Question 1 Below is an extract of the Big Bhd. financial ratios for the year ended 31 December 2019 compared to the latest industry ratios, Big Bhd. has approached the Bank for a loan. Selected financial ratios as at 31 December 2019. Industry Average RM'000 2019 2018 RM'000 RM'000 Current ratio (times) Quick ratio (times) Debtors' collection period Stock turnover (times) Creditors' payment period Fixed assets turmover (times) Total asset turnover (times) Total debt to total asset 1.30 0.89 50 days 3.3 96days 1.58 1.27 66% 25% 6.3 0.91 1.70 0.68 0.97 60 days 2.95 113 days 1.65 51 days 5.5 80 days 2.57 2.15 51% 24% 0.95 76% 27% Long term debt to total capitalization Interest coverage ratio (times) Gross profit margin Net Profit margin Return on total assets Return on equity 4.6 9.1 28% 21% 17% 7.4% 7% 11% 4.9% 6.6% 11.9% 9.6% 12,8% 20.3%

Question 1 Below is an extract of the Big Bhd. financial ratios for the year ended 31 December 2019 compared to the latest industry ratios, Big Bhd. has approached the Bank for a loan. Selected financial ratios as at 31 December 2019. Industry Average RM'000 2019 2018 RM'000 RM'000 Current ratio (times) Quick ratio (times) Debtors' collection period Stock turnover (times) Creditors' payment period Fixed assets turmover (times) Total asset turnover (times) Total debt to total asset 1.30 0.89 50 days 3.3 96days 1.58 1.27 66% 25% 6.3 0.91 1.70 0.68 0.97 60 days 2.95 113 days 1.65 51 days 5.5 80 days 2.57 2.15 51% 24% 0.95 76% 27% Long term debt to total capitalization Interest coverage ratio (times) Gross profit margin Net Profit margin Return on total assets Return on equity 4.6 9.1 28% 21% 17% 7.4% 7% 11% 4.9% 6.6% 11.9% 9.6% 12,8% 20.3%

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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