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Problem - The comparative statements of Mega Lace Bhd are presented below:
Mega Lace Bhd Income Statement for the year ended 31 December
2019 RM
2018 RM
Net sales
914,250
875,250
Cost of Goods Sold
(505,250)
(498,000)
Gross profit
409,300
377,250
Selling and Administrative expenses
(258,000)
(239,500)
Income from operation
151,000
137,750
Interest expense
(9,000)
(7,000)
Income before income taxes
142,000
130,750
Income tax expense
(42,500)
(38,500)
NET INCOME
99,500
92,250
Mega Lace Bhd Statement of Financial Position as at 31 December
Assets: Current Assets
Cash
30,050
32,100
Short-term investments
34,500
25,000
Accounts receivable (net)
61,400
51,400
Inventory
56,500
57,500
Total Current assets
182,450
166,250
Propert, Plant Equipments (net)
302,650
260,150
Total Assets
485,100
426,400
Liabilities and Shareholders' Equity:
Current liabilities
Accounts payable
80,000
72,750
Income taxes payable
21,750
21,000
Total Current liabilities
101,750
93,700
Long term liabilities
105,000
100,000
Total Liabilities
206,750
193,700
Shareholders' equity
Ordinary shares (RM5 par)
140,000
150,000
Retained earnings
138,350
82,700
Total Shareholders' equity
278,350
232,700
Total liabilities and shareholders' equity
All sales were on account. The allowance for doubtful debt accounts was RM1,600 on 31 December 2019 and RM1,500 on 31 December 2018.
Required -
a) Compute the following ratios for 2019:
i. Profit margin
ii. Return On Total Assets
iii. Current
iv. Acid Test
v. Receivable Turnover
vi. Inventory Turnover
vii. Total Asset Turnover
b) Give your comments in terms of liquidity of the company.
c) Identify the THREE (3) common tools of financial statement analysis.
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