Şection A ONE compulsory question Question 1 Yes Manufacturing Sendirian Berhad was organized five years ago and manufactures toys. Its most recent three years' balance sheets and income statements are reproduced below, YES MANUFACTURING SENDIRIAN BERHAD Balance Sheets 30 Junc, Year 5, Year 4 and Year 3 Year 5 Year 4 Year 3 Assets RM 12,000 183,000 142,000 5,000 160,000 RM 502,000 RM 16,000 60,000 52,000 4,000 70,000 RM 202,000 Cash RM 15,000 Receivabics (nct) Inventory Other current assets Plant and cquipment (net) 80,000 97,000 6,000 110,000 RM 308,000 Total asscts Liabilities and equity Accounts payablc Тах раyable Long-term liabilities Common stock, RM5 par value Retained earnings Total liabilities and cquity RM 147,800 30,000 120,000 110,000 94,200 RM502,000 RM 50,400 14,400 73,000 110,000 60,200 RM 308,000 RM 22,000 28,000 22,400 80,000 49,600 RM 202,000 YES MANUFACTURING SENDIRIAN BERHAD Consolidated Income Statements 30 Junc, Year 5, Year 4 and Year 3 Year 5 Year 4 Year 3 Net sales Cost of goods sold Gross profit Marketing and administrative cost Operating income Interest cost RM1,684,000 (927,000) 757,000 (670,000) 87,000 (12,000) 75,000 (30,000) RM 45,000 RM1,250,000 (810,000) 440,000 (396,700) 43,300 (7,300) 36,000 (14,000) RM 21,600 RM1,050,000 (512,000) 538,000 (467,760) 70,240 (2,240) 68,000 (28,000) RM 40,000 Earnings before income tax Income tax Net income 2 Additional information: 1. All sales are on account/credit. 2. Long-term liabilities are owed to the company's bank 3. Terms of sale are net 30 days. Required: (a) Compute the following ratios for both Years 4 and 5. Working capital i) ii) Current ratio iii) Acid-test ratio iv) Accounts receivable turnover v) Collection period of receivables vi) Inventory turnover vii) Days to sell inventory viii) Debt-to-equity rutio ix) Time interest earned (1. (b) Using Ycar 3 as the base ycar, compute an index-number trend serics for: Sales i) ii) Cost of goods sold iii) Gross profit iv) Marketing and administrative costs v) Operating income vi) Net income :repɔr: (c) Based on your analysis in (a) and (b) prepare a report yielding a recomnendation on whether to grant a loan to Yes Manufacturing. Support your recommendation with relevant analysis.