Financial Statement Analysis

Refer to the following financial statements of XYZ Sdn. Bhd. for 2018:

Statement of Profit or Loss for the Year Ending 31 December 2018

$ (000's)$ (000's)

Revenue 3,393

Cost of goods sold 2,482

Gorss profit 911

Less: operating expenses

- Selling, general and administrative expenses492

- Depreciation 147 639

Operating income 272

Other income 48

Earnings before interest and tax (EBIT) 320

Interest expense 75

Profit before tax 245

Corporation tax 74

Profit after tax 171

Preferred dividends 20

Earnings attributable to ordinary shareholders 151

Ordinary dividends 50

Retained earnings 101

Statement of Financial Performance as at 31 December 2018

$ (000's) $ (000's)

Non-current assets Current liabilities

Property, plant and equipment 2,135 Trade creditors 321

Less: depreciation (810) Other creditors and accruals801,325Short-term borrowings335 Investments3757361,700 Current assetsLong-term liabilities Stocks (inventories)435Long-term borrowings707 Trade debtors441Deferred tax176 Other debtors and prepayments90883 Cash at bank and in hand216Shareholders'equity1,182Ordinary shares100Preference shares48Capital reserves552Retained earnings602Treasury stock(39)1,263

2,8822,882

Required: Calculate the following ratios for the company and explain the general implications of your results:

a. Gross profit; operating profit; and net profit after tax margins

b. Current and acid-test ratios

c. Gearing ratio and interest cover ratio

d. Provide TWO (2) comments on the performance of XYZ Sdn. Bhd. for 2018.