Business Finance

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T3 Question 9

(a) The following are the financial statements of Watton Sdn. Bhd. and Guardon Sdn. Bhd. for the year ended 2009:

Income Statement for the year ended 31 December 2009
| Watton Sdn. Bhd.| Guardon Sdn. Bhd.|
| RM’000| RM’000|
Sales| 176,000| 450,000|
Cost of goods sold| 78,000| 335,000|
Gross Profit| 98,000| 115,000|
Operating expenses| 21,700| 78,000|
Profit before interest and tax| 76,300| 37,000|
Interest| 5,000| 21,000|
Profit before tax| 71,300| 16,000|
Tax paid| 17,800| 4,000|
Profit after tax| 53,500| 12,000|
| | |

Balance Sheet as at 31 December 2009
| Watton Sdn. Bhd.| Guardon Sdn. Bhd.|
| RM’000| RM’000|
Non-current assets:| | |
Property, plant and equipment| 825,000| 2,730,000|
Motor vehicles| 290,000| 1,853,000|
| 1,115,000| 4,583,000|
Current assets:| | |
Inventory| 387,500| 1,400,000|
Trade receivables| 513,000| 719,000|
Cash and bank balances| 349,000| 209,000|
| 1,249,500| 2,328,000|
Current liabilities:| | |
Trade payables| 711,000| 1,799,000|
Note payables| 100,000| 600,000|
| 811,000| 2,399,000|
Working capital| 438,500| (71,000)|
| 1,553,500| 4,512,000|
| | |
Owners’ Equity:| | |
Ordinary shares| 1,000,000| 2,000,000|
Retained earnings| 53,500| 12,000|
| 1,053,500| 2,012,000|
Long term loan| 500,000| 2,500,000|
| 1,553,500| 4,512,000|
| | |
Required:

Based on the above financial statements, compute the following ratios for both companies respectively for year 2009:

(i) Current ratio (in times); (3 marks)

(ii) Quick ratio (in times); (3 marks)

(iii) Debt ratio (in percentage); (3 marks)

(iv) Net profit margin (in percentage); (3 marks)

(v) Time-interest-earned (in times); and (3 marks)

(vi) Total assets turnover (in times)....
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