Question 2

Below are the financial statements for the year ended 31 December 2022 for Chiao Chiao Ldt.

Statement of Profit or Loss and Other Comprehensive Income for

the year ended 31st December 2022

	2022	2021
	RM	RM
Sales Revenue	550,000	400,000
Less: Cost of Goods Sold	-180,000	-120,000
Gross Profit	370,000	270,000
Add: Other Income	25,000	20,000
Less: Expenses:
Operating expenses	-175,000	-120,000
Administrative costs	-25,000	-8,000
Profit for the year	195,000	142,000

Statement of Financial Position as at 31st December 2022

	2022	2021
	RM	RM
Non-current Assets	282,500	155,000
Current Assets
Inventories	60,000	45,000
Accounts Receivable	93,500	30,000
Bank	42,000	27,500
Cash	20,000	16,000
Total assets	498,000	273,500
Owners Equities
Capital at beginning of the year	198,000	96,000
Profit for the year	195,000	142,000
Less: Drawings	-10,000	-30,000
Capital at end of the year	383,000	208,000
Current Liabilities
Accounts Payable	85,000	38,500
Accruals	5,000	7,000
Short term trade financing loan	25,000	20,000
Total Equities and Liabilities	498,000	273,500

Required:

1. Calculate the following ratios for both financial years.
   1. Gross profit margin
   2. Net profit margin
   3. Inventory turnover ratio
   4. Current ratio
   5. Quick ratio or Acid-test ratio
   6. Average Collection Period

2. Provide comments on the results of the ratios for both financial years.

Note: Show all relevant workings