1 Analysis on Items of Financial Statement 1.Analysis on Items of Balance Sheet (1)Trade Receivables (2)Stock asset (3)Fixed asset and investment asset (4)Loan 2. Analysis on Items of Income Statement (1)Sales (2)Gross Profit (3)Operating profit (4)Ordinary profit (5)Net profit before reduction of corporate tax

2 1. Analysis on Items of Balance Sheet (1)Trade Receivables In case turnover of Trade Receivables is dramatically lowered compared to same industry Accumulation of Bad Trade Receivables Delay in Collection of Trade Receivables Loss of Marketability for Products Aggravation in Lack of Fund In case turnover of Trade Receivables is active compared to same industry Fair Fund Operation based on Early Bond Collection Caution in Early Bond Collection due to Lack of Fund (2)Stock asset In case turnover of stock asset is dramatically lowered compared to same industry Accumulation of Bad Stock Loss of Marketability for Product Failure in Development of New Product Aggravation in Lack of Fund Ex) Declining in beeper due to appearance of PCS Declining in Video and Audio Tape due to DVD and MP3 In case turnover of stock asset is dramatically activated compared to same industry Clearance sale for stock of finished goods due to lack of fund Frequent Sale with Discount Sales under Raw Cost In case of reduction in finished goods Failure in Securing Raw Material in Appropriate Level compared to Increase in Sales Failure in Securing Raw Material due to Lack of Fund In case of reduction in raw material To assess company properly?? => “ Find hidden meaning behind under the value of financial statement!! ” Evaluation Method of Stock Asset Actual Cost Method Method to evaluate certain stock with actual raw cost Average Method Method to determine the raw cost of stock asset by dividing total sales amount by total sales quality in certain period FIRST IN FIRST OUT Method where raw cost of purchased stock is granted to previously sold stock and raw cost of purchased item is granted to remaining stock asset LAST IN FIRST OUT Method where raw cost of recently purchased stock is granted to previously sold stock and raw cost of remaining stock asset is granted of the oldest raw cost of purchase

3 (3)Fixed Asset and Investment Asset Increase in Fixed Asset Grasping appropriateness of investment Grasping the Speculative Asset Grasping the Amount by Asset Reevaluation Grasping the Appropriateness Of Procurement Fund Relevant to Investment Decrease in Fixed Asset Grasping the Reduction in Scale Of Total Asset Examination on Disposition of Real-Estate Due to Lack of Fund In case of Investment Asset Examination on Financial Status & Business Performance Of Investment Company Operation of Floating Money in Investment for Takeover of Other Company (4)Loan Analysis on increase in sales through integrated examination on trend of industry, estimated sales, operating rate, growth potential and fund procurement capability, etc Examination on appropriateness of facility investment and loan in conservative standpoint Excessive Increase in Loan Grasping the Composition of Short-Term Loan & Long-Term Loan Grasping the appropriateness in use and scale of loan including the lack of operating fund, purchase of real-estate other than use, investment, use of investment fund from company Increase in Long-Term Loan 2. Analysis on Items of Income Statement (1)Sales Increase in Sales Window-Dressing Settlement Growing Industry Success in Development of New Product Increase in unit price of sales and sales amount Frequently used to increase profit. Sum of fictitious sale, fictitious stock asset, Trade Receivables, etc Examination on sales by new industry and new product Consideration of domestic and overseas trend in market Increase in unit price of sales is difficult to be considered as actual increase Ratio of break-even point exceeding 100% Ratio of break-even point= (break-even point sales/sales) X 100 Ratio of break-even point is less than 70% => Sound Level High Rate of Increase in Trade Receivables or Stock Asset Compared to Increase in Sale Lowering of turnover with accumulation of bad bond and stock asset Concern for aggravation in lack of fund Cautions in assessing the limit of operating fund Determination on profit creation capability

4 Decrease in Sales Decrease in Purchasing Power to Products with Change in Market Environment Stagnation Problem in Marketing Strategy Sales leverage refers to the lever effect with dramatic change in operating profit compared to change in sales. It generally occurs since burden of depreciation caused by possession of tangible asset is the fixed cost generating steadily regardless of scale of sales. As burden of fixed cost is higher during reduction in sales of company, rate of reduction in operating profit increases. “ What is Operating Leverage? ” (2)Gross Profit Company with (-) Gross Profit Sales price of product< Purchase price of product Sales price of product < raw cost of manufacturing Examination on Constituents for Raw Cost of Sales Increase in material cost is the cause for increase in raw cost. Examination on trend in price of raw material and diversity of transactions Manufacturer Wholesale Industry Material Cost Labor Cost Labor cost shall be examined considering the spirit of staff, productivity, relation with labor union, etc “ Competitiveness only springs from continuous reduction in raw cost ” Sales: Physical performance of management for sales activity of company, Although it can be considered that company lead active sales activity when sales is high, company cannot be determined with just sales Business in deficit with increase in operating profit Sales Trade Receivables Although sales increased in great deal, Trade Receivables has dramatically increased correspondingly Internal deficiency Physical growth Although it is growing dramatically from outside, risk in management occurs with aggravation in lack of fund without any income internally Increase in raw cost Increase in sales Although sales is increasing in great deal, deficit in management cannot be avoided with the burden of raw cost of sales increasing furthermore

5 (3)Operating Profit It shall be at least (+) just like gross profit. In case of (-) operating profit, existence is difficult Examination on Importance of Constituents and each Item of Sales Cost and Management Cost Examination on appropriateness in severance and retirement benefits and depreciation cost Company with (-) Operating Profit Examination on excessive increase and unnecessary items (4)Ordinary Profit Since the company with (-) ordinary profit does not have capability to pay interest expense, examine its constituents Ordinary Profit – Operating Profit + Non-Operating Profit – Non-Operating Cost Determination on level of the company by comparing the ratio of previous year and average rate of same industry Company with ( － ) Ordinary Profit Ratio of Liabilities Ratio of Financing Expense To Sales Ratio of Interest Compensation (5)Net profit before reduction in corporate tax Simultaneous Analysis on Performance of Net Profit and Ordinary Profit Company shall create profit from sales activity. Doubt in perpetuity of company when profit is acquired with disposition of possessing fixed assets, etc Determination on existence as company Examination on Disposition of Fixed Asset Examination on Real-Estate for Additional Disposition, Etc Examination on Actual Management Status of Company