Question 4 The Final accounts for SAYUR Sdn BHD has been provided to the board of directors and the directors are not happy with the performance of the company. The company only makes $23,100 for the 2019 financial year. The board of directors are still indecisive whether to appoint new CEO or to devise new policies to ensure CEO could be more productive. Income statement of SAYUR Sdn Bhd for the year ended 31 December 2019 Sales $1800 000 Cost of goods sold: Materials $767 000 Labour 553 000 Heat, Light & power 88 000 Indirect labour 113 000 Depreciation 71000 Gross profit Selling expenses General and administrative expenses Earnings before interest and taxes Interest Expense Earnings before taxes Federal and state income taxes Net Income 1592.000 $ 200 000 115 000 30.000 63 000 24.500 38 500 15.400 23.100 SAYUR Sdn Bhd Balance sheet as at 31 December 2012 Cash Receivables Inventories Total current assets Net Fixed assets $ 98 000 316 000 241 000 655 000 292 500 Accounts Payable Notes Payable Other current liabilities Total current liabilities Long Term Debt Common Equity $129 000 84 000 1117000 330 000 256 500 361.000 947 500 Total assets 947 500 Ratio Current assets current liabilities Days sales Outstanding Sales/Inventories Sales/Total assets Net Income Sales Net income Total assets Net Income Common Equity Total debt/Total assets Industry. AYRS 20 X 35 Days 67 X 3.0 X 1.2% 3.6% 60.096 Required: a) Calculate the missing ratios for SAYUR and the industry (11 marks) b) Construct the extended Du Pont equation for SAYUR (3 marks) c) Analyse the ratios of SAYUR by comparing with that of the industry. (6 marks) d) What is meant by an agency cost or agency problem? Do these interfere with shareholder wealth maximization? Discuss (5 marks) (Total: 25 marks) Question 4 The Final accounts for SAYUR Sdn BHD has been provided to the board of directors and the directors are not happy with the performance of the company. The company only makes $23,100 for the 2019 financial year. The board of directors are still indecisive whether to appoint new CEO or to devise new policies to ensure CEO could be more productive. Income statement of SAYUR Sdn Bhd for the year ended 31 December 2019 Sales $1800 000 Cost of goods sold: Materials $767 000 Labour 553 000 Heat, Light & power 88 000 Indirect labour 113 000 Depreciation 71000 Gross profit Selling expenses General and administrative expenses Earnings before interest and taxes Interest Expense Earnings before taxes Federal and state income taxes Net Income 1592.000 $ 200 000 115 000 30.000 63 000 24.500 38 500 15.400 23.100 SAYUR Sdn Bhd Balance sheet as at 31 December 2012 Cash Receivables Inventories Total current assets Net Fixed assets $ 98 000 316 000 241 000 655 000 292 500 Accounts Payable Notes Payable Other current liabilities Total current liabilities Long Term Debt Common Equity $129 000 84 000 1117000 330 000 256 500 361.000 947 500 Total assets 947 500 Ratio Current assets current liabilities Days sales Outstanding Sales/Inventories Sales/Total assets Net Income Sales Net income Total assets Net Income Common Equity Total debt/Total assets Industry. AYRS 20 X 35 Days 67 X 3.0 X 1.2% 3.6% 60.096 Required: a) Calculate the missing ratios for SAYUR and the industry (11 marks) b) Construct the extended Du Pont equation for SAYUR (3 marks) c) Analyse the ratios of SAYUR by comparing with that of the industry. (6 marks) d) What is meant by an agency cost or agency problem? Do these interfere with shareholder wealth maximization? Discuss (5 marks) (Total: 25 marks)
