document presents financial analyses of Artistic Denim for fiscal years 2015 and 2014. It calculates key financial ratios using the DuPont analysis model and Altman Z-score model. For DuPont, it finds the company's 2015 return on equity was 13.6% compared to 15.87% in 2014. For Altman Z-score, it determines the 2015 score was 3.5 indicating the company is safe from bankruptcy, while 2014 score was 3.05. Overall, the document analyzes the company's profitability, efficiency, leverage, and bankruptcy risk for the two years.

1. Financial accounting
presentation on Artistic Denim
Presented By: Sidra Afzal
Qurratulain
Maira Ahmed

5. DuPontAnalysisalsoknownastheDuPontidentity,DuPontequation,DuPontModelor
theDuPontmethod.
TheDuPontidentitybreaksdownReturnonEquity(thatis,thereturnsthatinvestorsreceive
fromthefirm)intothreedistinctelements.
a) Profitability(MasurebyProfitMargine)
b) OperatingEfficiency(MeasuredbyAssetTurnover)
c) Financial Leverage(MeasuredbyEquityMultiplier)

6. Return 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

7. 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%

8. 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

9. Equity multiplier for the FY 2015:
Equity multiplier = asset/ equity
= 139 %
Equity multiplier for the FY 2014:
Equity multiplier = asset/ equity
=142 %

10. Return on equity for the FY 2015
Return on equity=net profit margin* asset turnover* equity
multiplier
= 0.106* 0.922 *1.39
=13.6%
Return on equity fot the FY 2014
Return o equity=net profit margin* asset turnover * equity
multiplier
= 0.1318 * 0.8483 * 1.43
= 15.87%

13. 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.


14. Z-score Bankruptcy model:
Z = 1.2T1 + 1.4T2 + 3.3T3 + 0.6T4 + .999T5
Where
T1 = (Current Assets − Current Liabilities) /
Total Assets
T2 = Retained Earnings / Total Assets
T3 = Earnings Before Interest and Taxes /
Total Assets
T4 = Equity / Total Liabilities
T5 = Sales/ Total Assets

15. Altman Guidelines

16. Altman Z
Score
Analysis On
Artistic
Denim

17. s
2015:
T1 = (2883781-1887718) / 7586987
=13%
2014:
T1 = (3260042-3695349) / 7623904
= 5%
2015:
T2 =4617000 / 7586987
= 60.8%
2014:
T2 = 3963000/ 7623904
=51.9 %

18. 2015:
T3 =867627/ 7586987
=11.4%
2014:
T3 =12.2%
2015:
T3 =5456653/ 2130334
= 2.56
2014:
T4 =4802782/ 2821122
= 1.702

19. 2015:
T5 =6998644/7586987
=92.2
2014:
T5 = 6467591/7623904
= 84.83

20. 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
2014
Z = 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