BEKZAT CORPORATION Common size Statement of Financial Position as at December 31 2020 2019 2018 Assets Cash and equivalents 21 89 6 80 4 94 Account receivables 16 25 17 30 15 11 Inventories 14 82 11 10 15 51 Prepaid expenses 0 00 2 06 2 04 Fixed assets 69 25 76 09 69 33 Accumulated depreciation 22 20 13 34 6 93 Total assets 100 00 100 00 100 00 Liabilities and Equity Accounts payable 8 44 9 35 9 19 Accrued expenses 0 94 1 13 1 22 Current maturities 3 57 9 25 11 41 Income taxes payable 5 00 4 01 4 74 Long term debt 28 59 30 78 8 39 Common stock RM0 20 par value 35 73 31 21 37 72 Paid in capital 17 87 15 60 18 86 Retained earnings (0 14 ) (1 34 ) 8 46 Total liabilities and equities 100 00 100 00 100 00 BEKZAT CORPORATION Common size Statement of Financial Performance for Years Ending December 31, 2020 2019 2018 Net Sales 100 00 100 00 100 00 Cost of Goods Sold 72 19 70 54 63 37 Gross Profit 27 81 29 46 36 63 Selling and Administrative Expenses 10 75 8 90 8 59 General expenses 6 66 6 72 5 85 Depreciation 6 34 8 17 5 66 Earnings before interest and tax 4 05 5 67 16 52 Interest expense 2 06 3 01 2 64 Earnings before tax 1 99 2 66 13 88 Tax (28 ) 0 56 0 75 3 89 Earnings after tax 1 44 1 92 9 99 a Analyse concerning Bekzats financial performance in 2020 relative to 2019 based on calculated common size financial statement provided Your analysis should include their effectiveness in managing assets and efficiency in handling operations, the degree of financial risks, profitability and overall operating results Based on your findings, identify TWO (2) financial strengths and TWO (2) financial weaknesses of Bekzat in 2019 Propose what actions Bekzat should take to resolve the weaknesses stated Bekzat is planning to finance its business expansion of RM2,000,000 in 2020 by using long term debt financing Do you agree with the companys plan Provide qualitative and quantitative justifications for your decision

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BEKZAT CORPORATION Common-size Statement of Financial Position as at December 31. 2020 2019 2018 Assets Cash and equivalents 21.89% 6.80% 4.94% Account receivables 16.25% 17.30%

BEKZAT CORPORATION

Common-size Statement of Financial Position as at December 31.

	2020	2019	2018
Assets
Cash and equivalents	21.89%	6.80%	4.94%
Account receivables	16.25%	17.30%	15.11%
Inventories	14.82%	11.10%	15.51%
Prepaid expenses	0.00%	2.06%	2.04%
Fixed assets	69.25%	76.09%	69.33%
Accumulated depreciation	22.20%	13.34%	% 6.93%
Total assets	100.00%	100.00%	100.00%

Liabilities and Equity
Accounts payable	8.44%	9.35%	9.19%
Accrued expenses	0.94%	1.13%	1.22%
Current maturities	3.57%	9.25%	11.41%
Income taxes payable	5.00%	4.01%	4.74%
Long-term debt	28.59%	30.78%	8.39%

Common stock RM0.20 par value	35.73%	31.21%	37.72%
Paid-in capital	17.87%	15.60%	18.86%
Retained earnings	(0.14%)	(1.34%)	8.46%
Total liabilities and equities	100.00%	100.00%	100.00%
BEKZAT CORPORATION Common-size Statement of Financial Performance for Years Ending December 31,
	2020	2019	2018
Net Sales	100.00%	100.00%	100.00%
Cost of Goods Sold	72.19%	70.54%	63.37%
Gross Profit	27.81%	29.46%	36.63%
Selling and Administrative Expenses	10.75%	8.90%	8.59%
General expenses	6.66%	6.72%	5.85%
Depreciation	6.34%	8.17%	5.66%
Earnings before interest and tax	4.05%	5.67%	16.52%
Interest expense	2.06%	3.01%	2.64%
Earnings before tax	1.99%	2.66%	13.88%
Tax (28%)	0.56%	0.75%	3.89%
Earnings after tax	1.44%	1.92%	9.99%

a. Analyse concerning Bekzats financial performance in 2020 relative to 2019 based on calculated common- size financial statement provided. Your analysis should include their effectiveness in managing assets and efficiency in handling operations, the degree of financial risks, profitability and overall operating results.

Based on your findings, identify TWO (2) financial strengths and TWO (2) financial weaknesses of Bekzat in 2019. Propose what actions Bekzat should take to resolve the weaknesses stated.

Bekzat is planning to finance its business expansion of RM2,000,000 in 2020 by using long-term debt financing. Do you agree with the companys plan? Provide qualitative and quantitative justifications for your decision.