Financial position AS AT 31st DECEMBER 2020

QUESTION 3 These will be elaborated in the following sections. To illustrate better the computations of financial ratios and its interpretation, the financial statements if ABC Bhd is provide in TABLE 1.1. INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2020 TABLE 1.1 RM('000) RM('000) 3,394 (2,485) 909 (300) (240) (105) Revenue Cost of sales and direct expenses Gross profit Other operating income Distribution expenses Administrative expenses Other operating expenses Profit from operations Finance cost Investing Income Fair value gain of equity investments Profit before tax Tax expense Profit after tax for year Retained profits brought forward Available for appropriation Dividends paid Retained profits carried forward (645) 264 (71) 40 5 238 (70) 168 220 388 (45) 343 RM('000) RM('000) Non- Current Assets Property, plant and equipment Investment property Investment in equity instruments Investment in debt instruments 2,140 1,590 350 250 4,330 440 443 Current assets Inventories Trade receivables Other receivables Deposits and prepayments Cash at bank and in hand 90 40 188 1,201 5,531 Total Assets Equity Share capital Share premium Retained profits Total equity 600 50 343 993 Non-current liabilities Bank borrowings Financial liabilities Deferred tax liabilities Total non-current liabilities 2,565 879 179 3,623 Current liabilities 325 115 355 Trade payables Accruals and other payables Bank borrowings Current tax liabilities Total Current liabilities Total liabilities Total Equity and Liabilities 120 915 4,538 5,531 REQUIRED:: Calculate the following Ratios: a) Gross Profit Margin b) Net Profit Margin Current Ratio Quick Acid Ratio Inventory Turnover Ratio (Days) Accounts Receivable Turnover Ratio Accounts Payable Turnover Ratio h) Debt ratio i) Return on Assets b) Explain the limitation of ratio in a business