Business Finance
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).
(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).