School of Management and Logistics Sciences(International Accounting)

Financial Statement Analysis “FSA”“SHEBA” Company Analysis

Instructor Name : Dr. Malek SharairiStudent Names : Reem Jayyousi, Qays Hijazeen

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Day/Date : Tuesday 17th jan 2017

List of content

Abstract Company’s Overview Competitor’s Company overview Analyzing the industry using :

Porter's Five Forces SWOT analysis Boston Consulting Group (BCG) Analysis

Analyzing Financial statements using : liquidity ratios Profitability ratios long term debt paying ability ratios investor ratios common size analysis

Conclusions: overview of performance Implications of investment Limitations of the analysis

Appendix Reference

Abstract

The objective of this report is to analyze the financial statements and find the financial ratios to determine

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whether is good or bad to invest in this company by analyzing the company’s financial statements and calculating the ratios, the analysis are based on prior-year comparison and comparing the ratio with the competitor’s . This report included financial statements for four years and the ratios for the company and its competitor in order to determine the company’s performance compared to the industry during (2012 – 2015).

Sheba’s Company Overview

Sheba Metal Casting Company was established in 1992 as a limited liability company before it has grown and become a public shareholding company listed in Amman stock exchange on the 10th march 2013, after that the company suffered losses of 120.342k in 2015 .Sheba Company is located in Amman, Jordan (Muqabalen). It has established itself as a reliable foundry serving the construction

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and the mining of industry of Jordan, Saudi Arabia, Iraq and Lebanon. Sheba Metal offers full heat treatment services which allow for softening, hardening, improved machine ability and increased wear resistance. As well as providing finishing and painting facilities and metal analysis services. Sheba Metal Casting produces castings in the following metals:

Cast iron Carbon steel Low Alloys Steel High Alloys Steel Stainless Steel

In addition to Crushers, earth equipment and different parts. Sheba Metal Casting Company’s Board of Directors:

Chairman : Eng.Fhakhri Hazeneh Vice Chairman : Eng.Michael Al masanat General Manager : Zaid Hazeneh

Sheba metal casting clients: Jordan phosphate mines Jo petrol Al harbi trading & contracting Arab mining company Abed Alaziz Almhaileb (21% of sales)

Sheba metal casting suppliers: Jordan steel – 30% Alestirad co – 60%

Sheba metal casting competitors: The Jordan Pipes Manufacturing Al Quds Ready Mix

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Manaseer Steel Comapany Overview The Company produces steel from using Jordan’s resources of scrap metal to produce steel billets and reinforced steel. Steel is a versatile product that plays a major part in everyday life; it is used in applications ranging from food cans to automobiles and office buildings. The company is distinguished from other companies in its concern for its clients, seeking to meet their needs regardless of how diverse they are, with high speed and quality in addition to giving high concern to the environment by using recycling to minimize pollution problems. Our laboratories are equipped with the latest equipment and machinery to guarantee the compliance of the products with the Jordanian and international standards and specifications.

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Analyzing the industry with the help of Porter's Five Forces:

Intensity of competitive rivalry Competitive rivalry is extremely high; if a company decides to raise its prices, they will be quickly undercut. Intense Competition puts strong downward pressure on prices. Referring to a statement made by the chairman of the board of directors, which clarifies that the company couldn't raise its prices because of the high competition with the foreign companies and the neighboring countries. Threat of potential new entrants

The threat of new entry is quite low; due to several reasons such as:1. Too many existing competitors in the market.2. Strong downward pressure on the prices.3. It's costly to enter this industry.4. Entering this industry requires the necessary

know-how "technology" and experience.

The Bargaining Power of Suppliers The power of suppliers is relatively strong, because the company has only two main suppliers, who make up 90% of the company's purchases. The company's suppliers have the power to drive up the prices of its inputs.

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The Bargaining Power of Buyers- The power of the buyers is quite strong. Although,

the company has customers in both the domestic and foreign markets, the degree of dependence on customers is relatively high.

