QUESTION 3 (40 MARKS) Statements of comprehensive income for the year ended 30 June 2021: Sash Berhad Cotton Berhad RM'000 RM'000 Sales (all on credit) 24,000 14,000 Cost of sales 20.000 11.300 Gross Profit 4,000 2,700 Operating expenses 2.320 1.710 Operating profit 1,680 990 Debenture interest paid 240 90 Loss on asset disposal 20 30 Profit before tax 1,420 870 Taxation 720 450 Profit after tax 700 420 Dividends paid 120 114 Retained profit for the year 580 306 Cotton Berhad RM'000 RM"000 4,500 Statements of financial position as at 30 June 2021: Sash Berhad RM 000 RM 000 Non-current assets: Property, plant & equipment 5,000 Less: accumulated depreciation 1,000 4,000 Current assets Inventory 2,000 Trade receivable 990 Cash at bank 1.580 4,570 1.560 2.940 3,180 1,320 1,560 6.060 8.570 9.000 2,000 2,280 Capital and reserves RM1 ordinary shares Share premium Retained profit 1,000 520 2.000 3,500 5.000 6,300 Non-current liabilities: 1.200 480 Debentures Current Liabilities: Bank loan Trade payables 900 900 1.470 1.320 2,370 2.220 8.570 9.000 a) Based on the financial statements above, calculate the following financial ratios fon both Sash Berhad and Cotton Berhad. ) Gross profit margin (ii) Operating profit margin (iii) Net profit margin (iv) Current ratio (v) Quick ratio (vi) Receivables collection period (vii) Inventory turnover period (viii) Payables payment period (ix) Debt-to-equity ratio (x) Interest cover (30 marks) b) Prepare a short report giving your observations on the profitability, liquidity, efficiency (activity) and debt ratios of the two companies. (10 marks)