Required:Analyse Rara's financial statement. Include the following ratios for 2020 and discuss your findings (2019values are provided for comparison):a. Return on assets (year 2019 – 10.8%)b. Profit margin (year 2019 – 10.0%)c. Return on common stockholders' equity (year 2019 – 56%) Rara Sdn. BhdBalance Sheets31st December (in millions)20202019AssetsCurrent assetsCashRM460RM444Acount receivable (net)1,1881,190Inventories1,1322471,056225Other current assets3,0273,281Total current assets2,9153,128Property (net)Other assets5.5935,804Total assetsRM11.901RM11,847Liabilities and Stockholders' EquityCurrent liabilitiesRM3,3136,826RM3,1846,509Long-term liabilitiesStockholders' equity - common1.762RM11,9012.154RM11,847Total liabilities and stockholders' equityRara Sdn. BhdIncome StatementsFor the year ended 31st December (in millions)2020RM13,1982019Net salesRM12,397Cost of goods soldGross profitSelling and administrative expensesIncome from operations7.7505,4487,1085,2893.4723.2991,9901,976Interest expense233248Other (income) expense, net111,732Income before income taxes1,742Income tax expense503502Net incomeRM1,229RM1.240

Required: Analyse Rara's financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison): a. Return on assets (year 2019 – 10.8%) b. Profit margin (year 2019 – 10.0%) c. Return on common stockholders' equity (year 2019 – 56%)

Required: Analyse Rara's financial statement. Include the following ratios for 2020 and discuss your findings (2019 values are provided for comparison): a. Return on assets (year 2019 – 10.8%) b. Profit margin (year 2019 – 10.0%) c. Return on common stockholders' equity (year 2019 – 56%)

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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Question

Required:
Analyse Rara's financial statement. Include the following ratios for 2020 and discuss your findings (2019
values are provided for comparison):
a. Return on assets (year 2019 – 10.8%)
b. Profit margin (year 2019 – 10.0%)
c. Return on common stockholders' equity (year 2019 – 56%)

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

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