The company's main clients make up 10% and above of the total sales. Also, Abd Al-Aziz Company which is considered one of the most substantial clients of the company make up 21% of the company's total sales. On the other hand, provided with the large number of existing competitors in the market, the prices would be sticky and fairly presented which reduce the bargaining power. Threat of Substitution

There is some threat of substitution. The Company provides mining service which is also offered by Jordan Phosphate Mines. Also, our company produces castings in the following metals:

i. Cast ironii. Carbon steeliii. Stainless steel

Same as Abdul Raof Al-Ejel Company which deals with casting and tempers all kinds of metal.

Finally, we conclude that the industry is not in a very attractive position due to the external influences of the five forces.

SWOT Analysis:7 | P a g e

Strengths:a. In 2008 the company developed its “Smelting

furnaces” with an American technology, to keep pace with the rapid development in the Metal Casting Industry. After that the company was able to produce “2000 kg” castes, this leads to massive decrease in power consumption.

b. This action leads to decrease in COGS, Operating expenses, DM and DL.

c. In 2014 the company added new Smelting furnaces

d. The company has more than 600 molding shapes

Weaknesses:a. During the financial year the company didn’t do

any training courses for the employees b. The company doesn’t have any Patent c. The company does not apply international

quality standards Threats:

a. Natural disasters.b. Political Situation in the region.

BOSTON CONSULTING GROUP (BCG) Analysis: The Company doesn’t have high market share compared to the industry, and with no sustained growth. This area represents poor dog because the market itself

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won't grow more, same products are produced by other companies, and sticky prices due to high competition.

Competitive Strategy:Because of the high competition in the market, the company is applying cost leadership strategy, in which the firm sets out to become the low cost producer in its industry.

Liquidity Analysis2012201320142015Liquidity

230.57377.76216.50159.21Days' Sales in Receivables1.580.971.692.29Accounts Receivable

Turnover230.57377.76216.50159.21A/R Turnover in Days

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154.1085.78291.92181.91Days' Sales in Inventory2.374.261.252.01Inventory Turnover

154.1085.78291.92181.91Inventory Turnover in Days

384.67463.54508.42341.11Operating Cycle530,677380,101439,599314,509Working Capital

5.044.093.302.63Current Ratio

3.172.851.631.23Acid Test0.120.230.230.21Cash Ratio1.210.831.041.47Sales to Working Capital

SHEBA Metal Casting Co.

Manaseer Steel Co.

2012201320142015Liquidity

0.00242.17261.40Days' Sales in Receivables3.011.25Accounts Receivable

Turnover121.09290.92A/R Turnover in Days

52.36102.3670.75209.59Days' Sales in Inventory

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13.944.064.492.40Inventory Turnover26.1889.8981.36151.95Inventory Turnover in Days

202.45442.88Operating Cycle(1)01610Working Capital

0.951.021.641.26Current Ratio

0.230.391.280.69Acid Test0.230.390.090.09Cash Ratio

(170.66)(239.83)5.432.53Sales to Working Capital

o In Terms of collecting receivables, in 2013 days' sales in receivables and accounts receivable turnover in days ratios were higher than 2012 , and start decreasing in comparison with prior years which indicates that the company is taking a shorter period of time to collect the A/R . Accounts receivable turnover ratio in 2013 was lower than 2012 but start increasing in 2014 and 2015. SHEBA co. has managed to decrease the amount of uncollectables, with lower inventory and increase sales in the latest years. Compared to Manaseer Steel company, SHEBA Co. has lower days' sales in receivables than Manaseer Steel which means that SHEBA Co. collects A/R faster. Average collection period is almost double times average collection for the competitor company.

