Question

1)

1. The summary of balance sheet and income statement of Manok Corporation are shown as follows:
   

   Manok Corporation

   Table 1: Income statement and Balance Sheet

   Balance Sheet	Income Statement
   Asset: Cash RM150,000 Account Receivables 450,000 Inventory 600,000 Net-non current asset 1,800,000 Liabilities and Equities: Account payable 150,000 Notes payable 150,000 Non-current liabilities 1,200,000 Equities 1,500,000	Sales (All credit) RM6,000,000 Cost of good sold 3,000,000 Operating expenses 750,000 Interest expenses 750,000 Tax 420,000 Net Profit 1,080,000

   Calculate the financial ratios for Manok Corporation based on the information given. Assume that there are 365 days in a year. The financial ratios are:
   
   1)Debt ratio
   
   2)Interest coverage ratio
   
   3)  Return on asset
   
   4)Average collection period
   
   5)Total Asset turn over

Answer 1

Answer 1.

Total Liabilities = Accounts Payable + Notes Payable + Non-Current Liabilities
Total Liabilities = 150,000 + 150,000 + 1,200,000
Total Liabilities = 1,500,000

Total Assets = Cash + Accounts Receivables + Inventory + Net Non-Current Assets
Total Assets = 150,000 + 450,000 + 600,000 + 1,800,000
Total Assets = 3,000,000

Debt Ratio = Total Liabilities / Total Assets
Debt Ratio = 1,500,000 / 3,000,000
Debt Ratio = 0.50 or 50%

Answer 2.

Operating Income = Sales - Cost of Goods Sold - Operating Expenses
Operating Income = 6,000,000 - 3,000,000 - 750,000
Operating Income = 2,250,000

Interest Coverage Ratio = Operating Income / Interest Expense
Interest Coverage Ratio = 2,250,000 / 750,000
Interest Coverage Ratio = 3 times

Answer 3.

Return on Assets = Net Profit / Total Assets
Return on Assets = 1,080,000 / 3,000,000
Return on Assets = 36%

Answer 4.

Average Collection Period = 365 * Accounts Receivable / Sales
Average Collection Period = 365 * 450,000 / 6,000,000
Average Collection Period = 27.38 days

Answer 5.

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = 6,000,000 / 3,000,000
Total Asset Turnover = 2 times