Reference no: EM133041792
QUESTION - UBK Auto Accessories Manufacturing Sdn Bhd. manufactures automobile spare parts and accessories which inclusive car battery, spark plug, steering wheel covers, fuel consumption meters, window tint, stereo system, DVD players, floor mats and even air fresheners. The firm is being financed by debt as well as equity. The business was established since the year 2001 in the industry. At present, the Board of directors would like to analyze the business from the perspective of internal and sustainable growth. The purpose of the analysis is to explore more opportunities in the industry and to ensure the sustainability of the business. The most recent year (2019) financial data extracted from the financial report of Rainbow Manufacturing Sdn Bhd are as follows:
|
ITEM
|
RM
|
|
Sales
|
658,000
|
|
Current Assets
|
205,000
|
|
Costs
|
212,800
|
|
Fixed Assets
|
665,000
|
|
Debt
|
310,000
|
|
Equity
|
554,000
|
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Tax
|
35%
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Number of shares outstanding
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27,000
|
Assets and costs are proportional to sales. Debt and equity are not proportional to sales. The company maintains a constant 35 percent dividend payout ratio. No external financing is possible.
Required -
(a) Assume you as the financial manager for UBK Auto Accessories Sdn Bhd. being assigned by the Board of directors to perform financial analysis by computing debt ratio, debt equity ratio, earning per share, capital intensity ratio, internal and sustainable growth rate for the business.
(b) Distinguish between trend analysis and peer group analysis in analyzing financial statements.