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o A gab is obviously noticed in terms of inventory, in 2013 days' sales in inventory and inventory turnover in days ratios were at their least in comparison to the other years, in 2014 it took the company more than double the period in 2013 to sell off the inventory in the balance sheet. Also 2013 had the highest inventory turnover in times throughout the years. The company's operating cycle has decreased in 2015 , the company needs in average over the four years 424 days to buy products , store them as inventory and sell them on credit to get cash in return, which is relatively higher than Manaseer Steel which only needs 323 days.

o The Company's working capital had a fluctuating trend over the past four years, and in 2015 working capital has decreased. But in general despite the fact that too high working capital indicates high liquidity, too high working capital is not efficient and costly.

o The current ratio and the quick ratio are decreasing over the four years, and since the inventory requires long time to be realized, asset-test ratio is better than current ratio to measure the short-term liquidity.

o All in all, since the Operating cycle is relatively long then the Working Capital, Current ratio, Quick ratio, and Cash ratio should be relatively high, so a cash ratio which is below one may concern us because it may indicate that the company is having financial difficulty. Also , it's too risky compared to the industry , Manaseer Steels Cash ratio is higher than our company in 2014 - 2015.

o Recently, the working capital turnover is higher than the prior years which indicates efficiency but risky because the working capital in 2015 was lower than the prior years.

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Profitability Analysis

SHEBA Metal Casting Co.

2012201320142015Profitability

1.17%#N/A2.20%#N/ANet Profit Margin0.550.320.400.45Total Asset Turnover

0.64%#N/A0.88%Return on Asset

1.21%#N/A3.42%#N/AOperating Income Margin0.550.320.400.45Operating Asset Turnover

0.66%#N/A1.37%Return on Operating Assets

1.270.650.890.90Sales to Fixed Assets

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0.72%#N/A1.64%Return on Investments0.72%#N/A1.06%#N/AReturn on Total Equity

13.84%#N/A-4.55%#N/AReturn on Common Equity23.05%#N/A28.69%2.96%Gross Profit Margin

Manaseer Steel Co.

2012201320142015Profitability

1.82%1.04%#N/A#N/ANet Profit Margin2.500.760.740.54Total Asset Turnover

4.55%0.80%#N/A#N/AReturn on Asset

1.79%1.04%#N/A#N/AOperating Income Margin0.731.432.469.33Operating Asset Turnover

2.56%16.69%#N/A#N/AReturn on Operating

Assets

#N/A#N/A#N/A#N/ASales to Fixed Assets1.16%6.26%#N/A#N/AReturn on Investments 1.27%6.54%#N/A#N/AReturn on Total Equity

14.24%60.36%#N/A#N/AReturn on Common Equity 3.36%4.87%#N/A#N/AGross Profit Margin

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Net Profit Margin (NPM) increased throw 2012 and 2014 this indicates that the company increased its profits from every dollar in sales .we can’t comment on years(2013+2015) when our company suffered losses because it meaningless .

Total Asset Turnover (TAT) was fluctuating over the years in 2012 it was the highest then it decreased in 2013 after in 2014 and 2015 that the company managed to efficiently use its total assets to generate sales . comparing it to our competitor Manaseer steel TAT was much higher than ours .

Return on Assets (ROA) in 2014 increased by 24% from 2012 this shows that the company generate profits from utilizing its Currents Assets .

Operating Income Margin (OIM) increased by 2.21% in 2014 this shows that the company Operating income increased by the increase in sales.

Operating Asset Turnover (OAT) was fluctuating over the years in 2012 it was the highest then it decreased in 2013 after in 2014 and 2015 that the company managed to efficiently use its operating assets like the inventory to generate sales.

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Comparing it to our competitor our numbers are much lower. And the return on operating assets increased by 0.71% in 2014 this indicates that the company efficiently uses its operating assets to generate profits and also in 2014 the company managed to decrease its operating expenses.

Sales to fixed assets ratio in 2012 was the highest then it decreased by 0.61% in 2013 after that the company managed to increase it in 2014 and 2015.

