Scribd Logo
Upload

Welcome to Scribd!

  • 10 views

    BBMF2813 Extra Notes Topic 2 Ratios

    Uploaded by

    Fred Lelet
    The document contains financial statements and ratio calculations for Menara Gading Sdn. Bhd. for the year ended December 31, 2008. It includes the income statement, balance sheet, and calculations of various profitability, liquidity, activity, and investor ratios. Hypothetical examples are provided to demonstrate how to calculate ratios using financial figures for items like EBIT, debt, equity, fixed and variable costs, and earnings per share.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    BBMF2813 Extra Notes Topic 2 Ratios

    Uploaded by

    Fred Lelet
    10 views10 pages
    The document contains financial statements and ratio calculations for Menara Gading Sdn. Bhd. for the year ended December 31, 2008. It includes the income statement, balance sheet, and calculations of various profitability, liquidity, activity, and investor ratios. Hypothetical examples are provided to demonstrate how to calculate ratios using financial figures for items like EBIT, debt, equity, fixed and variable costs, and earnings per share.

    Original Description:

    BBMF2813 topic 2 extra notes

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document contains financial statements and ratio calculations for Menara Gading Sdn. Bhd. for the year ended December 31, 2008. It includes the income statement, balance sheet, and calculations of various profitability, liquidity, activity, and investor ratios. Hypothetical examples are provided to demonstrate how to calculate ratios using financial figures for items like EBIT, debt, equity, fixed and variable costs, and earnings per share.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views10 pages

    BBMF2813 Extra Notes Topic 2 Ratios

    Uploaded by

    Fred Lelet
    The document contains financial statements and ratio calculations for Menara Gading Sdn. Bhd. for the year ended December 31, 2008. It includes the income statement, balance sheet, and calculations of various profitability, liquidity, activity, and investor ratios. Hypothetical examples are provided to demonstrate how to calculate ratios using financial figures for items like EBIT, debt, equity, fixed and variable costs, and earnings per share.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 10

    Extra notes BBMF2813 Financial

    Management
    Prepared by: Frederick Chong Chen
    Tshung
    1

    Menara Gading Sdn. Bhd.


    Income Statement
    for the year ended 31 December 2008

    (RM'000)

    Sales 320,000
    Less: Cost of goods sold 192,000
    Gross profit 128,000
    Less: Operating expenses 94,000
    Operating profit (earnings before interest and tax) 34,000
    Less: Interest 12,200
    Earnings before tax 21,800
    Less: Tax (at 30%) 6,540
    Net Income 15,260

    Profit available to ordinary shareholders : RM14,760


    2

    Menara Gading Sdn. Bhd.Balance Sheet


    as at 31 December 2008

    (RM'000) (RM'000)
    ASSETS
    Current Assets:
    Cash and marketable securities 1,000
    Account receivables 32,000
    Inventories 91,000
    Total current assets 124,000

    Fixed Assets:
    Land 52,000
    Plant and equipment 200,000
    Less: Accumulated depreciation 76,000 124,000
    Total fixed assets 176,000
    TOTAL ASSETS 300,000

    LIABILITIES AND OWNERS'S EQUITY


    Current Liabilities:
    Account payable 44,000
    Short-term debt 94,000
    Total current liabilities 138,000

    Long-term Liabilities:
    Long-term debt 45,900

    Owners' Equity:
    Ordinary shares 63,000
    Retained earnings 53,100
    Total Liabilities and Owners' Equity 300,000

    Numbers of shares issued: 20,000 Market


    Price:RM3.50 Dividend per share:RM0.18
    3

    RATIO 1 WORKINGS

    Profitability Ratio

    Gross Profit Margin =RM128,000/RM320,000 x100%= 40%

    Net Profit Margin =RM15,260/RM320,000 x100%= 4.78%

    Operating Profit Margin =RM34,000/RM320,000= 10.63%

    Return on Asset =RM15,260/RM300,000 x100%= 5.09%

    Suppose a company has the following financials:

    • Profit Before Interest and Tax (PBIT): RM200,000


    • Shareholders' Funds: RM500,000
    • Non-current Liabilities: RM350,000

    RATIO 2 WORKINGS

    Profitability Ratio

    ROCE =RM200,000/ RM500,000+RM300,000=25%

    Let's go through an example to understand how this calculation works:

    Suppose a company has the following financial figures:

    • Net Income (Profit After Tax): $150,000


    • Preference Dividends: $20,000
    • Ordinary Shareholders' Equity: $400,000
    RATIO 3 WORKINGS

    Profitability Ratio

    ROE =$150,000- $20,000/$400,000= 32.5%


    4

    To provide an example calculation for each, we would need actual figures for non-current
    liabilities, capital and reserves, and capital employed. However, I can show you how to calculate
    these ratios with hypothetical numbers.

    Let's assume the following for a company:

    • Non-current liabilities: $200,000


    • Capital and reserves: $500,000
    • Capital employed: $700,000

    Financial Gearing Ratio 1 WORKINGS

    Debt to equity $200,000/$500,000=40%

    Debt to total capital employed $200,000/$700,000=28.57%

    Let's use hypothetical figures to illustrate how this calculation is done:

    • Profit before Interest and Tax (EBIT): $120,000


    • Interest Expense: $30,000

    Financial Gearing Ratio 2 WORKINGS

    Interest coverage $120,000/ $30,000=4


    5

    Financial Gearing Ratio 3

    Let's use hypothetical figures for an example:

    • Fixed operating costs: $80,000


    • Variable operating costs: $20,000
    • Total operating costs: Fixed costs + Variable costs = $80,000 + $20,000 = $100,000

    Now we'll calculate the operational gearing using both formulas:

    1. Using the first formula:


    Operational gearing=80,00020,000×100Operational gearing=20,00080,000×100
    Operational gearing=4×100Operational gearing=4×100 Operational gearing=400%
    Operational gearing=400%
    2. Using the second formula:
    Operational gearing=80,000100,000×100Operational gearing=100,00080,000×100
    Operational gearing=0.8×100Operational gearing=0.8×100
    Operational gearing=80%Operational gearing=80%

    RATIO WORKINGS

    Liquidity Ratios

    Net Working Capital =RM124,000-RM138,000=-RM14,000

    Current ratio =RM124,000/RM138,000=0.8986

    Quick ratio =RM124,000-RM91,000/RM138,000=0.2391


    6

    Efficiency/Activity Ratios
    7
    8

    Investors Ratio

    For a calculation example, assume:

    • Profit Available to Ordinary Shareholders: $500,000


    • Weighted Average Number of Ordinary Shares: 250,000

    $500,000/200,000= $2.50
    9

    You might also like