The Bujang Lapok Berhad manufactures and sells a line of exclusive sportswear. The company was started by Miss Sizuka just $10$ years ago and has been profitable every year since its inception. The chief financial officer for the firm, Mr$.$ Nobitha, has decided to seek a line of credit from the firm$$s bank. In the past, the company has relied on its suppliers to finance a large part of its needs for inventory. However, in recent months tight money conditions have led the firm$$s suppliers to offer sizable cash discounts to speed up payments for purchases. Mr$.$ Nobitha wants to use the line of credit to supplant a large portion of the firm$$s payable during the summer, which is the firm$$s peak seasonal sales period.

The firm$$s two most recent statements of financial position were presented to the bank in support of its loan request. In addition, the firm$$s income statement for the year just ended was provided. These statements are found in the following:

Income Statement

for the year ending December $31,($in RM millions$)$

This year

Last year

Sales revenue

$53,195$

$52,235$

Less: Cost of goods sold

$41,304$

$38,032$

Gross profits

$11,891$

$14,203$

Less: Operating expenses

Selling & administration

$4,064$

$3,933$

Pension

$405$

$714$

Non$-$pension post$-$retirement

$758$

$834$

Depreciation

$1,100$

$994$

Amortization of tools

$1,120$

$961$

Total operating expenses

$7,447$

$7,436$

Operating profits

$4,444$

$6,767$

Less: Interest expenses

$995$

$937$

Net profit before taxes

$3,449$

$5,830$

Less: Taxes $(40\%)$

$1,380$

$2,332$

Net profit after taxes

$2,069$

$3,498$

Statement of Financial Position

for the year ending December $31($in RM millions$)$

This year

Last year

Current Assets

Cash and cash equivalents

$5,543$

$5,145$

Marketable securities

$2,582$

$3,226$

Account receivables

$2,003$

$1,695$

Inventories

$4,448$

$3,356$

Prepaid taxes

$985$

$1,330$

Other receivables

$13,623$

$12,433$

Total Current Assets

$29,184$

$27,185$

Property & equipment

$20,468$

$18,281$

Less: Accumulated Depreciation

$7,873$

$7,208$

Net Plant & Equipment

$12,595$

$11,073$

Other Assets

Special tools

$3,566$

$3,643$

Intangible assets

$2,082$

$2,162$

Deferred tax assets

$490$

$395$

Total Other Assets

$6,138$

$6,200$

Total Assets

$47,917$

$44,458$

Current Liabilities

Account payables

$8,290$

$7,826$

Short$-$term debt

$2,674$

$4,645$

Accrued liabilities

$7,032$

$5,582$

Other payments

$1,661$

$811$

Total Current Liabilities

$19,657$

$18,864$

Non$-$Current Liabilities

Long$-$term debt

$9,858$

$7,650$

Accrued employee benefits

$3,378$

$3,514$

Other non$-$current liabilities

$4,065$

$3,736$

Total Non$-$Current Liabilities

$17,301$

$14,900$

Total Liabilities

$36,958$

$33,764$

Shareholder's Equity

Preferred stock

$0$

$2$

Common stock $($at RM$1$ par$)$

$408$

$364$

Additional paid$-$in capital

$5,506$

$5,536$

Retained earnings

$5,045$

$4,792$

Total Shareholder's Equity

$10,959$

$10,694$

Total Liabilities and Shareholder's Equity

$47,917$

$44,458$

Industry Average Ratio this year

Current Ratio

$1\mathrm{.}78$

Acid Test Ratio

$1\mathrm{.}55$

Inventory Turnover

$7\mathrm{.}41$

Average Collection Period

$22\mathrm{.}8$

Non$-$Current Asset Turnover

$1\mathrm{.}54$

Total Asset Turnover

$0\mathrm{.}89$

Debt

$75\%$

Times Interest Earned

$6\mathrm{.}4$

Net Profit Margin

$4\mathrm{.}70\%$

Return on Assets

$4\mathrm{.}60\%$

Return on Common Equity

$20\mathrm{.}70\%$

a$.$ Compute the financial ratios for both years, and using the average industry evaluate the firm in the following category:

i$.$ Liquidity

ii$.$ Asset Management

iii. Debt Management

iv$.$ Profitability