Return On Investment (ROI) increased by 0.91% in 2014 because the NI in 2014 is higher than 2012

The company decreased its total shareholders by 84516$ then it increased ROE by 0.34% in 2014

ROCA in 2014 was at least it decreases dramatically by -167086 in the shareholders equity

The company managed to decrease it COGS throw 2012 till 2014 this leads to increase it GPM but in 2015 the cross profit was at least because the COGS increased , this leads to low GPM

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In order to understand the Strength and weaknesses affecting ROA we used DuPont Analysis:

Sheba Co.ROA

year= NPM * TAT

2015 = #N/A #N/A2014 = 2.20% * .402013 = #N/A #N/A2012 = 1.17% * .55

Manaseer Co.ROA

year= NPM * TAT

2015 = #N/A #N/A2014 = #N/A * #N/A2013 = 1.04% 0.762012 = 1.82% * 2.50

Comparing Sheba Co. And Manaseer Co. In 2012, Manaseer Co. Has higher NPM , and higher TAT. Sheba’s ROA ratio can be improved by boosting both NPM and TAT or one of them.

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Long-term debt paying ability ratios

Sheba Metal Casting Co. LONG-TERM

DEBT-PAYING ABILITY 2015 2014 2013 2012

Times Interest Earned #N/A 2.80 #N/A #DIV/0!

Fixed Charge Coverage #N/A 2.80 #N/A #DIV/0!Debt Ratio 18.86% 16.73% 12.44% 11.25%

Debt/Equity 23.24% 20.09% 14.21% 12.68%Debt to

Tangible Net Worth 23.24% 20.09% 14.21% 12.68%Cash

Flow/Total Debt 0.00% 0.00% 0.00% 0.00%

Manaseer Steel Co. LONG-TERM DEBT-

PAYING ABILITY2015 2014 2013 2012 2011

Times Interest Earned

#N/A #N/A #DIV/0!

-58.00 #DIV/0!

Fixed Charge Coverage

#N/A #N/A #DIV/0!

-58.00 #DIV/0!

Debt Ratio 61.64% 48.12%

43.84%

30.17%

#DIV/0!

Debt/Equity 164.47%

94.98%

77.65%

43.40%

#DIV/0!

Debt to Tangible Net Worth

164.47%

94.98%

77.65%

43.40%

#DIV/0!

Cash Flow/Total Debt

0.00% 0.00% 0.00% 0.00% #DIV/0!

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o The Company’s debt ratio has increased over the past four years. However, it’s almost 3 times lower than the competitor’s which means that the company depends less on debts to finance its assets.

o We must take into consideration that debt ratio is the lower the better only regarding to the creditors perspective, the management take into consideration minimizing WACC, which means that the management may prefer debts as a source of finance because it’s cheaper than issuing equity.

o Regardless the perspective, the debt ratio the higher the riskier.

o We also must notice that more than 50% of Sheba’s Co. total assets consist of other assets which require questioning, and almost all its total liabilities are short-term and too close to mature which puts the company in a disturbing situation.

o Regarding Debt/Equity ratio, it has increased from 2012-2015 but it’s much lower than Manaseer Steel Company’s ratio therefore the creditors will be more protected in Sheba Co.

o Regarding Debt to tangible net worth ratio, it equals Debt/Equity ratio because the company doesn’t have intangible assets.

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Investor RatiosSheba Metal Casting Co.

INVESTOR ANALYSIS

2015 2014 2013 2012

Degree of Financial Leverage

1.00 1.00 1.00 1.00

Earnings per Share -0.13 0.01 -0.32Price/Earnings RatioPercentage of Earnings Retained

100.00% 100.00% 100.00% 100.00%

Manaseer Steel Co.INVESTOR ANALYSIS 2015 2014 2013 2012

Degree of Financial Leverage

#N/A #N/A 1.00 0.98

Earnings per Share 0.00 0.00 0.00 0.00 Price/Earnings Ratio #DIV/

0!#DIV/

0!#DIV/0! #DIV/0!

