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QUESTION 4 The following information are extracted from the books of EZY Enterprise for the year ended 30 June 2021: Gross profit Total other income
QUESTION 4 The following information are extracted from the books of EZY Enterprise for the year ended 30 June 2021: Gross profit Total other income Total operating expenses Total non-current assets Total current assets Account receivables Inventory as at 1 July 2020 Inventory as at 30 June 2021 Total non-current liabilities Total current liabilities Capital as at 1 July 2020 RM 170, 100 24,700 88,000 450,000 95,000 33,000 25,000 19,400 110,000 65,000 263,200 1. 2. 3. 4. Net sales during the year amount RM243,000 Net credit sales are 60% from the net sales. Cost of goods sold is 30% of total net sales. Assume that there are 365 days in a year. Required: a. Based on the information given above, compute the following ratios: i. Quick ratio ii. Gross profit margin iii. Net profit margin iv. Inventory turnover ratio V. Average collection period (8 marks) b. Based on your answer in (a) above, explain the following ratios: C. i. Quick ratio ii. Net profit margin iii. Inventory turnover ratio iv. Average collection period (4 marks) State whether each of the following statements is TRUE or FALSE. i. Net profit margin can be used to measure the performance of the business entity. ii. Inventory turnover ratio is used by the creditor to know the business's ability to pay debts. iii. Quick ratio is the measure of liquidity position of the business entity
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