Youwillbe

in
Competenthands.

HargobindWesters1478486
EvaVelts1456563
TimoSlobs1593498
JulietteHoedemakerss1423592
WybeWestras1578472
StijnWolterss15710792

Introduction
Incompetenceengineeringisahighquality,ecofriendlyglobalcompanythatdevelops
topofthenotchsoftwareandtechnicalsmartphoneswhichareknownasInPhone.

Inthisdocumentfinancesofthefirstfourquarterswillbediscussed.Thefollowing
figuresexplaintheincomestatement,cashflowandbalance.
MostcashwasputintoR&Dinthefirstquarters,whereasinthelastfourquarters,most
cashhasbeenspentonmarketingandproduction.

Incomestatement Quartile 1

Quartile 2

Quartile 3

Quartile 4

Year 2015

Total Revenues

367,878,322

484,822,688

446,619,786

559,806,373

1,859,127,169

Material Costs

134,850,945

168,292,129

135,357,317

133,953,154

572,453,545

15,665,000

23,792,500

20,842,500

22,960,000

83,260,000

Total Direct Costs

150,515,945

192,084,629

156,199,817

156,913,154

655,713,545

Gross Margin

217,362,377

292,738,059

290,419,969

402,893,219

1,203,413,624

M&S Costs

62,369,762

79,560,143

147,788,514

161,316,129

451,034,548

R&D Costs

135,029,167

131,983,190

131,848,986

114,466,371

513,327,714

Stock Costs

7,905,939

7,296,758

7,977,759

13,992,890

37,173,346

Shipping Costs

6,693,667

8,292,767

6,820,388

8,525,770

30,332,592

Warranty Costs

6,367,498

7,329,268

7,901,166

10,399,142

31,997,074

Depreciation Costs

12,045,267

14,193,162

13,999,362

14,604,972

54,842,763

Overhead Costs

22,910,958

43,359,995

47,613,201

49,013,921

162,898,075

253,322,258

292,015,283

363,949,376

372,319,195

1,281,606,112

-35,959,881

722,776

-73,529,407

30,574,024

-78,192,488

4,696,863

8,455,419

6,928,469

6,056,888

26,137,639

Profit Before Taxation

-40,656,744

-7,732,643

-80,457,876

24,517,136

-104,330,127

Taxation

-14,229,860

-2,706,425

-28,160,257

8,580,998

-36,515,544

Net Profit

-26,426,884

-5,026,218

-52,297,619

15,936,138

-67,814,583

Production Personnel Costs

Total Indirect Costs

EBIT
Interest

Reflectiononincomestatement
Thecapitalspentonmaterialhasstayedroughlythesame,exceptforthesecond
period,wheretheproductionwasincreasedandmorematerialwasbought.Inthefourth

quartileadiscountonthematerialcostswasgivenandmorematerialwasboughtto
savecapitalonthelongterm.Itisalsodisplayedthattheproductionpersonnelcosts
havegreatlyincreasedduringthesecondquartile.Inquartilethreethesecostswent
down,duetoanearthquakewhichshutdownproductionandthefactoryonlyranfor
75%oftheirnormalperformance.BecauseofanincreasedfocusonM&Sduringthe
fourthquartileandanincreaseinsellingprice,thetotalrevenueshaveincreasedgreatly
duringthefourthquartile.

AnothernoticeabledevelopmentistheincreaseinM&ScostsanddecreaseinR&D
costs.A200mUS$loanwasusedtobuymachinesandinvestinR&Dinthebeginning
andtoinvestinM&Sduringthesecondhalfoftheyear.Afterproductdevelopmentwas
done,thebudgetwascutandinvestedinM&Sandresearcheremployeeswereletgo.

Exceptforthefourthquartile,thestockcostshavestayedthesame.Thedifference
duringthethirdquartilewascausedbyproducingtoomanyunitsandnotsellingallof
them.Thisincreaseinproductionduringquartiletwoandthreealsocausedtheshipping
coststogoupby6millionUS$becausetheproducthadtobeshippedtothe
distributorsonallcontinents.

Thewarrantycostsalsoincreasedby4millionUS$duringthefourthquartilecompared
tothefirstquartile.Thisiscausedbyanincreaseinwarrantytimeupto60months,
becausetheinPhoneisaverydurableproduct.

Thedepreciationcostshavealsoincreasedduringtheyear,becausemachineshave
beenboughteveryquartiletobeabletocopewithanincreaseddemandforthe
product.

Theoverheadcostshaveincreasedbecauseoftheloanof400millionUS$thatwas
takenduringthefirstandsecondquartileandthepaymentsforthisloanareincludedin
theoverheadcosts.

