NUSANTARA BUMI CORPORATION

NUSANTARA BUMI CORPORATION
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)

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