UNIVERSITI TEKOLOGI MARA (UITM)

KAMPUS ALOR GAJAH MELAKA

FACULTY OF BUSINESS AND MANAGEMENT
DIPLOMA IN BUSINESS
INTRODUCTION TO FINANCIAL ACCOUNTING
(ACC117)

GROUP PROJECT 2:
SPARKLE LIGHT
PREPARED BY:
NAME STUDENT ID
ABDULLAH HAKIMI BIN ABDULLAH 2021824952
MUHAMMAD SUHAIL BIN SOHPIAN 2021847986
SABRINA ALEEYA MOHD FAHMI 2021623792
NUR WIRDANI ALANI BINTI MOHD 2021469028
RAHUDIN

CLASS: MBA1111G
PREPARED FOR: A’IESHAH ABDULLAH SANI
SUBMISSION DATE: 4 FEBRUARY 2022
PART A
2020 2021
Current ratio = Current Assets / Current liability Current Ratio = RM 147 640/ RM 94 710
= RM 122 290/ RM 75 800 = RM 1.56: RM 1
= RM 1.61: RM 1
Acid test ratio = Current assets – inventory- Acid test ratio = RM 147 640 – RM 54 000
prepayment / Current liability -RM 1 380 – RM 2 700
= (RM 122 290 – RM 32 000 – = RM 0.95: RM 1
RM 1 840) / 75 800
= RM 1.17 : RM 1
Gross profit = Gross profit/ Sales X 100% Gross profit = RM 207 650 / RM 390 900 X
margin =RM 226 768/ RM 360 230 X margin 100%
100% = 53%
= 62.95%
Net profit = Net profit / Sales X 100% Net profit = RM 86 160/ RM 390 900 X 100%
margin = RM 78 485/ RM 360 230 X 100% margin = 22%
= 21.79%
Return on =Net profit/ Capital employed X 100 Return on =RM 86 160/ RM 294 400 X 100%
Investment =RM 78 485/ RM 214 400 X 100% investment = 29.27%
= 36.61%
Inventory turnover = Cost of sales / average Inventory turnover = RM 183 250/ RM 60 140
inventory ratio = 3.05 times
= RM 133 462/ RM 58 430
= 2.28 times
Average collection = Acc rec / Cr Sales X 365 Credit sales = RM 30 540 X 10%
= RM 53 450/ RM 377 849 = RM 3054 (cash sales)
X 365 RM 30540 – RM 3054 = RM 27486
= 51.63 days
Average collection = RM 62 760/ RM 418 386
period = 54.75 days
PART B
2020
For every RM 1 of current liabilities, there is
RM 1.61 of current asset cover it
For every RM 1 of current liabilities, there is
RM 1.17 of acid test ratio cover it
For every RM 1 of sales, the company earned
RM 0.63 gross profit
For every RM 1 of sales, the company earned
RM 0.22 net profit
For every RM 1 of profit, the company
earned RM 0.37 of investments
The company replace 2 times of inventory
during accounting period
The company takes approximately 52 days to
collect their debts from debtors
2021
For every RM 1 of current liabilities, there is
RM 1.56 of current asset cover it
For every RM 1 of current liabilities, there is
RM O.95 of acid test ratio cover it
For every RM 1 of sales, the company earned
RM 0.53 gross profit
For every RM 1 of sales, the company earned
RM 0.22 net profit
For every RM 1 of profit, the company
earned RM 0.29 of investments
The company replace 3 times of inventory
during accounting period
The company takes approximately 55 days to
collect their debts from debtors
PART C
Liquidity ratio

 Current ratio
Current ratio for 2020 is RM 1.61 while for 2021 is RM 1.56 which mean the current
asset to cover the current liabilities is decreased but the company still managed to cover
it. This show that 2020 has greater current ratio compared to 2021. Its show that, 2020
is better than 2021.

 Acid test ratio

Acid test ratio for 2020 is RM 1.71 while for 2021 is RM 0.95 which mean the
company do not have enough liquid asset to pay the debts. It is because the acid test
ratio is less than 1. Its show that, 2020 is better than 2021
Profitability ratio
 Gross profit margin
Gross profit margin for 2020 is RM 0.63 while for 2021 is RM 0.53. The amount of
sales increases but the gross profit margin has fallen by a relatively greater amount.
This show that 2020 has greater gross profit marin compared to 2021. Its show that,
2020 is better than 2021.

 Net profit margin

Net profit margin for 2020 and 2021 is RM 0.22. So, gross profit margin has stay the
same from 2020 to 2021. Its show that, 2020 and 2021 is same.

 Return on investment
For 2020, the ROI is 36.61% and for 2021 is 29.27%. It shows that the company has no
ability of a business to make better use of its capital. So, return on investment has
decreased from 2020 to 2021. Its show that, 2020 is better than 2021.
Efficiency ratio
 Inventory turnover ratio
Inventory turnover ratio for 2020 is 2 times but for 2021 is 3 times. It provide an
indication of how quickly the goods are sold. So, inventory turnover ratio has
increased from 2020 to 2021. Its show that, 2021 is better than 2020
 Average collection ratio
The company took 52 days to collect money from debtors in 2020 but for 2021 it took
55 days. It is due the business has a loose credit control policy which could result to
bad debts. So, average collection period has increased from 2020 to 2021.Its show
that, 2020 is better than 2021
 REFERANCES
- Rosemary Carlson, ‘How to compare liquidity ratio’, Analysis of liquidity
Position, https://www.thebalancesmb.com/liquidity-position-analysis-with-ratios-
393233, (access on November 20, 2019)

- FreshBooks, ‘Analyzing liquidity ratio’, What is a good liquidity ratio?,

https://www.freshbooks.com/hub/accounting/good-liquidity-ratio

- Personal finance, ‘Comparing and Analyzing Financial Statement’,

https://saylordotorg.github.io/text_personal-finance/s07-02-comparing-and-
analyzing-financ.html,

- Fatimah Abd Rauf, Amla Abu, Radzia Mahmud, (2020), Financial Accounting for
Non-accounting Students, Kuala Lumpur, pages 193-200