Answer Happy

You are a finance consultant and a client intend to make an
investment in retail business in Malaysia. You, as a finance
consultant needs to prepare a full of report and propose the
company. Prepare a report in which you evaluate the
company’s performance and recommend whether to invest. You are
required to calculate and interpret the results of the financial
statements of the company covering the following
areas of analysis:
1. Liquidity Ratios a) Current ratio
b) Quick ratio
2. Profitability Ratios
a) Operating profit margin b) Gross profit margin
c) Average collection Period
3. Activity Ratios
a) Inventory turnover ratio b) Total asset turnover ratio
4. Financial Leverage Ratios a) Total debt to assert ratio
5. Return Ratios
a) Return on assets ratio b) Return on equity ratio
Ratio for industry average.
Ratio Industry average,
Current ratio 2.35
Quick ratio 0.87
Inventory turnover 4.55
Average collection period 35.8 days Total asset turnover 1.09
Debt ratio 0.30
Gross profit margin 0.202
Operating profit margin 0.135
Return on total assets (ROA) 0.099 Return on common equity (ROE)
0.167