Ercel ('000) Statements of Financial Position as at 30 September 2021 Kerem ('000) Bursin (RM'000) Investments Subsidiary 11,170 Associate 3,200 Land 10,500 5,600 Property, plant & equipment 8,850 4,770 Intangible assets 120 Current assets: Inventory 5,660 3,340 Trade receivables 5,980 3,116 Current account 300 Bank 4,830 2,270 Total assets 50,490 19,216 2,200 3,560 1,890 2,110 1,300 11,060 12,000 6,900 32,830 2,000 1,760 5,880 1,260 Ordinary shares 5% Preference shares Revaluation reserve Retained earnings Long term loan 8% Debentures Trade payables Current account Tax payables Total equity & liability 700 1,370 1,000 300 3,510 250 86 19,216 6,120 2.500 1,900 50,490 400 11,060 Statements of Profit & Loss as at 30 September 2021 Bursin ('000) Ercel ('000) Kerem ('000) 25,300 (13,800) 11,500 (4,590) (1,860) 200 5,250 (1,800) 3,450 2,430 12,900 (8,440) 4,460 (2,830) (920) Sales - Cost of sales Gross profit -) Administration expenses -) Other expenses +) Gain from sale of PPE Profit before tax - Tax Profit after tax RE b/f Dividends declared in September 2021 Ordinary shares Preference shares 6,600 (4,130) 2,470 (1,310) (200) 700 (200) 510 860 960 (260) 700 560 10 100 780 100 Additional information: 1. Kerem Bhd acquired 80% of ordinary shares issued by Bursin Sdn Bhd on 30 September 2020 with consideration transferred of RM7.17 million which has been fully recorded, retained earnings was recorded at RM860,000. Revaluation reserve balance on acquisition date was recorded as RM500,000. There had been no new shares issued by Bursin Sdn Bhd since acquisition date. 2. During the year 2021, Kerem disposed of a plant with carrying value of RM600,000 for RM800,000 of which payment received was in cash. 3. Bursin sold inventory to Kerem at cost plus 25% with invoice price of RM800,000. 10% of Kerem's closing inventory is related to this transaction. 4. On 1 October 2020, Kerem acquired 40% of Ercel with consideration transferred of RM3.2 million. Ercel had bank balance of RM460,000 on the date of acquisition. Dividends paid by the new associate must be taken into consideration when calculating investment in associate. 5. Depreciation for the year is estimated at RM2.4 million and partial goodwill impairment estimated at 50% for year 2021. 6. The group's statement of financial position as at 30 September 2020 is as follows: RM'000 RM'000 482 16,100 14,900 150 18,256 8,652 8,114 1,490 Goodwill Land PPE Intangible assets Current assets: Inventory Trade receivables Bank Total assets Ordinary shares 5% preference shares Group revaluation reserve Group retained earnings Non-controlling interest 8% Debentures Trade payables Tax payables Total 49,888 29,030 2,000 1,760 2,430 2,672 300 10,250 1.446 49,888 (b) You are assessing this group's financial health for investment purposes. Based on the group's financial statements, provide your analysis on following: i. Gearing ratio (total liabilities/total assets) ii. Net operating cashflow and liquidity ratio iii. Improvements on cash management, supported by your analysis of investing and financing cash flows (25 marks)