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QUESTION 2 (25 MARKS) Galaxy Enterprise closes its accounting period on 31 December annually. The statement of Profit or Loss for the year ended 2020 for Galaxy Enterprise as shown below: Galaxy Enterprise Statement of Profit or Loss for the year ended 31 December 2020 RM RM Sales 630,000 Less: retur Inwards (50,000) Net Sales 580,000 RM 25,000 Less: Cost of Goods Sold Opening Inventory Purchases Less: retum Outwards 295,000 (80,000) 215,000 (18,000) Closing inventory Gross Profit (222,000) 358,000 Add: Revenue Less: Expenses 27,000 (16,000) NET PROFIT 369,000 Additional information: 1. All sales were made on credit. 2. The following is the extract of Statement of Financial Position for Galaxy Enterprise as at 31 December 2020: CURRENT ASSETS Cash at bank 36,750 Closing inventory 18,000 Debtor 26,000 Prepaid Expenses 250 CURRENT LIABILITIES Creditor 31,000 Accrued Rental 6,000 CIVE1702 /June2021 Page 3 of 6 3. Use 365 days in a year. Required: Calculate the following ratio and give comments for each of the following: i. Current ratio (5 marks) (CLO2:PLOS:C4) ii. Quick ratio (5 marks) (CLO2.PLOS:C4) Inventory tumover ratio (5 marks) (CLO2.PLOS:C4) 111. iv. Average collection period (5 marks) (CLO2:PLO5.C4) V. Gross profit margin (5 marks) (CLO2:PLO5:C4) Gross Profit Margin Gross Profit X 100 Net Sales Net profit margin Net Profit x 100 Net Sales Inventory turnover ratio = Cost of goods sold Average inventory Average collection period - Acc Receivable x 365 Credit Sales Current ratio Current Assets Current Liabilities Quick Ratio Current Assets-Inventory-Prepayment Current Liabilities Net Profit X100 Return on Investment Capital Employed Capital Employed = Total Asset - current Liabilities or owners' equity + Non-current Liabilities