Question 2 Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: Statements of Comprehensive Income Sales Company A Company B RM Cost of sales RM 160,000 (120,000) RM RM Gross profit 40.000 240,000 (180,000) 60,000 Less: Administration expenses 12,000 18,000 Selling and distribution expenses 6.000 9,500 Other operating expenses 10,000 14,000 Financial expenses 3.000 500 (31,000) Net profit 9.000 (42,000) 18,000 RM RM RM RM Statements of Financial Position Non-current Assets 80.000 180.000 Current Assets Inventory 30.000 50,000 Receivables Bank 6.000 4.000 20,000 10.000 Total Asset 40,000 120.000 80,000 260.000 Capital and reserves Ordinary share capital 60,000 160.000 Accumulated profits 20.000 75.000 80,000 235.000 Non Current liabilities 10% Loan stock 30,000 5,000 Current liabilities Payables 10,000 20.000 Total Capital and reserves 120.000 260.000 Required: a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: Gross Profit Margin Net Profit Margin Inventory Turnover Period (days) Receivables Collection Period (days) iv V Payables Payment Period (days) vi Current Ratio vii Quick Ratio (8 marks) b. Comment on each of the ratios calculated in part (a) above. (7 marks)