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Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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
Transcribed Image Text:QUESTION 1- Analysis of Financial Statement and Cash Flow
The balance sheet and income statement for the Changlun Company are as folow:
Balance Sheet (RM'000)
RM
Cash
500
Account receivable
2,000
1,000
Inventories
Current assets
Net fixed assets
3,500
4,500
Total assets
Account payable
Accrued expenses
Shorts-term notes payable
Current liabilities
8,000
1,100
600
300
Long-term debt
Owners' equity
Total liabilities and owner's equity
2,000
2,000
4,000
8,000
Income Statement (RM'000)
RM
Net sales (all credit)
Cost of good sold
Gross profit
Operating espenses
Operating income
Interest expenses
Earning before taxes
Income taxes (40%)
8,000
(3,300)
4,700
(3,000)
1,700
(367)
(1,333)
(533)
800
Net income
' Indludes depraciation expene of RM500 for the year
Calculate the following ratios:
Current ratio
Debt Ratio
Time interest earned
Inventory turnover
Total asset turnover
Average collection period
Fixed assets turnover
Gross profit margin
Retun on equity
Operating profit margin
Operating income retun on investment
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