GROUP ASSIGNMENT (20%)

Shown below are the financial statement of Relaxing Resort Group.

Relaxing Resort Group

Income Statement for the Year Ended December 31, 2017
RM
Sales revenue 10,000,000
Less: Cost of Goods Sold 7,500,000
Gross profit 2,500,000
Less: Operating expenses
Selling expense 300,000
General expense 650,000
Lease expense 50,000
Depreciation expense 200,000
Total operating expense 1,200,000
Operating profit 1,300,000
Less: Interest expense 200,000
Net profit before taxes 1,100,000
Less: Taxes (rate = 40%) 440,000
Net profit after taxes 660,000
Less: Preferred dividends 50,000
Earnings available for common stockholders 610,000
EPS 3.05

Relaxing Resort Group

Balance Sheet as at December 31, 2017
RM RM
Assets Liabilities and equity
Cash 200,000 Accounts payable 900,000
Marketable securities 50,000 Notes payable 200,000
Accounts receivable 800,000 Accruals 100,000
Inventories 950,000 Total current liabilities 1,200,000
Total current assets 2,000,000 Long term debt 3,000,000
Net fixed assets 9,000,000 Preferred stock 1,000,000
Other assets 1,000,000 Common stock 600,000
Total assets 12,000,000 Paid in capital 5,200,000
Retained earnings 1,000,000
Total equity 7,800,000
Total liabilities and equity 12,000,000
 Historical And Industry Average Ratios For Relaxing Resort Group
Ratio Actual 2015 Actual 2016 Industry average, 2017
Current ratio 1.40 1.55 1.85
Quick ratio 1.00 0.92 1.05
Inventory turnover 9.52 9.21 8.60
Average collection period 45.6 days 36.9 days 35.5 days
Total asset turnover 0.74 0.80 0.74
Debt ratio 0.20 0.20 0.30
Time interest earned ratio 8.2 7.3 8.0
Gross profit margin 0.30 0.27 0.25
Operating profit margin 0.12 0.12 0.10
Net profit margin 0.062 0.062 0.053
Return on total asset 0.045 0.050 0.040
Return on common equity 0.061 0.067 0.066
EPS RM2.96 RM2.98 NIL
*The annual kredit purchase of RM6,200,000 were made during the year.

Instruction:
Based on the financial statement above, prepare an analysis covering the following points:
a) Table of content (cover page, page number should be included)
b) Contents

 Calculate Financial Ratio:-

1. Liquidity ratios
2. Activity ratios
3. Debt ratios
4. Profitability ratios
5. Market ratios

 Please show all the detailed calculations and formula used in calculating the ratios.
c) Analyze :
 Students must be able to evaluate this company’s performance. Analyze company’s
financial position as it is related to (1) liquidity, (2) activity, (3) debt, (4)
profitability and (5) market ratio. Summarize the company’s overall financial
position.
1. Based on time series analysis (compare year 2015-2016 of the company)
 2. Based on cross-sectional analysis (compare year 2017 with industry average
ratio 2017)
 The ability to indicate any improvement/deterioration in the performance of
companies.
 The ratios results must be shown in the report.
d) Conclusion and recommendations

 In conclusion and recommendations part, students must include the following

comments:
1. From a point of view of investor, is this company considered as a good
investment? Justify your recommendation.

General format of the report:

1. Font – Times New Roman, size 12
2. Paragraph : 1.5 line spacing, justifies alignment
3. Pages – maximum 15 pages for the report (excluding appendices)

* IMPORTANT DATES (SUBMISSION DATE)

11/4/2022 (MONDAY) Before 4.00 PM at WSAS.
The marks will be deducted for the late submission.
 DIPLOMA OF ACCOUNTANCY/ DIPLOMA IN BUSINESS STUDIES
SEMESTER 2 2021/2022
GROUP ASSIGNMENT

RATIO ANALYSIS

FICD113

PRINCIPLES OF FINANCE

SECTION: (CLASS SECTION)

PREPARED BY:

STUDENT’S NAME ID NUMBER

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