Percentage of Earnings Retained

#N/A #N/A 100.00%

100.00%

o Investors look forward for to generate earnings and to maximize their wealth, so by calculating the leverage we can evaluate the sensitivity of profits to the change in performance.

o Both Companies’ seem to have same level of risk in terms of investing.

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Common Size Analysis Vertical Analysis

Vertical Analysis

INCOME STATEMENT

2015 2014 2013 2012

Net Sales 100.00% 100.00%

100.00%

100.00%

Less: Cost of Goods Sold

97.04% 71.31%

144.95%

76.95%

Gross Profit 2.96% 28.69%

-44.95

%

23.05%

Other Operating Revenue

0.00% 2.93% 0.00%

Less: Operating Expenses

28.87% 28.20%

37.12%

21.84%

Operating Income

-25.91% 3.42% 82.07%

1.21%

Less interest expense

1.13% 1.22% 1.36% 0.00%

Other Income (Expenses)

0.00% 0.00% -6.79%

-0.04%

Unusual or Infreq. Item;

0.00% 0.00% 0.00% 0.00%

Gain (Loss) 1.08% 0.00% 0.00% 0.00%

Income before Taxes

-25.96% 2.20% -90.21

1.17%

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%

Less:Taxes Related to Operations

0.00% 0.00% 0.00% 0.00%

Net Income (Loss)

-25.96% 2.20% 0.00% 1.17%

In 2013 cost of goods sold were higher than the sales because the operating expenses in 2013 increased due to renting a land for 8000 JD , which leads to minus gross profit

In 2012 and 2014 the company decrease their cost of goods sold with increase their sales. But in 2015 the cost of goods sold has increase due to increase the cost of transferring the goods.

The company spends 68% in gross profit to increase their sales $1. And it increase in 2013 and 2014. In 2015 the gross profit had decrease because of increasing the cost of goods sold.

In 2015 and 2013 the operating income were minus due to high COGS. But it increases in 2014 and 2012 because of decrease in operating expenses.

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BALANCE SHEET 2015 2014 2013 2012

ASSETSCurrent Assets: Cash 3.94% 3.84% 2.85% 1.40% Gross Receivables 19.73% 23.70% 33.05% 34.62% Less: Allowance for Bad Debts

0.39% 0.35% 0.41% 0.34%

Net Trade Receivables 19.34% 23.35% 32.65% 34.28% Inventories 21.88% 22.79% 10.88% 17.81% Prepaid Expenses 0.00% 0.00% 0.00% 0.00%Other currents assets 4.39% 5.21% 4.56% 3.21%Total Current Assets 49.55% 55.19% 50.94% 56.70%Long-Term Assets:Net Tangible (Fixed) Assets (other than construction in progress)

50.45% 44.81% 49.06% 43.30%

Construction in Progress 0.00% 0.00% 0.00% 0.00%Intangible Assets 0.00% 0.00% 0.00% 0.00%Investments 0.00% 0.00% 0.00% 0.00%Other Operating Assets 0.00% 0.00% 0.00% 0.00%Total Long-Term Assets 50.45% 44.81% 49.06% 43.30%Total Assets 100.00

%100.00%

100.00%

100.00%

LIABILITIES AND EQUITYCurrent Liabilities: Accounts Payable 9.19% 8.31% 6.97% 4.29%Short term loans 6.19% 3.06% 0.25% 2.20% Other Current Liabilities 3.47% 5.36% 5.23% 4.76%

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Total Current Liabilities 18.85% 16.73% 12.44% 11.25%Long-Term Liabilities: Long-term Debt 0.00% 0.00% 0.00% 0.00%Total Long-term Liabilities 0.00% 0.00% 0.00% 0.00%Total Liabilities 18.86% 16.73% 12.44% 11.25%Shareholders' Equity: Preferred Equity 114.47

%102.62%

110.87%

84.12%

Common Equity-incl. Ret. Ern.

