Question 1 Income Statement Paper and Board Berhad For the Year Ended December 31, 2016 RM Sales 2,080,976 (-) Cost of Goods Sold 1,701,000 Gross Profits 379,976 (-) Operating Expenses 273,846 Operating Profits 106,130 (-) Interest 19,296 Net Profit before taxes 86,834 (-) Taxes 34,734 Net Profit after taxes 52,100 Balance Sheet Paper and Board Berhad December 31, 2016 Assets Cash Accounts receivable Inventories Total Current Assets Gross fixed assets (-) Accumulated Depreciation Net Fixed Assets Total Assets RM 95,000 237,000 243,000 575,000 500,000 75,000 425,000 1,000,000 Liabilities and Stockholders' Equity Current Liabilities: Accounts Payable Notes Payable Accruals Total Current Liabilities Long term debts Total Liabilities Stockholders' Equity: Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 89,000 169,000 87,000 345,000 188,000 533,000 255,000 212,000 467,000 1,000,000 And the following is the average ratios for broadcasting and entertainment industry: Current ratio Acid-test ratio Accounts receivables turnover Inventory turnover Debt ratio Times interest earned 1.17 0.92 10.08 18.32 34.21% 4.5x a. From the above information, you are required to calculate the company's: i) Current ratio ii) Acid-test ratio iii) Account receivables turnover iv) Inventory turnover v) Debt ratio vi) Times interest earned (6 Marks) b. Based on your calculation in (a), compare with the industry standard and evaluate the company's position and practices on its: i) Liquidity position ii) Debt management level (8 Marks) c. Describe TWO (2) limitations of financial ratio analysis. (6 Marks)