CONFIDENTIAL GUC/SEPT-JAN20/21/MBFM230/S1 Question 3 Below are the financial statements for XYZ Sdn Bhd as at 31 December 2020. The company is applying for a loan from EEE Bank. In order to evaluate the company as a potential debtor, the bank would like to compare the XYZ Sdn Bhd performance with the industry. STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Cash Marketable securities Account receivables Prepaid expenses Inventory Net land and building 20,000 Account payable 55,000 Accrued expenses 30.000 Tax accrual 15,000 Long term debt 70,000 Common Stock 80,000 Retained earnings 270.000 40,000 20,000 40,000 80,000 20,000 70,000 270,000 INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Sales Cost of good sold Gross Profit Selling Expenses Earning Before Interest and Tax Interest Expense Earning Before Tax Tax Expenses Profit After Tax 120,000 55,000 65,000 30,000 35,000 8.200 26.800 25,520 1,280 INDUSTRY AVERAGE RATIO Current ratio Quick ratio Debt ratio Time interest earned 1.60 x 1.00 x 40% 6.3 x Average collection period Inventory turnover Return on assets Net profit margin 120 Days 1.30 x 10% 22% Based on the given financial statements: a) Compute the indicates ratios as listed in industry average ratio for XYZ Sdn Bhd. b) Analyse the overall performance of the company according to liquidity, activity, profitability and leverage ratios. (20 Marks) 5 COPYRIGHT RESERVED CONFIDENTIAL