UNIVERSITY OF TECHNOLOGY AND APPLIED SCIENCES- MUSCAT BRANCH

COLLEGE OF ECONOMICS AND BUSINESS ADMINISTRATION

CORPORTATE ACCOUTING II
STRUCTURED AASSIGNEMNT- SEM II, 2022-23

ANALYSIS OF FINACIAL STATEMENT OF MICROSOFT CORPORATION FOR

THE YEAR 2017-2022

Prepared by: Hussna Al- Habsi - 11s19156

Submitted to Mr. Gopalan Puthukulam.

SEM II, 2022-23

 INTRODUCTION

According to historical records, the Oman Fisheries Company SAOG was legally established
through the enactment of Royal Decree No. 87/79, which was issued by the late Sultan Qaboos
bin Said Al Said. It is noteworthy that the National Fishery Company of Oman was absorbed into
the Oman Fisheries Company SAOG by a decision. The company officially commenced its
business activities on April 2, 1989, and is currently listed on the Muscat Securities Market. As a
result, it operates under the supervision of the Capital Market Authority of the Sultanate of
Oman. The Oman Fisheries Company is globally renowned for its exceptional-quality frozen fish
products, which provide customers with added value. Their products are exported to over 55
countries worldwide, and their factories are equipped to produce tailor-made goods based on
customers' preferences. They also have access to the world's finest fishing grounds in the seas
surrounding Oman, allowing them to produce the best-quality fish, which is then processed to the
highest standards in their factories.

This report evaluates OFCI's financial performance over the past five years, focusing on three
critical aspects: share capital, net profit earned, and dividend history. The analysis of OFCI's
financial statements reveals that, despite the global pandemic crisis's commercial and logistical
challenges, the company has remained committed to fulfilling the needs of its local and
international customers. OFCI encountered difficulties such as increased shipping costs and
elevated prices of raw materials, but persevered nonetheless. During the fiscal year 2022, the
company generated total sales of OMR 4.12 million, representing a 6.5% decrease from the
previous year.

In the same period, OFCI recorded operating revenues of OMR 12.797 million, indicating a rise
from OMR 11.716 million in the preceding year. However, the company incurred a net loss of
RO 1,168,770, a 23% decrease from the previous year's net loss of RO 1,526,924. Despite this
negative trend, OFCI remains optimistic about the future and is committed to maintaining its
position as a leading producer of high-quality frozen fish products.
 SHARE CAPITAL

Summary of Share capital and Ownership Structure:

Share capital is a measurement of the money that investors put into a business in return for
ownership. In 2018, 2019, 2020, and 2021, Oman Fisheries (OFCI) has a 125,000,000 fully paid
ordinary shares of RO 0.100 each authorized, issued, and paid-up share capital. The company's
authorized share capital expanded to RO 20,000,000 in 2022, and the issued and paid-up share
capital was made up of 125,000,000 shares at a par value of RO 0.100 and 57,078,399 shares at a
par value of RO 0.06671.

The company's share capital structure remained unchanged over the past five years. However,
the percentage of ownership by top shareholders fluctuated during this period. Oman Food
Investment Holding Co. (SAOC) was the top shareholder in 2018 and 2019, owning 24% of the
company's shares. In 2020, Oman Flour Mills SAOG and Fisheries Development Oman SAOC
had equal shares of 24.23% and 24.00%, respectively. In 2021, Oman Flour Mills SAOG held
25.15%, and Fisheries Development Oman SAOC held 24.00%. Finally, in 2022, Aqua Holding
Company became the top shareholder, owning 31.35% of the company's shares, followed by
Oman Flour Mills SAOG and Fisheries Development Oman SAOC with 17.27% and 16.48%,
respectively.

Capital Structure:

The company's capital structure consists of both debt and equity. The company monitors its
capital on the basis of the gearing ratio, which is the ratio of net debt to total equity. The gearing
ratio has increased over the years, indicating an increase in the company's debt. The company's
total equity has decreased in the last 5 years, from RO 12,005,441 in 2018 to RO 6,655,533 in
2022. This decrease in equity may be due to the company's retention of earnings or the payment
of dividends to shareholders.
Gearing Ratio Comparison (2018-2022)
Year Total Debt Total Equity Gearing Ratio
2018 1,569,065 12,005,441 0.13
2019 2,090,939 8,640,007 0.24
2020 2,858,103 5,543,527 0.52
2021 2,884,897 4,016,603 0.72
2022 3,189,031 6,655,533 0.48

Graph Showing Change in Equity

Equity (OMR)
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
2018 2019 2020 2021 2022

Equity (OMR)

Graph Showing Change in Debt

Debt (OMR)
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2018 2019 2020 2021 2022

Debt (OMR)
Interpretation:

The presented table displays the gearing ratio, total debt, and total equity of Oman Fisheries over
the past five years. The gearing ratio is a financial measure that illustrates the proportion of debt
in relation to equity, indicating a company's financial leverage.

The data reveals that the company's gearing ratio has been increasing consistently, implying that
the firm has relied more on debt financing relative to equity financing. In 2018, the gearing ratio
was at its lowest, standing at 0.13. However, it climbed to 0.48 in 2022, marking a significant
increase in the past five years. This suggests that the company has relied heavily on debt
financing to expand its operations or invest in new projects.

Furthermore, the total debt of the company has also increased over the years, which could be
attributed to its expansion plans or investments. However, the total equity has been decreasing,
indicating that the company's profitability or financial performance might not have been as
robust as anticipated. Nonetheless, the ratio has declined slightly in 2022, which may indicate an
optimistic trend.

