Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

REQUIRED:

a) Explain how profitability ratios give an impact to management decision making.

b) Following are the financial statement of Suci Berhad for year 2022.

  

Based on the statement above, calculate the following ratios:
i. Current ratio
ii. Quick ratio
iii. Inventory turnover
iv. Total asset turnover
v. Debt ratio
vi. Net profit margin
vii. Return on asset
viii. Return on equity
 
 

Suci Berhad Statement of Comprehensive Income for the year ended at 31 December 2022 Revenue Cost of Sales Gross Profit Less: Operating expenses Distribution Cost Administrative Expenses Other Expenses Operating Profit Less: Interest expenses Profit before tax Income tax Net Profit RM 137,000 (65,000) 72,000 10,000 18,000 3,000 41,000 1,000 40,000 (12,000) 28,000