1. b) Prepare a short report giving your observations on the profitability, liquidity, efficiency (activity) and debt ratios of the two companies. (10 marks)

Statements of comprehensive income for the year ended 30 June 2021: Sash Berhad Cotton Berhad RM'000 RM'000 Sales (all on credit) 24,000 14,000 Cost of sales 20,000 11,300 Gross Profit 4,000 2,700 Operating expenses 2.320 1,710 Operating profit 1,680 990 Debenture interest paid 240 90 Loss on asset disposal 20 30 Profit before tax 1,420 870 Taxation 720 450 Profit after tax 700 420 Dividends paid 120 114 Retained profit for the year 580 306 Cotton Berhad RM'000 RM'000 4,500 Statements of financial position as at 30 June 2021: Sash Berhad RM'000 RM'000 Non-current assets: Property, plant & equipment 5,000 Less: accumulated depreciation 1,000 4,000 Current assets: Inventory 2,000 Trade receivable 990 Cash at bank 1,580 4.570 1,560 2,940 3,180 1,320 1,560 6.060 8,570 9.000 2,000 2,280 Capital and reserves: RM1 ordinary shares Share premium Retained profit 1,000 520 2.000 3,500 5,000 6,300 1,200 480 Non-current liabilities: Debentures Current Liabilities: Bank loan 900 900 Trade payables 1.470 1,320 2.370 2.220 8.570 9,000