FAA Furniture, a manufacturer and wholesaler of high$-$quality home furnishings has been experiencing low profitability in recent years. As result, the board of directors has replaced the president of the firm with a new president, Jalal Idris, who has asked you to make an analysis of the firm$$s financial performance. The most recent industry average ratios and FAA Furniture$$s financial statements are as follows:

Statement of Financial Position As At $31$ December $2023($RM$000)$

Cash

Marketable securities

Account receivables

Inventories

Prepaid expenses

Total current asset

Plant and equipment

Accumulated depreciation

Total fixed asset $1,400$

$300$

$10,000$

$12,000$

$300$

$24000$

$14,300$

$7,300$

$7,000$ Account payable

Notes payable

Accrued wages and salaries

Current portion of short term debt

Total current liabilities

Deferred income taxes

Mortgage

Term loans

Total long term liabilities

Share capital

Retained earnings

Total equity $3,000$

$3,400$

$3,100$

$500$

$10,000$

$1,500$

$6,300$

$2,900$

$10,700$

$2,100$

$8,200$

$10,300$

Total asset $31,000$ Total liabilities and equity $31,000$

Statement of Profit or Loss For The Year Ended $2023($RM$000)$

Net sales

Cost of goods sold

Gross profit

Operating expenses

Net operating income

Interest expense

Earnings before taxes

Income taxes

Earnings after taxes $51,00$

$38,00$

$13,000$

$9,000$

$4,000$

$1,000$

$3,000$

$1,200$

$1,800$

Industry Average Ratios

Current ratio

Acid test ratio

Debt ratio

Time interest earned

Inventory turnover

Average collection period

Net profit margin

Return on equity $2$ times $1\mathrm{.}1$ times

$54\mathrm{.}9\%$

$2\mathrm{.}4$ times

$3\mathrm{.}6$ times

$63$ days

$4\mathrm{.}14\%$

$9\mathrm{.}3\%$

Required:

a$)$ Compute the relevant ratios from financial statements provided above:

i$)$ Quick ratio

ii$)$ Average collection period

iii$)$ Inventory turnover

iv$)$ Time interest earned

v$)$ Return on equity

b$)$ Based on your answer in $($a$)$ above, analyse the firm$$s financial performance as compared to the industry average ratios.