Homework Help is Here – Start Your Trial Now!
Business
Accounting
Exercise 4 Al-Falah Berhad has approched to Al-Mizan Islamic Bank for a loan of RM 250 million to extend its business. The most recent industry average ratios and Al-Falah Berhad's financial statements are as follows: AL-FALAH BERHAD BALANCE SHEET AS AT 31 DECEMBER 2017 (Millions of Ringgit) Cash Marketable securities Net receivables Inventories Gross Fixed Assets RM 45 Account payable 33 Notes payable 66 Other current liabilities RM 45 45 21 24 114 201 159 Long term debt 225 Common stock 78 Retained earnings Less: Depreciation TOTAL ASSETS 450 TOTAL LIABILITIES & EQUITY 450 AL-FALAH BERHAD INCOME STATEMENT FOR YEAR ENDED 31 DECEMBER 2017 (Million of Ringgit) RM 795 Sales Cost of good sold Gross profit Selling expenses Depreciation expenses Earning before interest and tax 660 135 73.5 12 49.5 Interest expense Earning before taxes Taxes (40%) 4.5 45 18 Net income 27 INDUSTRY AVERAGE 2 times 20% 8.5 times 3 times 3% 9% RATIO'S Current ratio Debt ratio Inventory turnover Asset turnover Net profit margin Return on total assets Return on equity 12.9% Compute the relevant ratios for Al-Falah Berhad. Based on the calculated ratios, discuss whether you would accept the loan application made by Al-Falah Berhad. Support your answer with justifications.

Exercise 4 Al-Falah Berhad has approched to Al-Mizan Islamic Bank for a loan of RM 250 million to extend its business. The most recent industry average ratios and Al-Falah Berhad's financial statements are as follows: AL-FALAH BERHAD BALANCE SHEET AS AT 31 DECEMBER 2017 (Millions of Ringgit) Cash Marketable securities Net receivables Inventories Gross Fixed Assets RM 45 Account payable 33 Notes payable 66 Other current liabilities RM 45 45 21 24 114 201 159 Long term debt 225 Common stock 78 Retained earnings Less: Depreciation TOTAL ASSETS 450 TOTAL LIABILITIES & EQUITY 450 AL-FALAH BERHAD INCOME STATEMENT FOR YEAR ENDED 31 DECEMBER 2017 (Million of Ringgit) RM 795 Sales Cost of good sold Gross profit Selling expenses Depreciation expenses Earning before interest and tax 660 135 73.5 12 49.5 Interest expense Earning before taxes Taxes (40%) 4.5 45 18 Net income 27 INDUSTRY AVERAGE 2 times 20% 8.5 times 3 times 3% 9% RATIO'S Current ratio Debt ratio Inventory turnover Asset turnover Net profit margin Return on total assets Return on equity 12.9% Compute the relevant ratios for Al-Falah Berhad. Based on the calculated ratios, discuss whether you would accept the loan application made by Al-Falah Berhad. Support your answer with justifications.

Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter13: Marketable Securities And Derivatives
Section: Chapter Questions
Problem 27P
See similar textbooks
icon
Related questions
Question
Exercise 4 Al-Falah Berhad has approched to Al-Mizan Islamic Bank for a loan of RM 250 million to extend its business. The most recent industry average ratios and Al-Falah Berhad's financial statements are as follows: AL-FALAH BERHAD BALANCE SHEET AS AT 31 DECEMBER 2017 (Millions of Ringgit) RM 45 Account payable 33 Notes payable 66 Other current liabilities Cash RM 45 Marketable securities 45 Net receivables 21 Inventories Gross Fixed Assets 159 Long term debt 225 Common stock 78 Retained earnings 450 TOTAL LIABILITIES & EQUITY 24 114 Less: Depreciation 201 TOTAL ASSETS 450 AL-FALAH BERHAD STATEM INCO FOR EAR ENDED 31 DECEMBER 2017 (Million of Ringgit) Sales Cost of good sold Gross profit Selling expenses Depreciation expenses Earning before interest and tax RM 795 660 135 73.5 12 49.5 Interest expense Earning before taxes Taxes (40%) 4.5 45 18 Net income 27 RATIO'S Current ratio Debt ratio INDUSTRY AVERAGE 2 times Inventory turnover Asset turnover 20% 8.5 times 3 times Net profit margin 3% Return on total assets 9% Return on equity 12.9% Compute the relevant ratios for Al-Falah Berhad. Based on the calculated ratios, discuss whether you would accept the loan application made by Al-Falah Berhad. Support your answer with justifications.
Transcribed Image Text:Exercise 4 Al-Falah Berhad has approched to Al-Mizan Islamic Bank for a loan of RM 250 million to extend its business. The most recent industry average ratios and Al-Falah Berhad's financial statements are as follows: AL-FALAH BERHAD BALANCE SHEET AS AT 31 DECEMBER 2017 (Millions of Ringgit) RM 45 Account payable 33 Notes payable 66 Other current liabilities Cash RM 45 Marketable securities 45 Net receivables 21 Inventories Gross Fixed Assets 159 Long term debt 225 Common stock 78 Retained earnings 450 TOTAL LIABILITIES & EQUITY 24 114 Less: Depreciation 201 TOTAL ASSETS 450 AL-FALAH BERHAD STATEM INCO FOR EAR ENDED 31 DECEMBER 2017 (Million of Ringgit) Sales Cost of good sold Gross profit Selling expenses Depreciation expenses Earning before interest and tax RM 795 660 135 73.5 12 49.5 Interest expense Earning before taxes Taxes (40%) 4.5 45 18 Net income 27 RATIO'S Current ratio Debt ratio INDUSTRY AVERAGE 2 times Inventory turnover Asset turnover 20% 8.5 times 3 times Net profit margin 3% Return on total assets 9% Return on equity 12.9% Compute the relevant ratios for Al-Falah Berhad. Based on the calculated ratios, discuss whether you would accept the loan application made by Al-Falah Berhad. Support your answer with justifications.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Earning per share and Dilutive securities
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Financial Reporting, Financial Statement Analysis…
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS