Required: a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: i. Gross Profit Margin ii. Net Profit Margin iii. Inventory Turnover Period (days) iv. Receivables Collection Period (days) v. Payables Payment Period (days) vi. Current Ratio vii. Quick Ratio b. Comment on each of the ratios calculated in part (a) above.

Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: Statements of Comprehensive Income Company A Company B RM RM RM RM Sales 160,000 240,000 Cost of sales (120.000) (180.000) Gross profit 40,000 60,000 Less: Administration expenses 12,000 18,000 Selling and distribution expenses 6,000 9,500 Other operating expenses 10,000 14,000 Financial expenses 3,000 500 (31,000) (42,000) Net profit 9,000 18,000 Company A Company B RM RM RM RM Statements of Financial Position Non-current Assets 80,000 180,000 Current Assets Inventory Receivables Bank 30,000 6,000 4,000 50,000 20,000 10,000 Total Asset 40,000 120,000 80,000 260,000 60,000 20,000 80,000 160,000 75,000 235,000 Capital and reserves Ordinary share capital Accumulated profits Non Current liabilities 10% Loan stock Current liabilities Payables Total Capital and reserves 30,000 5,000 10,000 120,000 20,000 260,000