QUESTION 2 As a junior financial manager, your first task in Gezza Sdn.Bhd. is to assess the firm's efficiency, liquidity, profitability and leverage. The firm's financial statement are presented below: Gezza Sdn. Bhd. Statement of Financial Position as at 31 December 2020 RM,000 RM,000 Current Assets: Cash 200 Account Receivable 200 800 1,200 Inventory Net non-current assets 2.150 3,350 120 275 65 460 Current Liabilities: Account Payable Notes Payable Other Current Liabilities Non-Current Liability Common Equity Common Stocks Retained Earnings 1,250 1,400 240 1.640 3.350 Gezza Sdn. Bhd. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 RM,000 Net sales 4,000 Less: Costs of goods sold 1,500 Operating expenses 1,825 Depreciation 265 Interest expense 215 Earnings before taxes 195 Income tax 40 Net profit after taxes 155 Less: Ordinary dividends 90 Retained profits for the year 65 Additional information : The industrial financial ratios are as follow: Industry Averages Net profit margin 6% Total assets turnover 1.2x Debt ratio 30% Return on assets 6.6% Return on Equity 12% Required: a. Compute the following: i. Debt ratio. (3 marks) ii. Current ratio. (3 marks) iii. Net profit margin. (2 marks) iv. Total assets turnover. (2 marks) V. Average collection period. (3 marks) vi. Return on assets. (2 marks) b. Using the Du Pont equation, calculate the return on equity of the company. (3 marks) C. Based on Du Pont analysis, identify factors affecting Gezza's return on equity. (4 marks) d. Explain THREE (3) ways to improve the firm's profitability