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Assessment Instructions

Topics Covered, Textbook and Reference Materials

1. Additional reference materials may be provided by your facilitator.

Assessment

2. You will be assessed on the basis of ONE (1) assignment. Details regarding this assignment are shown below.

3. Significant departures, e.g., by 10%, from prescribed word limits will be penalized.

4. Full citation of references and a select bibliography or list of references should accompany each assignment. Failure to do so may result in a failing grade (see section on plagiarism below).

5. To obtain a passing grade, you must obtain at least 40 marks out of 100 weighted marks for the subject.

Plagiarism and Failure to Cite References

6. AeU takes a serious view of plagiarism, cheating and collusion in any form. All assignments will be subjected to plagiarism checks, including the use of electronic or internet-based detectors

Assignment Question

Due Date:

Value: 100% of total assessment in subject

Length: Approximately 2,500 words

Font: Time New Roman

Size: 12, Line Spacing 1.50.

Questions:

1. Briefly describe how each of the liquidity ratios is computed.

2. Briefly describe how each of the profitability ratios is computed.

3. Define the stock turnover ratio.

4. What is working capital?

5. What do you mean by net current assets as opposed to net current liabilities?

6. The following information was given for a firm:

a. Current Ration 3times

b. Stock turnover ratio 10times

c. Gross profit margin 50%

d. Net profit margin 20%

Required

Interpret each ratio.

7. The following ratios were given for 2 similar businesses:

i. Vong Trading ii Long Trading

Stock turnover ratio 6 times 8times

Current ratio 2 times 3 times

Gross profit margin 30% 40%

Net profit margin 15% 10%

Required

Which firm has a stronger financial condition? Explain.

8. The following information was given for Metalik Enterprises:

Profit and Loss Account for the year ended 31.12.2013

Cost of Sales Gross Profit C/D Operating Expenses Net Profit	RM50,000 RM100,000	Sales Gross Profit B/D	RM150,000
	RM150,000		RM150,000
	RM70,000 RM30,000		RM100,000
	RM100,000		RM100,000

The firm’s closing stock was RM20,000 at 31.12.2013

Required

Calculate the following ratios and interpret them:

a. Stock turnover

b. Gross profit margin

c. Net profit margin

9. The following data was extracted from the books of Leong Trading:

Year	2010 RM	2011 RM	2012 RM	2013 RM
Sales	20,000	22,000	25,000	28,000
Gross Profit	6,000	8,000	9,000	12,000
Inventory	4,000	5,000	6,500	6,000
Accounts Receivable	1,600	2,000	2,000	1,800
Bank	4,000	2,000	3,000	4,000