FINANCIAL MANAGEMENT (FIN420)

ASSIGNMENT ON

FINANCIAL RATIO ANALYSIS

Financial ratios are useful tools that help companies and investors analyze and compare relationships
between different pieces of financial information across an individual company's history, an industry,
or an entire business sector. Given below the balance sheet and income statement for Fashion
Valet Sdn Bhd for Year 2019 and Year 2020. From the information given, you are required to
calculate and do an analysis. You also have to recommend to Existing Shareholder and Potential
Investors either they should remain in the company (existing shareholders) or should invest in the
company (potential investors).

FASHION VALET BALANCE SHEET

AS AT DEC 31ST 2019 AND 2020 (RM)

2019 2020
Assets:
Cash 1,400,000 1,680,000
Marketable Securities 300,000 360,000
Account Receivables 10,000,000 12,000,000
Inventories 12,000,000 14,400,000
Prepaid expenses 300,000 360,000
Total Current Assets 24,000,000 28,800,000

Plant and equipment 14,300,000 11,440,000

(-) Accumulated Deprieciation 7,300,000 5,000,000
Net Fixed Assets 7,000,000 6,440,000

TOTAL ASSETS 31,000,000 35,240,000

Liabilities:
Account Payable 3,000,000 3,600,000
Notes payable 3,400,000 4,040,000
Accrued wages and salaries 3,600,000 4,600,000
Mortgage 7,800,000 8,000,000
Term loans 2,900,000 3,500,000
Share capital 2,100,000 2,500,000
Retained earnings 8,200,000 9,000,000

TOTAL LIABILITIES AND 31,000,000 35,240,000

EQUITIES
 INCOME STATEMENT FOR THE YEAR ENDED 2019 & 2020 (RM)

2019 2020
Net sales 51,000,000 60,000,000
(-) Cost of goods sold 38,000,000 42,000,000
Gross profit 13,000,000 18,000,000
(-)Operating Expenses 9,000,000 12,000,000
Earning before interest 4,000,000 6,000,000
and tax
(-)Interest expenses 1,000,000 1,500,000
Earnings before taxes 3,000,000 4,500,000
(-)Income taxes 1,200,000 2,000,000
Earnings after taxes 1,800,000 2,500,000

a. From the information above, you have to calculate the following ratios:

Kena kira 2 kali ratio

2020 compare dengan 2019 either dah improve

i) Current ratio
ii) Quick ratio
iii) Fixed asset turnover
iv) Average Collection period
v) Debt ratio
vi) Time interest earned
vii) Net profit margin
viii) Return on asset

b. Based on your answer in (a), analyze the firm’s financial performance as compared to the
year 2019 ratios.

c. Make a recommendation to your existing and potential investors either they should
remain/invest in you company.
 REPORT GUIDELINES

 You need to form a group of 4-5 students per group

 You have to do a report and presentation based on this assignment.

Report:

Front page
Table of Contents

Chapter 1 Introduction

(bagitau secara general apa purpose)

1.1 Introduction on Financial Ratio

1.2 Liquidity Ratio

1.3 Activity Ratio

1.4 Leverage Ratio

1.5 Profitability Ratio

Chapter 2 Financial Ratio Analysis (letakkan income statement n balance sheet punya
information)

(2.1 START CALCULATE LETAK TABLE AND PUT INTERPRETATION BELOW)

2.1 Liquidity Ratio

2.2 Activity Ratio

2.3 Leverage Ratio

2.4 Profitability Ratio

Chapter 3 Conclusion and Recommendation

 (CONCLUDE EITHER IMPROVED OR WORSE)

3.1 Conclusion

Worsen decrease performance

3.2 Recommendation (WETHER SHOULD INVEST)

References

*Report must be in Times New Roman (font 12)

*Submission of report : 23rd December 2020

*Submission Video Presentation:23rd December 2020

CHAPTER 1
INTRODUCTION

1.1 Introduction on Financial Ratio

Financial ratio is a tools to measure………………………………………….

1.2 Liquidity Ratio

………………………………………………………………………………………….

1.3 Activity Ratio

……………………………………………………………………………………….

1.4 Leverage Ratio

…………………………………………………………………………………………

1.5 Profitability Ratio

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 CHAPTER 2
FINANCIAL RATIO ANALYSIS

FASHION VALET BALANCE SHEET

AS AT DEC 31ST 2019 AND 2020 (RM)

2019 2020
Assets:
Cash 1,400,000 1,680,000
Marketable Securities 300,000 360,000
Account Receivables 10,000,000 12,000,000
Inventories 12,000,000 14,400,000
Prepaid expenses 300,000 360,000
Total Current Assets 24,000,000 28,800,000

Plant and equipment 14,300,000 11,440,000

(-) Accumulated Deprieciation 7,300,000 5,000,000
Net Fixed Assets 7,000,000 6,440,000

TOTAL ASSETS 31,000,000 35,240,000

Liabilities:
Account Payable 3,000,000 3,600,000
Notes payable 3,400,000 4,040,000
Accrued wages and salaries 3,600,000 4,600,000
Mortgage 7,800,000 8,000,000
Term loans 2,900,000 3,500,000
Share capital 2,100,000 2,500,000
 Retained earnings 8,200,000 9,000,000

TOTAL LIABILITIES AND 31,000,000 35,240,000

EQUITIES

INCOME STATEMENT FOR THE YEAR ENDED 2019 & 2020 (RM)

2019 2020
Net sales 51,000,000 60,000,000
(-) Cost of goods sold 38,000,000 42,000,000
Gross profit 13,000,000 18,000,000
(-)Operating Expenses 9,000,000 12,000,000
Earning before interest 4,000,000 6,000,000
and tax
(-)Interest expenses 1,000,000 1,500,000
Earnings before taxes 3,000,000 4,500,000
(-)Income taxes 1,200,000 2,000,000
Earnings after taxes 1,800,000 2,500,000

2.1 Liquidity Ratio

Ratio Formula Year 2019 Year 2020
Current Ratio *show your working
inside this box

Quick Ratio

Interpretation:
Example: The liquidity ratio for Fashion Valet is good in year 2019 compared to year
2020. It shows the company …………………………………………………

2.2 Activity Ratio

Ratio Formula Year 2019 Year 2020

Interpretation:

2.3 Leverage Ratio

*do the same as above

2.4 Profitability Ratio

*do the same as above

CHAPTER 3
CONCLUSION AND RECOMMENDATION

3.1 Conclusion
*Conclude apa yang you Nampak dalam company in year 2019 or 2020..is improve or
getting worse?. Conclude here

3.2 Recommendation
*Recommend to existing shareholder and potential investors… They shold
remain/hold/sell or invest dalam company you.
REFERENCES