XOX Inc.

Income Statement for Years Ended 31/12/2021 and 31/12/2022 (RM '000)

2021 2022
RM ('000) RM ('000)
Sales 1200 1450
(-) COGS -700 -850
Gross profit 500 600
(-) Selling, general and administrative expenses -30 -40
Operating Income @ EBITDA 470 560
(-) Depreciation expense -220 -200
EBIT 250 360
(-) Interest -50 -64
Net income before taxes 200 296
Taxes (40%) 80 118.4
Net income 120 177.6

Additional data:
1) Market price RM22
2) Earnings per share (EPS) RM2.50
3) Book value per share RM20

Q1. Interpret the condition of the firm financial statements

 XOX Inc. Balance Sheet at 31/12/2021and 31/12/2022 (RM '000)
Assets 2021 2022
RM ('000) RM ('000)
Cash 200 150
Accounts receivable 450 425
Inventory 550 625
Current assets 1200 1200
Plant and equipment 2200 2600
(-) Accumulated depreciation -1000 -1200
Net plant and equipment 1200 1400
Total assets 2400 2600

Liabilties and Owners' Equity

Accounts payable 200 150
Notes payable 0 150
Current liabiities 200 300
Bonds 600 600
Total liabilities 800 900
Owners' equity
Common stock 900 900
Retained earnings 700 800
Total owners' equity 1600 1700
Total liabilities and owners' equity 2400 2600
2. Based the data of Balance Sheet and an Income statement in Q1, compute following ratios and analyse performance of the

Ratios Calculation 2021 Calculation 2022

a) Current ratio 1200/200 = 6 1200/300 4

b) Inventory turnover ratio 700/550+625 = 1.19 850/550+625 = 0.725

c) Day sales outstanding = =

d) Total assets turnover 1200/1200+1000= 0.5455 1450/1400+90= 0.6304

e) Debt ratio 600/1600 = 0.375 600/1700 = 0.3529

f) Times interest earned 250+220/50 = 9.4 =

g) Return on assets 200/2400 = 0.11 296/2600 = 0.11

h) Return on equity 120/1600 = 0.08 177.6/1700 = 0.1

i) Operating margin 470/1200 = 0.39 560/1450 = 0.39

j) Price earning ratio 22/2.50 = 8.8 22/2.5 = 8.8

k) Market/book ratio 22/20 = 1.1 22/20 = 1.1

3. Is the firm improve its performance in year 2022? Interpret.

4. Identify the strength and the weaknesses of the firm based on the liquidity ratios, asset management or efficiency ratios, de
5. Recommend how the firm may overcome the above weaknesses.
d analyse performance of the firm's for both years:

Analysis and comparison the performace for both years

the decrease shows decrease in company current assets and increase in its liability

indicates decreasein output from capiat employed

gement or efficiency ratios, debt ratio, profitability ratio and market value ratio based on performance in year 2022.