-33.33%

-19.35%

-23.31%

4.63%

Total Equity 81.14% 83.27% 87.56% 88.75%Total Liabilities and Equity 100.00

%100.00%

100.00%

100.00%

We can notice that in 2012,almost 58% of total asset are current assets which indicates the high liquidity of assets in 2012, but, the most extensive part of the current asset are from receivables 34.28% rather than cash 1.40% which is a risky indicator .Inventory turnover ratio for 2013 was 10.88%, which was the least , yielding better sales.

In the following year, cash as a percentage of total assets have increased by 2.54% from 2012 till 2015, and net receivables decreased by 14.94%, improving the company’s liquidity, due to collections from customers.

Total liabilities of the company were the highest in 2015 means that the company is more depending on short term loans to finance it operating activities this

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is a risky indicator that the company may not meet its future obligations

In 2014 company’s liquidity in terms of collecting receivables have improved constantly, with an increase for percentage of inventories as a part of total assets, including the fact that in 2014 the company had an decrease in cost of goods sold, which explains the increase in the inventory, but this increase served its obligation by having a better net sales in 2014.

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Horizontal AnalysisBALANCE SHEET 2015 2014 2013 2012

ASSETSCurrent Assets: Cash 229.22

%212.03%

175.84%

100.00%

Net Trade Receivables 75.64% 82.50% 78.14% 100.00% Inventories 121.01

%132.59%

90.59% 100.00%

Prepaid Expenses 1864.27%

2236.84%

2069.24%

100.00%

Total Current Assets 132.23%

135.16%

113.20%

100.00%

Other Operating Assets 96.63% 97.81% 98.42% 100.00%Total Long-Term Assets 131.60

%103.40%

98.42% 100.00%

Total Assets 131.97%

122.24%

107.18%

100.00%

LIABILITIES AND EQUITYCurrent Liabilities: Accounts Payable 1518.27

%1718.11%

7.09% 100.00%

Other Current Liabilities 0.00% 0.00% 96.82% 100.00%Total Current Liabilities 111.02

%125.63%

90.26% 100.00%

Long-term Debt 183.34%

156.36%

105.84%

100.00%

Total Long-term Liabilities

183.34%

156.36%

105.84%

100.00%

Total Liabilities 137.13%

136.73%

95.89% 100.00%

Shareholders' Equity:

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Common Equity-incl. Ret. Ern.

131.29%

120.33%

108.68%

100.00%

Total Equity 131.29%

120.33%

108.68%

100.00%

Total Liabilities and Equity

131.97%

122.24%

107.18%

100.00%

We notice that cash have improved highly by 76% during 2013, the increase is explained by the decrease in net inventories by improving sales, and a high decrease by 19% in net receivables, the company have managed to collect cash from customers on account, and the biggest part was from providing services and collecting cash in return, prepaid expenses have increased double what was in 2012.

The company in 2013 had a high solvency in paying its creditors, comparing to 2012 there is almost no or low liability for the short term manner, a decrease for about 93% in the companies short term debts, but an increase in the long term contracts with external parties have incurred.

It’s obvious that in 2013 the company had attracted more investors as for the market shares of the company with an increase of 8% in common equity.

For the extensive increase in the company’s purchasing power, increase of customers, the company had a Boom in term of liabilities, the companies total debt has increased by 36%

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compared to 2012. But through the high stock market that the company has by increasing its equity solvency by 20%, the company has managed to cover its liabilities, resulted in increase of debt paying ratio by 5%.

The increase in sales from the base year is proven; although a high percentage of inventories have occurred in 2014, the company improved its liquidity in 2014 by 112% from 2012, cash from services and collecting accounts receivables have managed the increase in inventory problem with a high marketing expenses for improving sales and products.

