Accounting Assignment Help
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There are TWO (2) questions in this section. Answer ALL
questions. Question 1
(40 Marks)
Rose-Jewel sells jewellery
through retail stores
throughout the country. Over the last
two years it has experienced declining profitability and is wondering if this is related to the sector as a whole. It has recently subscribed to an agency that produces average ratios across many businesses. Below are the ratios
that have been provided by the agency for Rose-Jewel's business sector based on a year end of 30 September 2019.
|
Return on year-end capital employed
(ROCE) |
16·8% |
|
Net asset (total assets less current liabilities)
turnover |
1-4 times |
|
Gross profit margin |
35% |
|
Operating profit margin |
12% |
|
Current ratio |
1·25:1 |
|
Average inventory turnover |
3 times |
|
Trade payables' payment period |
64 days |
|
Debt to equity |
38% |
The financial statements of Rose-Jewel
for the year ended 30 September 2019 are:
|
Income Statement |
RM'000 |
RM'000 |
|
Revenue |
|
56 ,000 |
|
Opening inventory |
8,300 |
|
|
Purchases |
43,900 |
|
|
|
52,200 |
|
|
Closing inventory |
(10,200) |
(42,000) |
|
Gross profit |
|
14,000 |
|
Operating costs |
|
(9,800) |
|
Finance costs |
|
(800) |
|
Profit before tax |
|
3,400 |
|
Income tax expense |
|
(1,000) |
|
Profit for the year |
|
2,400 |
|
Statement of financial position |
RM'000 |
RM'000 |
|
Assets |
|
|
|
Non-current assets |
|
|
|
Property and
shop fittings |
|
25,600 |
|
Deferred development expenditure |
|
5,000 |
|
|
|
30,600 |
|
Current assets |
|
|
|
Inventory |
10,200 |
|
|
Bank |
1,000 |
11,200 |
|
Total assets |
|
41,800 |
USA 
India