Below are the financial statements for RAM Furniture Bhd. for year of 2015.RAM Furniture Bhd.Balance Sheet As At 31 December 2015 (RM'000)2,400 Account payable600 Notes payableCashMarketable securitiesAccount receivablesInventoriesPrepaid expensesPlant and equipmentAccumulated depreciationTOTAL ASSETSNet SalesCost of goods soldGross profitOperating expensesNet operating incomeInterest expensesEarnings before taxesIncome taxesEARNINGS AFTER TAXES20,000 Accrued expenses24,000Current ratioQuick ratioDebt ratioTime interest earned600 MortgageTerm Loan29,000(14,600) Common sharesRetained earningsRAM Furniture Bhd.Income Statement For The Year Ended 31 December 2015 (RM'000)62,000TOTAL LIABILITIES& EQUITYIndustry Average Ratios2.55 x Inventory turnover1.70 x Average collection periodNet profit marginReturn on equity76%2.5 xa) Compute the above indicated ratios for RAM Furniture Bhd.6,0006,8007,20012,6008,8004,20016,40062,000102,000(76,000)26,000(18,000)8,000(2,000)6,000(2,400)3,6003.6 x63 days4.5%19.5%b) Evaluate the overall performance of the company as compared to the industry averageratios.

Indicated ratios are the same as Industry average ratios. So, the ratios that need to be computed…

Below are the financial statements for RAM Furniture Bhd. for year of 2015. RAM Furniture Bhd. Balance Sheet As At 31 December 2015 (RM'000) 2,400 Account payable 600 Notes payable Cash Marketable securities Account receivables Inventories Prepaid expenses Plant and equipment Accumulated depreciation TOTAL ASSETS Net Sales Cost of goods sold Gross profit Operating expenses 20,000 Accrued expenses 24,000 600 Net operating income Interest expenses Earnings before taxes Income taxes EARNINGS AFTER TAXES 29,000 (14,600) 62,000 Mortgage Term Loan Common shares Retained earnings RAM Furniture Bhd. Income Statement For The Year Ended 31 December 2015 (RM'000) TOTAL LIABILITIES & EQUITY Industry Average Ratios Current ratio Quick ratio Debt ratio Time interest earned a) Compute the above indicated ratios for RAM Furniture Bhd. 2.55 x Inventory turnover 1.70 x Average collection period 76% Net profit margin 2.5 x Return on equity 6,000 6,800 7,200 12,600 8,800 4,200 16,400 62,000 102,000 (76,000) 26,000 (18,000) 8,000 (2,000) 6,000 (2,400) 3,600 3.6 x 63 days 4.5% 19.5% b) Evaluate the overall performance of the company as compared to the industry average ratios.

Below are the financial statements for RAM Furniture Bhd. for year of 2015. RAM Furniture Bhd. Balance Sheet As At 31 December 2015 (RM'000) 2,400 Account payable 600 Notes payable Cash Marketable securities Account receivables Inventories Prepaid expenses Plant and equipment Accumulated depreciation TOTAL ASSETS Net Sales Cost of goods sold Gross profit Operating expenses 20,000 Accrued expenses 24,000 600 Net operating income Interest expenses Earnings before taxes Income taxes EARNINGS AFTER TAXES 29,000 (14,600) 62,000 Mortgage Term Loan Common shares Retained earnings RAM Furniture Bhd. Income Statement For The Year Ended 31 December 2015 (RM'000) TOTAL LIABILITIES & EQUITY Industry Average Ratios Current ratio Quick ratio Debt ratio Time interest earned a) Compute the above indicated ratios for RAM Furniture Bhd. 2.55 x Inventory turnover 1.70 x Average collection period 76% Net profit margin 2.5 x Return on equity 6,000 6,800 7,200 12,600 8,800 4,200 16,400 62,000 102,000 (76,000) 26,000 (18,000) 8,000 (2,000) 6,000 (2,400) 3,600 3.6 x 63 days 4.5% 19.5% b) Evaluate the overall performance of the company as compared to the industry average ratios.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business

Section: Chapter Questions

Problem 4SEB: FINANCIAL RATIOS Based on the financial statements, shown on pages 603604, for McDonald Carpeting...

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