Activity 2.1 Financial Ratios Presented below are the financial statements and the comparative statements of the SUKI Corporation for the financial year 2018 and 2017. The corporation has been operating since ten years ago and intends to progressively expand their business in 2019. The corporation is pursuing KIERA Bank for additional financing in regards to their expansion plans. Balance Sheet as at June 30, 2018 (RM) Changes (%) 2017 (RM). Changes (%) ) Cash 195,000 36.84 142,500 48.44 Marketable securities 60,000 -20.00 75,000 92.31 Accounts receivable 390,000 -28.51 545,500 -27.27 Inventories 187,200 67.74 111,600 16.25 Other current assets 30,000 0.00 30,000 -44.44 Prepayment 28,000 211.11 9,000 -6.25 Plant and equipment, net 1,620,000 58.82 1,020,000 19.30 Land 2,250,000 76.47 1,275,000 18.06 Total assets 4,760,200 48.36 3,208,600 7.69 Current ratio Acid-test ratio Net working capital Days to sell inventory Average or period Cash turnover Accounts receivable turnover Inventory turnover wer Working capital turnover Fived as Fixed assets turnover Total Total assets turnover Debt ratio w Total debt to equity Law Long-term debt to equity Times interest earned Gross profit margin Operating profit margin Net profit margin Return on assets Return on equity Return on common equity 2018 1.79 1.41 391,950 178 177 177 104 1.01 2.03 200 2.03 200 2.09 40 0.19 0.24 54.58 wo 120.18 0749 97.13 an 1.37 00.1 68.11 30.91 5.89 1.41 2.85 6.79 2017 2.30 2.02 516,100 113 250 259 1.28 1.39 3.18 1.68 0.28 20 0.29 45.11 11 82.19 59.62 200 3.01 63.33 37.26 17.42 5.07 9.52 23.23 times times RM days days time times times times time times time times time times - percent percent Pencer percent time times percent percent percent percent percent percent Accounts payable Accruals Short-term notes payable, 6% Mortgages Bond Common stock Paid-in Capital Retained earnings Total liabilities and equity 324,250 114,000 60,000 2,100,000 900,000 700,000 561,950 4,760,200 39.46 90.00 -42.86 100.00 20.00 43.27 7.55 48.36 232,500 60,000 105,000 1,050,000 750,000 488,600 522,500 3,208,600 -25.62 - 16.67 2.94 9.38 25.00 5.65 11.04 7.69 a) a) Changes (%) Based on the above financial information, provide a concise report for the stakeholders and shareholders of SUKI Corporation emphasizing on the following concern: i) The ability of the corporation in meeting their short-term obligations ii) The relevant of additional asset acquisition for expansion iii) The relevant of obtaining additional external funding iv) The current operating and profitability performances (20 marks) b) Income Statement for Years 2018 (RM) Changes (%) 2017 (RM) Ended June 30, Net sales 950,000 5.56 900,000 Cost of goods sold 303,000 -8.18 330,000 Gross profit 647,000 13.51 570,000 Selling & administrative exp. 255,000 47.74 172,600 General expenses 66,000 46.67 45,000 Depreciation 32,400 89.47 17,100 Operating profit 293,600 -12.44 335,300 Interest expense 213,600 91.91 111.300 Income before tax 80,000 -64.29 224,000 Income taxes 24,000 -64.29 67,200 Net income 56,000 -64.29 156.800 4.65 -1.79 8.78 2.74 -42.31 -16.18 30.16 8.99 44.07 44.07 44.07 In order to expand their business, SUKI Corporation needs to apply RM1 million new financing for asset acquisition. Based on SUKI current position and performance, examine the financial information for KIERA Bank in determining whether SUKI Corporation has great potential to grow in the market to justify the financing application. Include the strengths and weaknesses of SUKI Corporation in your analysis. (10 marks) Activity 2.1 Financial Ratios Presented below are the financial statements and the comparative statements of the SUKI Corporation for the financial year 2018 and 2017. The corporation has been operating since ten years ago and intends to progressively expand their business in 2019. The corporation is pursuing KIERA Bank for additional financing in regards to their expansion plans. Balance Sheet as at June 30, 2018 (RM) Changes (%) 2017 (RM). Changes (%) ) Cash 195,000 36.84 142,500 48.44 Marketable securities 60,000 -20.00 75,000 92.31 Accounts receivable 390,000 -28.51 545,500 -27.27 Inventories 187,200 67.74 111,600 16.25 Other current assets 30,000 0.00 30,000 -44.44 Prepayment 28,000 211.11 9,000 -6.25 Plant and equipment, net 1,620,000 58.82 1,020,000 19.30 Land 2,250,000 76.47 1,275,000 18.06 Total assets 4,760,200 48.36 3,208,600 7.69 Current ratio Acid-test ratio Net working capital Days to sell inventory Average or period Cash turnover Accounts receivable turnover Inventory turnover wer Working capital turnover Fived as Fixed assets turnover Total Total assets turnover Debt ratio w Total debt to equity Law Long-term debt to equity Times interest earned Gross profit margin Operating profit margin Net profit margin Return on assets Return on equity Return on common equity 2018 1.79 1.41 391,950 178 177 177 104 1.01 2.03 200 2.03 200 2.09 40 0.19 0.24 54.58 wo 120.18 0749 97.13 an 1.37 00.1 68.11 30.91 5.89 1.41 2.85 6.79 2017 2.30 2.02 516,100 113 250 259 1.28 1.39 3.18 1.68 0.28 20 0.29 45.11 11 82.19 59.62 200 3.01 63.33 37.26 17.42 5.07 9.52 23.23 times times RM days days time times times times time times time times time times - percent percent Pencer percent time times percent percent percent percent percent percent Accounts payable Accruals Short-term notes payable, 6% Mortgages Bond Common stock Paid-in Capital Retained earnings Total liabilities and equity 324,250 114,000 60,000 2,100,000 900,000 700,000 561,950 4,760,200 39.46 90.00 -42.86 100.00 20.00 43.27 7.55 48.36 232,500 60,000 105,000 1,050,000 750,000 488,600 522,500 3,208,600 -25.62 - 16.67 2.94 9.38 25.00 5.65 11.04 7.69 a) a) Changes (%) Based on the above financial information, provide a concise report for the stakeholders and shareholders of SUKI Corporation emphasizing on the following concern: i) The ability of the corporation in meeting their short-term obligations ii) The relevant of additional asset acquisition for expansion iii) The relevant of obtaining additional external funding iv) The current operating and profitability performances (20 marks) b) Income Statement for Years 2018 (RM) Changes (%) 2017 (RM) Ended June 30, Net sales 950,000 5.56 900,000 Cost of goods sold 303,000 -8.18 330,000 Gross profit 647,000 13.51 570,000 Selling & administrative exp. 255,000 47.74 172,600 General expenses 66,000 46.67 45,000 Depreciation 32,400 89.47 17,100 Operating profit 293,600 -12.44 335,300 Interest expense 213,600 91.91 111.300 Income before tax 80,000 -64.29 224,000 Income taxes 24,000 -64.29 67,200 Net income 56,000 -64.29 156.800 4.65 -1.79 8.78 2.74 -42.31 -16.18 30.16 8.99 44.07 44.07 44.07 In order to expand their business, SUKI Corporation needs to apply RM1 million new financing for asset acquisition. Based on SUKI current position and performance, examine the financial information for KIERA Bank in determining whether SUKI Corporation has great potential to grow in the market to justify the financing application. Include the strengths and weaknesses of SUKI Corporation in your analysis. (10 marks)