i. Debt-to-equity ratio 2021 : 0.742020 : 1.12ii. Net profit margin 2021 : 34.58%2020 : 36.25%iii. Current ratio 2021 : 2.952020 : 2.5iv. Inventory turnover ratio 2021 : 6.332020 : 1.57Required : Provide comments in terms of liquidity, profitability, efficiency and solvency based on the computed ratios above. The following is the comparative financial statement for AZ Trading for the period ended 31December.AZ TradingComparative Statement of Financial PositionAs at 31 December 2020 and 202120212020RMRMAssetsNon-current assets:Motor Vehicle85,000(21,000)64,00065,000(18,000)47,000Less: Accumulated depreciationFurniture and FittingsLess: Accumulated depreciation58,000(12,000)46,00043,000(6,800)36,200Current assets:Cash & cash equivalentsAccount ReceivableShort-term investments30,00050,00070,00015,000275,00010,00020,00060,00035,000InventoriesTotal assets208,200Liabilities56,00061,000117,00050,00060,000110,000Current liabilitiesLong term liabilitiesTotal liabilitiesOwner's equity:CapitalNet profitLess: Drawings79,50083,000(4,500)158,000275,00042,70058,000(2,500)98,200208,200Total liabilities and equityAZ TradingComparative Statements of Profit or Loss and Other Comprehensive IncomeFor the year ended 31 December 2020 and 20212021RM2020RMSalesCost of goods soldLess: Opening inventoryAdd: PurchaseLess: Closing inventory240,000160,00035,00075,000(15,000)25,00065,000(35,000)Gross profitLess: Expenses145,000105,0006/7ACB10103/FPP/SEMESTER I SESSION 2021/2022Office administrationOther expensesNet Profit27,00035,00083,00019,00028,00058,000

Ratio analysis is very important technique of management accounting. Under this, various type of…

i. Debt-to-equity ratio 2021 : 0.74 2020 : 1.12 ii. Net profit margin 2021 : 34.58% 2020 : 36.25% iii. Current ratio 2021 : 2.95 2020 : 2.5 iv. Inventory turnover ratio 2021 : 6.33 2020 : 1.57 Required : Provide comments in terms of liquidity, profitability, efficiency and solvency based on the computed ratios above.

i. Debt-to-equity ratio 2021 : 0.74 2020 : 1.12 ii. Net profit margin 2021 : 34.58% 2020 : 36.25% iii. Current ratio 2021 : 2.95 2020 : 2.5 iv. Inventory turnover ratio 2021 : 6.33 2020 : 1.57 Required : Provide comments in terms of liquidity, profitability, efficiency and solvency based on the computed ratios above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rara Sdn. Bhd Balance Sheets 31st December (in millions) 2020 2019 Assets Current assets Cash RM460 RM444 Acount receivable (net) 1,188 1,190 Inventories 1,132 247 1,056 225 Other current assets 3,027 3,281 Total current assets 2,915 3,128 Property (net) Other assets 5.593 5,804 Total assets RM11.901 RM11,847 Liabilities and Stockholders' Equity Current liabilities RM3,313 6,826 RM3,184 6,509 Long-term liabilities Stockholders' equity - common 1.762 RM11,901 2.154 RM11,847 Total liabilities and stockholders' equity Rara Sdn. Bhd Income Statements For the year ended 31st December (in millions) 2020 RM13,198 2019 Net sales RM12,397 Cost of goods sold Gross profit Selling and administrative expenses Income from operations 7.750 5,448 7,108 5,289 3.472 3.299 1,990 1,976 Interest expense 233 248 Other (income) expense, net 11 1,732 Income before income taxes 1,742 Income tax expense 503 502 Net income RM1,229 RM1.240
Please do not give solution in image format thanku
Please do not give solution in image format thanku
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