ASSESSMENT OF ECONOMIC EVENTS
The company chosen for the paper is Gulfa Mineral Water & Processing Industries Company, (GMW & PIC). The major objective of this paper is to provide an extensive assessment of economic events in the company. Precisely, we shall look at the financial performance of this company by analyzing its recent income statement and statement of financial position.
Background of the company
Gulfa mineral water & Processing Industries Company, precisely referred to as “Gulfa” is a public limited company in the United Arab Emirates (UAE). The Company was established in 1975. This company has since been listed on the Dubai Financial Market (DFM), in which it was registered on April 17, 2007.
Hence, its shares are traded in the stock market.It operates within the consumer staples sector in the UAE, and it boasts of having clinched an international certification, with an ISO 9001:2008 and HACCCP: 2006 standard for processing manufacturing and offering for sale mineral water. It has extensively expanded its capacity, currently having an annual production of 8 million cartons. It has also been able to serve both locally and beyond currently also exporting its product to other countries like Kuwait, Qatar, Syria, Afghanistan, United Kingdom among others.
Since it operates in the United Arab Emirates, all its financial statements herein shall be discussed in terms of UAE Dirham. The following is an extensive analysis of the Gulfa’s financial statements as presented by the auditing firm-Rodl Middle East.
The aim of an income statement is to present a summary of the activities of the business both operating and non-operating. It provides the revenues earned and expenses incurred by the company. Finally, it provides the net profit or loss of the company, within a specific accounting period.Here we look at the recent interim income statement of Gulfa Company for an accounting period of nine months ended on 30th September 2015, after review and presentation by the auditors. In the attached financial statement document, Gulfa's income statement is referred to as Interim condensed statement of comprehensive Income. It is identified as, Exhibit B.
It shall be discussed under the subtitles; sales, Discount on sales, net sales, Cost of sales, expenses, and other charges; gross profit, total revenues, net profit, and shares.
Gulfa company ordinary operating activity is processing, bottling and selling natural mineral water. In the year 2015, up to the end of September, the company had managed to make sales worth 41,126,334 dirhams. That's is a drop of 11.59% compared to the year 2014, where for the same period the company had sales worth 46,519,867 dirhams (GMW & PIC, 2015).
Discounts on sales
The income statement depicts clearly that Gulfa Company is committed to offering discounts on sales to its customers. Cumulatively at the end of September 2015, the company had allowed discount worth 2,137,381 dirham which is a notable increase of 12.30% compared to the year 2014, in which case it had allowed 1,903,251 (Dirham) (GMW & PIC, 2015).
Net sales refer to a result of making all appropriate deductions from the total …