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INCOME STATEMENT 2015 2014 2013 2012

- ---------- ---------- ---------- ----------Net Sales 124.50

%128.95%

116.15%

100.00%

Less: Cost of Goods Sold 136.69%

119.36%

108.17%

100.00%

---------- ---------- ---------- ----------Gross Profit 118.77

%133.45%

119.90%

100.00%

Less: Operating Expenses 133.81%

154.30%

119.68%

100.00%

---------- ---------- ---------- ----------Operating Income 102.74

%111.22%

120.13%

100.00%

Other Income (Expenses) 45.73% 56.82% 135.44%

100.00%

Unusual or Infreq. Item; Gain (Loss) 100.00

%100.00%

100.00%

100.00%

Income before Taxes 123.62%

131.31%

114.89%

100.00%

Less:Taxes Related to Operations

66.55% 90.47% 101.66%

100.00%

N.I. before Noncontr. Inc 133.45%

138.34%

117.16%

100.00%

Net Income (Loss) 133.45%

138.34%

117.16%

100.00%

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We can notice that Gross Profit is increase in 2013 because of decrease the cost of goods sold and increase the net sales. In 2013 the net sales increase and the cost of goods sold also increase, which will increase the Gross Profit. But in 2014 the net sales decrease and the cost of goods sold increase, which will decrease the Gross Profit .So, the Gross profit has increase in 2013 and 2014 and decrease in 2015.

The operating income has decrease each year because of increasing the operating expense.

The other income (expense) has decease from the basis year (2012) to year 2015. The tax has increase in 2015 which will decrease in net income.

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ConclusionSheba Metal Casting Co. Has suffered from great losses during the past three years, in 2014 we can notice that the company tried to manage these losses but the losses increased in the following year. A company with increasing losses year after year is not an attractive spot for investing because it’s risky. The debts are increasing, which increase the interest expenses that eventually increase the losses. The company is generating losses because of the fixed costs not because of sales, so it can manage to produce more in order to generate gross profit higher than the fixed costs. Also, cutting down managerial costs might make a difference.We can notice that the Company’s Assets are decreasing year after year, as well as the liabilities increasing. The liquidity and profitability ratios were fluctuating with no trend which makes it risky, despite the fact that some of the profitability ratios were negative due to the generated losses.

Depending on the numbers issued by the company, and based on our further researches and studies we can conclude that the company isn’t in its best position and it’s going through difficult years, which makes it unattractive to invest in at the current period unless you are a risk taker the company may start generating profit after few years if the costs mainly were managed right and minimized.

Limitations of the report:1. Accessibility: not all the information needed

was accessible.2. Using annual averages instead of quarterly

averages.3. Lack of financial information4. Availability: not enough information on the

company’s website 31 | P a g e

AppendixINCOME STATEMENT 2015 2014 2013 2012

Net Sales 10512347

10888015

9807369

8443660

Less: Cost of Goods Sold 3689234 3221498 2919497

2699008

- - - -Gross Profit 6823113 7666517 688787

2 5744652

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Other Operating Revenue 0 0 0 0 Less: Operating Expenses 3967380 4574836 354857

7 2964967

- - - -Operating Income 2855733 3091681 333929

5 2779685

Less: Interest Expense 0 0 0 0 (no capitalized interest)

Other Income (Expenses) -335967 -417441 -995058

-734679

Unusual or Infreq. Item;

Gain (Loss) -35000 -35000 -35000 -35000 Equity in Earnings of Assoc.;

Profit (Loss) 0 0 0 0 - - - -

Income before Taxes 2484766 2639240 2309237

2010006

Less:Taxes Related to Operations

196540 267214 300265 295349

- - - -N.I. before Noncontr. Inc 2288226 2372026 200897

2 1714657

Noncontrolling income (loss) 0 0 0 0 - - - -

N.I. before Nonrecurring Items 2288226 2372026 2008972

1714657

Net Income (Loss) 2288226 2372026 2008972

1714657

= = = = =

BALANCE SHEET 2015 2014 2013 2012

ASSETS

Current Assets:

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Cash 4892817 4525890 3753493 2134580

Marketable Securities 0 0 0 0 Gross Receivables 3121276 3404255 3224167 4126258

Less: Allowance for Bad Debts 0 0 0 0 Net Trade Receivables 3121276 3404255 3224167 4126258 Inventories 2310032 2530904 1729231 1908887