Summingtheabovecostsandsubtractingthemfromthetotalrevenues,Theearnings
beforeinterestandtaxationhavefluctuatedgreatly.Duringthethirdquartile,notenough
unitswereproducedsoabigamountofsalesweremissed.Thiscausedthecompany
tonotreachtheexpectedincomeandloseabigamountofcapital.

Alsoanincreaseininterestduringthesecondquartilecanbeseen,becauseofthe
secondpartofthetakenloan.Afterthisquartile,theinterestratedecreasedbecause
theloanswerepaidbackinparts.

Thisalsoexplainsthebigfluctuationsintheprofitbeforetaxationandbecausethe
taxationislinearlylinkedtotheprofit,causingthetaxationtobebigwhenmoremoney
hadbeenlostortobesmallwhenasmallamountofmoneyhadbeenlostormade.

Aboveisexplainedhowthenetprofitoriginatesandhowalargelosswasmadedueto
anearthquake,whilethebreakevenpointshouldhavebeenreached.Duringthefourth
quartileaprofithasbeenmadeandexpectationsarethatthisprofitwillincreaseduring
theupcomingquartilesbecauseofanincreasedbudgetforM&S.

Cashflow2015

Quartile 1

Quartile 2

Quartile 3

Quartile 4

Cash & Bank Last Period

60,627,361

208,916,182

314,306,156

288,622,309

Total Revenues

367,878,322

484,822,688

446,619,786

559,806,373

Total Depreciation Costs

12,045,267

14,193,162

13,999,362

14,604,972

Investment in Liabilities

176,258,223

195,461,416

-9,162,801

-16,039,555

Total Costs

268,987,258

315,807,783

384,791,876

395,279,195

Materials Purchased

100,118,600

159,870,100

185,305,500

241,230,000

Inventory in Assets

48,320,130

107,660,415

-71,725,394

148,541,518

Taxation & Interest

-9,532,997

5,748,994

-21,231,788

14,637,886

208,916,182

314,306,156

288,622,309

47,305,500

Cash & Bank

Balancesheet01012015
Assets

Liabilities

Buildings
Machines

575,397,010
116,465,943

Shares Capital
Retained Earnings

321,476,812
535,602,687

Fixed Assets

691,862,953

Total Equity

857,079,499

Material Stock
Work in Progress
Product Stock
Accounts Receivables
Cash & Bank

35,450,628
8,772,424
28,741,677
89,956,575
60,627,361

Long-Term Loans
Accounts Payable

0
58,332,119
58,332,119

Floating Assets

223,548,665

Borrowed Capital

Total Assets

915,411,618

Total Liabilities

Balancesheet01012016

915,411,618

Assets

Liabilities

Buildings
Machines

552,724,073
171,416,117

Shares Capital
Retained Earnings

321,476,812
467,788,116

Fixed Assets

724,140,190

Total Equity

789,264,928

Material Stock
Work in Progress
Product Stock
Accounts Receivables
Cash & Bank

163,463,108
20,024,890
14,799,864
224,380,778
47,305,500

Long-Term Loans
Accounts Payable

260,000,000
144,849,402

Floating Assets

469,974,140

Borrowed Capital

404,849,402

Total Assets

1,194,114,330

Total Liabilities

1,194,114,330

Reflectiononbalancesheets
ThefirstbigdifferencebetweenbothbalancesheetsisthattheworthofIncompetence
Engineeringhasincreasedwith220millionUS$.Thiscanbeexplainedbyaloanthat
hasbeentakenof400millionUS$,lossesatthestartoftheyearwhilefocussingon
R&Dandmakingsmallbitsofprofit.Anotheraspectwastheincreasingofmachinery,
thiswascausedbyinvestingintomachinerytocopewiththedemandandbecauseof
depreciation.
WhatalsohasincreasedistheAccountsReceivables,becausethetimethedebtors
havehasincreasedfromfourweekstosixweeks.

Becauselosseshavebeenmade,theretainedearningshavedecreasedwithabout70
millionUS$.Thisisbeingcompensatedbymakingmoreprofitduringthenextquartiles.
Thisobviouslyhadaneffectonthetotalequityofthecompany.Alsoasexplained
before,aloanhasbeentakenfromthebankof400millionUS$.Thiscausedthelong
termloanstogoupfromzeroto260millionUS$.Thedecreaseiscausedbypayments
tothebanktopayoffthedebt.Theaccountspayablehavebeenincreasedaswell,
becauseofgoodsthathavebeendeliveredtothecompany,buthaventbeenpayedfor.
Thesetwofactorshavecausedtoincreasethetotalborrowedcapitalwith350million
US$.