Statement of Financial Position as at December 31,
2019(RM)
2018(RM)
2017(RM)
Assets
Cash and equivalents
612,492
217,961
131,085
Account receivables
454,760
554,200
400,522
Inventories
414,770
355,642
400,522
Prepaid expenses
0
66,000
54,000
Fixed assets
1,937,900
2,437,900
1,837,900
Accumulated depreciation
621,370
427,580
183,790
Total assets
2,798,552
3,204,123
2,650,917
Liabilities and Equity
Accounts payable
236,297
299,600
243,566
Accrued expenses
26,435
36,202
32,400
Current maturities
100,000
296,400
302,600
Income taxes payable
139,804
128,453
125,663
Long-term debt
800,000
986,300
222,400
Common stock RM0.20 par value
1,000,000
1,000,000
1,000,000
Paid-in capital
500,000
500,000
500,000
Retained earnings
(3,984)
(42,832)
224,288
Total liabilities and equities
2,798,552
3,204,123
2,650,917
NUSANTARA BUMI CORPORATION
Statement of Financial Performance for Years Ending December 31,
2019(RM)
2018(RM)
2017(RM)
Net Sales
3,055,563
2,983,410
3,245,427
Cost of Goods Sold
2,205,830
2,104,451
2,056,670
Gross Profit
849,733
878,959
1,188,757
Selling and Administrative Expenses
328,523
265,525
278,855
General expenses
203,520
200,455
189,962
Depreciation
193,790
243,790
183,790
Earnings before interest and tax
123,900
169,189
536,150
Interest expense
63,000
89,789
85,750
Earnings before tax
60,900
79,400
450,400
Tax (28%)
17,052
22,232
126,112
Earnings after tax
43,848
57,168
324,288
Nusantara Bumi Corporation is a company dealing with textiles manufacturing and has been in the market for almost 10 years. Since the textile industry is getting more competitive, Nusantara Bumi is planning for business expansion. Using the provided financial statements, you are assigned to conduct a comprehensive analysis on Nusantara Bumi Corporation in order to identify the strengths and weaknesses of its financial position.
Using average values, compute any two relevant financial ratios for each area that are useful to highlights Nusantara Bumi’s overall financial performance for 2019 and 2018, related to:
i. Ability to meet maturing obligations.
(4 marks)
ii. Ability to service debt and the degree of financial risk.
(4 marks)
iii. Effectiveness in managing assets and efficiency in handling operations.
(4 marks)
iv. Profitability and overall operating results.
(4 marks)
v. Draw inferences concerning Nusantara Bumi Corporation’s financial performance in 2019 relative to 2018 based on calculated financial ratios. Your discussion should include their effectiveness in managing assets and efficiency in handling operations, the degree of financial risks, profitability and overall operating results.
(9 marks)
Sample Solution