Prepaid Expenses 515489 618510 572166 27651 Other Current Assets

- - - -Total Current Assets 1083961

4 11079559

9279057 8197376

Long-Term Assets: Net Tangible (Fixed) Assets (other than construction in progress)

0 0 0 0

Construction in Progress 1227379 314581 0 0 Intangible Assets 36820 0 0 0 Investments 701356 0 0 0 Other Nonoperating Assets 0 0 0 0 Other Operating Assets 5431295 5497550 5531806 5620854

- - - -Total Long-Term Assets 7396850 5812131 5531806 5620854 Total Assets 1823646

4 16891690

14810863

13818230

LIABILITIES AND EQUITY

Current Liabilities:

Accounts Payable 1144172 1294764 5340 75360

Short Term Loans 0 0 0 0 Current Maturity of L.t. Debt 0 0 0 0 Other Current Liabilities 0 0 924903 955269

- - - -Total Current Liabilities 1144172 1294764 930243 1030629

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Long-Term Liabilities:

Long-term Debt 1068004 910864 616584 582537

Reserves 0 0 0 0 Deferred Liabilities 0 0 0 0 Noncontrolling Interest 0 0 0 0 Redeemable Preferred 0 0 0 0 Other Long-term Liabilities 0 0 0 0

- - - -Total Long-term Liabilities 1068004 910864 616584 582537 Total Liabilities 2212176 2205628 1546827 1613166

Shareholders' Equity:

Preferred Equity 0 0 0 0 Common Equity-incl. Ret. Ern. 1602428

8 14686062

13264036

12205064

- - - -Total Equity 1602428

8 14686062

13264036

12205064

Total Liabilities and Equity 18236464

16891690

14810863

13818230

Liquidity Ratios Working Capital

Current Assets- Current Liabilities

Acid Test or Quick Ratio

Cash + Marketable Securities + Accounts ReceivableCurrent Liabilities

Current Ratio

Current AssetsCurrent Liabilities

Cash Ratio

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Cash Equivalents + Marketable SecuritiesCurrent Liabilities

Profitability Ratios Net Profit Margin (Return on Sales)

Net Income *Net Sales

Return on Assets

Net Income *(Beginning + Ending Total Assets) / 2

Operating Income Margin

Operating IncomeNet Sales

Return on Investment

Net Income *Long-term Liabilities + Equity

Return on Equity

Net Income *Equity

Gross Profit Margin

Gross ProfitNet Sales

Financial Leverage Ratio Total Debts to Assets

Total LiabilitiesTotal Assets

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Debt to Equity

Total DebtTotal Equity

Long-term Debt to Net Working Capital

Long-term DebtCurrent Assets - Current Liabilities

Efficiency Ratios Cash Turnover

Net SalesCash

Sales to Working Capital (Net Working Capital Turnover)

Net SalesAverage Working Capital

Total Asset Turnover

Net SalesAverage Total Assets

Fixed Asset Turnover

Net SalesNet Fixed Assets

Days' Sales in Receivables

Gross ReceivablesAnnual Net Sales / 365

Accounts Receivable Turnover

Net SalesAverage Gross Receivables

Accounts Receivable Turnover in Days

Average Gross ReceivablesAnnual Net Sales / 365

Days' Sales in Inventory

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Ending InventoryCost of Goods Sold / 365

Inventory Turnover

Cost of Goods SoldAverage Inventory

Inventory Turnover in Days

Average InventoryCost of Goods Sold / 365

Operating Cycle

Accounts Receivable Turnover in Days+ Inventory Turnover in Day

References http://financials.morningstar.com/valuation/price-ratio.html?

t=SHBA&region=jor&culture=en-US&ownerCountry=USA http://www.ase.com.jo/en/disclosures?category=1&symbol=SHBA http://shebametalcasting.com/

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