Description

Additional information:

a)            The fixed dividend on the preference shares in Bulabi Bhd is 7%. The fixed dividend on the preference shares in Green Cable Bhd is 6%.

b)            At 30 June 2020, the market value of an ordinary share in Bulabi Bhd was RM3. At 30 June 2020, the market value of ordinary share in Green Cable was RM2.

You are required to calculate the following ratios for each firm (correct to 2 decimal places).

(i)            Return on capital employed.

(4 marks)

(ii)           Turnover to fixed assets;

(4 marks)

(iii)          Rate of stock turnover (in times);

(4 marks)

(iv)         Gross profit ratio;

(4 marks)

(v)          Net profit ratio;

(4 marks)

(vi)         Dividend yield;

(4 marks)

(vii)        Dividend cover;

(4 marks)

(viii)       Earnings per share;

(4 marks)

(ix)         Price/earnings ratio;

(4 marks)

(x)          Capital gearing ratio.        

(4 marks)

Question 2

Serena Enterprise is applying for loan with a local bank in order to expand her business. The following is available regarding her cash utilization.

i)              Cash balance as at 1st January 2020 is expected to be RM25,000.

ii)             Forecast sales and purchases for December 2019 to March 2020 are as follows:-

iii)            Terms of purchase: Purchase price is RM3 per unit. 70% of the monthly purchases are on a cash basis and balance is settled in the month following the purchase.

iv)           Sales price is RM4.25 per unit. 60% of the monthly sales are on a cash basis and balance is collected in the month following the sales.

v)            Forecasted expenditure for the months are as follows:-

§  Wages amounting to RM17,500 is paid at the end of each month.

§  Rent of RM7,200  is payable semi-annually. The first payment to be paid in January 2020.

§  Office Computer will be bought in January 2020. A deposit of RM1,000 to be paid immediately. The balance to be paid in installments of RM250 per month.

§  General Expenses of RM 380 is expected to be paid each month.

§  A loan of RM2,000 is to be repaid in February 2020.

§  The owner Serena is expected to make a monthly withdrawal of RM500.

You are required to produce a Cash Budget from January to March 2020.                                                                                                                                                             (20 marks)