(101AL. 13 ) QUESTION 5 The following financial statements relate to Star Millenium Sdn. Bhd, which operates a car detailing retail business: Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31 2016 and 2017 Sales revenue Cost of goods sold Gross profit Operating expenses 2016 RM'000 2,240 (1,745) 495 (252) 243 (18) 225 (61) 164 2017 RM'000 2,681 (2,272) 409 (362) (32) Finance costs Profit before tax Tax expense Profit for the year Statement of changes in equity For the year ended December 31, 2017 Share capital RM 000 300 Balance, 1.1.2016 Profit for the year Retained earnings RM 000 138 164 302 (40) 262 Dividends Balance, 31.12.2016 Balance, 1.1.2017 Profit for the year 300 300 262 Dividends Balance, 31.12.2017 273 (40) 233 300 Statement of Financial Position As at December 31, 2016 and 2017 Property, plant and equipment 2016 RM 510 2017 RM 587 300 240 Inventory Trade receivables Cash and cash equivalent Total assets Ordinary share capital Retained earnings 406 273 1,053 300 1,266 300 233 262 9% Bonds payable 562 200 533 300 221 314 40 40 Trade payables Dividend payable Tax payable Bank overdraft Total equity and total liabilities 30 5 74 1,053 1,266 Assume that the year-end balance shown for trade receivables and inventory in each year approximate the average balances of these items through each of the year. Required: 1. Calculate the following ratios for year 2016 and 2017: a) Current ratio f) Times interest earned b) Acid-test ratio g) Gross profit margin Accounts receivable collection period h) Net profit margin Accounts payable payment period Return on equity Debt ratio Return on assets j) (15 marks) 2. From your answers in (1) above, interpret the relationship between the elements of the financial statements with regard to the company's short-term liquidity, efficient use of resources, long-term solvency and profitability. (5 marks) (TOTAL: 20 MARKS)