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Question
The financial manager Katrina Sdn Bhd, a manufacturing firm, has decided to seek a line of credit from the Alliance Bank. This additional source of funds is needed to support a large portion of the firm's accounts payable during the next three months, which are the firm's peak seasonal sales period. The firm's most recent financial statements were presented to the bank in support of its loan request.
Katrina Sdn Bhd
Income Statement for the Year ended 31 December 2019
RM
Sales (all credit)
2,400,000
Less : Cost of goods sold
1,840,000
Gross profits
560,00
Less : Operating expenses:
General and administrative
120,000
Depreciation expense
240,000
Operating profits
320,000
Less : Interest expense
40,000
Before-tax profits
280,000
Less : Taxes
84,000
After-tax profits
196,000
Balance Sheet as at 31 December 2019
Cash
56,000
Marketable securities
24,800
Accounts receivable
132,000
Inventories
336,000
Total current assets
548,800
Net fixed assets
1,080,000
Total Assets
1,628,800
Accounts payable
228,000
Notes payable
52,000
Other current payable
20,000
Total current liabilities
300,000
Long -term debt
600,000
Total [email protected] par
500,000
Retained earnings
228,800
Total liabilities and shareholders' equity
The average industry rations are provided below to facilitate an analysis of the firm's loan request:
Required:
Compute the above ratios for Katrina Sdn Bhd 2019.
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