Overall, the rising gearing ratio and total debt, alongside the declining total equity, may raise
concerns regarding the financial health and sustainability of the company. Thus, it is imperative
for the company to manage its capital structure and debt levels prudently to ensure its long-term
viability.

NET PROFIT, RESERVE AND SURPLUS ETC

Summary:

Oman Fisheries Company (OFCI) had net losses every year during the previous five years, with
a decline in loss amount from 2019 to 2022. During this time, the company's legal and capital
reserves remained unaltered. This implies that the corporation did not significantly increase its
surplus or reserves over this time, and the net losses probably had an impact on its overall
financial situation. In order to grow profitability and perhaps strengthen its reserves and surplus
in the future, OFCI must put into action plans targeted at enhancing its financial performance.
Net profit / Loss (2018-2022):

Year 2018 2019 2020 2021 2022

Total Comprehensive
(589,379) (3,365,434) (3,088,254) (1,616,439) (1,168,770)
(Loss/Profit) OMR

Charts showing Net Loss/Profit

Net Loss/Profit
0
2018 2019 2020 2021 2022
-500,000

-1,000,000

-1,500,000

-2,000,000

-2,500,000

-3,000,000

-3,500,000

-4,000,000

Interpretation:

An essential indicator of a company's financial performance is net profit or loss, which shows
whether the business made money during a given time period or not. In the case of Oman
Fisheries (OFCI), the company has experienced net losses in the last five years. The total
comprehensive loss for 2018 was RO 589,379, while for 2019, it was RO 3,365,434, and for
2020, it was RO 3,088,254. However, the company's financial performance improved in 2021
and 2022, with total comprehensive losses of RO 1,616,439 and RO 1,168,770, respectively.
Reserves (2018-2022):

Reserves 2018 2019 2020 2021 2022

Legal reserve 3,314,319 3,314,319 3,314,319 3,314,319 3,314,319
Capital reserve 29,269 29,269 29,269 29,269 29,269
Total Reserve 3,343,588 3,343,588 3,343,588 3,343,588 3,343,588

Charts showing increase/ Decrease in Reserves:

Total Reserves
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2018 2019 2020 2021 2022

Interpretation:

Reserves are profits that a company sets aside for a specific purpose, such as future investments
or paying off debt. Oman Fisheries (OFCI) has reported a legal reserve and a capital reserve in
its balance sheet for the past five years. The legal reserve is set up to comply with legal
requirements, and the capital reserve is created when a company sells shares for more than their
nominal value. In the case of OFCI, the legal reserve and capital reserve have remained the same
over the past five years, with a legal reserve of RO 3,314,319 and a capital reserve of RO 29,269.

Surplus:
Surplus is the amount of money a company has left over after paying all its expenses, including
taxes and dividends. In Oman Fisheries (OFCI)'s case, the company has not reported any surplus
in the last five years, as it has experienced net losses during this period.

DIVIDEND POLICY

Summary of Dividend policy:

The Oman Fisheries Company (OFCI) places a significant emphasis on equity and dividend
payments as a part of its financial strategy. Share capital signifies the nominal value of shares
that have been issued. Dividend payments to equity shareholders are accounted for in other
liabilities when they have been authorized in a general meeting prior to the reporting date. The
Commercial Companies Law and the rules established by the Capital Market Authority govern
the remuneration and sitting fees for the Board of Directors. The maximum fees may not exceed
5% of the annual net profit after deducting the legal reserve, the optional reserve, and 5% of
share capital for dividend payments to shareholders. However, a public joint stock company that
makes no profits may pay remuneration of up to RO 50,000 annually, provided that its capital is
not eroded or it generates less profit.

In recent years, the company has registered net losses in its income statement, which may have
resulted in the absence of a dividend policy. The company may choose to retain earnings to
improve its financial position and pursue growth opportunities rather than distribute dividends to
shareholders. As the company's financial performance improves, it may decide to implement a
dividend policy. To maintain or modify the capital structure, the group may adjust the amount of
dividend paid to shareholders, return capital to shareholders, issue new shares, or sell assets to
reduce debt. The Capital Market Authority and the Commercial Companies Law of 1974, as
amended, prescribe capital requirements.
 CONCLUSION

Oman Fisheries Company SAOG has been a renowned producer of top-quality fish products
globally since its inception in 1989. Despite the challenging pandemic crisis, the company
remains committed to serving the needs of its local and international clientele. However, an
analysis of OFCI's financial statements over the past five years reveals a decline in the
company's financial performance, with net losses reported every year. The increasing gearing
ratio implies that the company is reliant on debt financing, while the decreasing total equity
raises concerns regarding its financial health and sustainability. Thus, it is crucial for the
company to manage its capital structure and debt levels prudently to ensure long-term viability.

In the future, OFCI's expected financial performance is uncertain. However, the company
remains optimistic and committed to upholding its status as a leading producer of high-quality
fish products. It is, therefore, recommended that the company continue to monitor its capital
structure and debt levels prudently. Additionally, it should explore diversifying its product
offerings and expanding its customer base to enhance its financial performance. Lastly, the
company should strive to innovate and improve operational efficiency to increase profitability
and competitiveness in the market.

Despite OFCI's strong market position and reputation for producing high-quality fish products,
addressing rising debt levels and improving profitability through cost-saving measures,
diversification, and innovation is essential to ensuring long-term viability. By doing so, the
company can continue to expand and provide value to shareholders, customers, and other
stakeholders.
References

 Oman Fisheries Annual Reports (2018-2022) from Muscat Securities Market (MSX)
website. https://www.msx.om/snapshot.aspx?s=OFCI&se=3

 Oman Fisheries Company website https://omanfisheries.com/