Analyst Name: Akarsh Gowda
Date:
Firm Name: Banna Leisure Limited
Location: Sir Rogers Caravan Park, Banna, Ardfert, Tralee Co Kerry
Trade Description: Recreational activities, holiday resorts
1. Directors/Owners (Shareholding Pattern): The firm has three shareholders shown in the diagram.
The company status is normal. The current directors Ben Breen and John Breen are directors of
another company Banna mobile homes and cabins Limited. The remuneration of these three
directors for the financial year 2015 is 31.6,23.6, and 35.6 (Euro ‘000) respectively as shown in the
below diagram.
Directors
Margaret Breen Ben Breen John Breen
(34%) (33%) (33%)
2. Balance sheet Analysis:
2015 2014 2013 2012
Net Assets 1136.39 958.26 815.41 695.97
Current Ratio 0.15 0.02 0.17 0.08
Debt to Asset Ratio 0.39 0.47 0.54 0.60
Debt Equity Ratio 0.34 0.56 0.74 1.10
Proprietary Ratio 0.61 0.53 0.46 0.40
3. Balance Sheet Summary:
The overview of the balance sheet clearly points out the share holding pattern is restricted among
the three shareholders that is Margret Breen, Ben Breen and John Breen holding total equity of
34%, 33% and 33% respectively. The Fixed assets of the company has been increased from 2012-
2015 as the core business of the company is provide leisure time in their Resort, hence a
considerable amount has been invested on fixed assets which is evident from the balance sheet. In
the normal course of the business the company should sufficient amount of current assets to pay
meet its short-term requirements and to pay for it creditors, there has been a huge fluctuation in
the current assets of the company but in the year 2014 the current assets has decreased drastically
to 7,729. This is due to the huge investments made on fixed assets. The total assets of the firm are
showing an increasing trend from 2012-2015. In the normal course of the business the firm must
meet its day daily requirements to run the business. If there is any shortage of funds the firm has
an option to borrow it from the bank as short-term loans, bank overdraft or from the suppliers
(creditors). The firm has taken short term loans, bank overdraft and trade creditors to meet its
short-term requirements. The company has also borrowed long term loans. The total liability of
the firm is showing a decreasing trend which means the company can generate revenue from its
operations satisfactorily throughout the following years. It shows that the business is well
established and would be suitable for investments and it might attract investors in the following
years.
Interpretation:
1. Net assets: It is defined as total assets minus total liabilities. The firm’s net assets show a positive
increasing trend from 2010-2015. The highest net asset is recorded in 2016. This indicates that
firm is in a good position and expanded the business over a time e.g. adding new equipment’s,
build spirit plant etc.
2. Current Ratio: It is defined as the ratio of current asset to current liabilities. It measures liquidity
(short-term obligation) of the firm. It indicates whether the business can pay debts due within
one year out of its current assets. The industry standard of the ratio is 2:1. The current ratio of
the firm is poor and fluctuating from 2010-2016. This indicates the firm is not able to meet its
short-term obligations. Therefore, it is advisable to raise finance or extend the time it takes to pay
creditors.
3. Debt Equity Ratio: It is defined as the ratio of total liabilities to total equity. It measures the
percentage of financing that comes from creditors and investors. A high debt equity ratio indicates
more creditor financing rather than investors financing. The firm’s ratio has been constantly
increasing from 2010 and it is more than one this indicates that portion of the asset provided by
creditors is greater than the portion of assets provided by the shareholders.
4. Proprietary ratio: It is defined as ratio of stockholder’s equity to total assets. It measures the
contribution of the stockholders in total capital of the company, higher the ratio higher is the
stockholder’s contribution. The firm’s proprietary ratio is very less since 2010 which is evident
that owner’s contribution to the firm’s capital is significantly low.
5. Notes to account:
1. By convention the analysis represents a positive change on a negative starting value as positive
percentage growth.
2. Where appropriate (e.g. for profit & Loss account items) percentage growth calculations adjust
the starting value to be on the same accounting period basis as the final value.
3. Compound annual growth rates are undefined when the starting value and the final value are of
different signs.
4. By convention this analysis this analysis doesn’t presents compound annual growth rates where
the starting value is negative.
