Question 5 Two companies Grappa Sdn Bhd and Grandma Sdn Bhd trade in the same market. Their financial statements for the year ended 30 September 2018 are summarised below: Statements of Comprehensive Income for the year ended 30 September 2018: Grappa RM'000 Grandma RM'000 20,500 (16,000) 4,500 (500) (2,300) (10) (290) 1,400 (400) 1,000 Revenue Cost of sales Gross profit Operating expenses Finance costs-loan - overdraft -lease Profit before tax Income tax expense Profit for the year Note: dividends paid during the year 12,000 (10,500) 1,500 (240) (210) Nil Nil 1,050 (150) 900 250 700 Statement of Financial Position as at 30 September 2018 Grappa Grandma RM'000 RM'000 RM'000 RM'000 Non-current assets Freehold factory Owned plant Leased plant 4,400 5,000 Nill Nil 2,200 5,300 7,500 9,400 Current assets Inventory Trade receivables Bank Total assets 3,600 3,700 Nil 2,000 2,400 600 7,300 14,800 5,000 14,400 Equity and llabilities Equity shares of RM1 each Retained earnings 2,000 800 2,800 2,000 3,500 5,500 Non-current liabilities Finance lease obligations 7% loan notes 10% loan notes 3,200 Nil Nil 3,000 3,000 Nil 5 100 Nill 600 1,200 Deferred tax Government grants 6,300 4,800 Current liabilities Bank overdraft 1,200 3,800 Nil 500 200 Nil 3,100 400 Nil Trade payables Government grants Finance lease obligations Taxation 5,700 4,100 14,400 600 14,800 Total equity and liabilities Required: Calculate the following ratios for Grappa and Grandma: (a) (State the formulae used for calculating the ratios.) Gross profit percentage () (ii) Gearing percentage (iii) Asset turnover ratio (iv) Current ratio (v) Quick ratio (acid test ratio) (vi) Receivables collection period (24 marks) (b) Compare and comment on the performance of the companies as indicated by the ratios you have calculated in part (a). (6 marks)