Fin 262 March2002 Uitm Final Paper

FIN 262

FUNDAMENTAL OF FINANCE

INDIVIDUAL ASSIGNMENT

OCTOBER 2000 & MARCH 2002

Student’s Name : Muhammad Izzat Al-Amin Bin Musbah

Student’s ID : 2009844164

Lecturer’s Name : Madam Fairuz bt Ahamad

Section : 11

March 2002

Part A

Question 1

1. Liquidity ratio (2001) (2000)

Current ratio

= 13970/2430 4.4x

= 5.7x

Quick ratio

= 13970-6470/2430 2.5x

= 3.1x

2. Activity ratio

Inventory turnover

= 11506/6470 2.6x

=1.2x

Average collection period

= 7300/22560 x 360 days 86 days

=116 days

Fixed asset turnover

= 22560/5900 5.9x

= 3.8x

3. Leverage ratio

Debt ratio

=14765/19870 x 100% 82.4%

= 74.3%

Times interest earned

= 5022/1180 3.8x

= 4.3x

Debt to equity ratio

= 14765/5105 3.8x

=2.9x

4. Profitability ratios

Net profit margin

=2305/22560 x 100% 8.6%

= 10.2%

Return on asset

=2305/19870 x 100% 11.5%

= 11.6%

Return on equity

= 2305/5105 x 100% 49.6%

= 45.2%

b) Analysis

Liquidity ratio

Our current ratio and quick ratio in 2001 higher than year 2000. High value state that our company able to pay its liabilities and expenses and shows that our company has more liquid in 2001.

Efficiency ratio

Our inventory turnover is lower compare to ratio in 2000. So lower mean inventory turnover state that our firm ineffectively used it inventory. Our fixed asset turnover also lower compare to ratio in 2000. So, lower state that our firm ineffectively used it fixed asset. Our total asset turnover is lower compare to ratio in 2000. So lower mean total asset turnover state that our firm ineffectively used it total asset.

Average collection period is larger than ratio in 2000. Larger state that our company takes longer time in collecting debts.

Leverage ratio

Our debt ratio and debt equity ratio in 2001 lower than ratio in 2000. The company has lower borrowing level. Next, our time interest earned high compare to ratio in 2000 which is...