BALANCE SHEET, CASH FLOW AND RATIOS

QUESTION 1

Yuhanis is the Marketing Manager of UEM Berhad. She earns a basic salary of RM8,000 per
month and receives a three (3) months bonus based on her performance appraisal recently.
She pays income tax of RM700 monthly and contributes 11% of her basic monthly salary and
any bonus received to EPF. She lives in a double storey terrace house in Saujana Utama and
drives a VW Jetta. She is currently pursuing her MBA degree with annual fee of RM2,500.
Yuhanis is a single mother with four children. She receives monthly alimony of RM400 from
her ex-husband and RM350 monthly for each child. The followings were her transactions for
the year 2018.

ITEMS RM
ASB Dividend received in February 3,000
Current value of clothing 8,000
Current value of i-pad 1,500
Groceries per month 500
Dining out monthly 500
Petrol, toll, parking monthly 800
Utilities and phone bills monthly 600
House installment per month 1,800
Car installment per month 1,100
Children education insurance per month 400
Takaful medical card premium monthly 300
Children tuition fees monthly 600
Textbook bought for the year 800
Current value of textbook as at end of 2018 2,200
Current value laptops and desktops 4,000
Quit rent and assessment tax 1,000
House market value 450,000
VW Jetta market value 85,000
Housing loan outstanding 680,000
VW Jetta outstanding amount 130,000
Maxis Berhad shares market value 20,000
Household furnishings current value 50,000
Personal loan with Bank Rakyat - balance 40,000
Monthly repayment of personal loan 800
Credit card outstanding balance as at end of 2018 20,500
Tabung Haji account 6,000
Family vacation to Istanbul in June 2018 20,000
Other expenses 1,000
Car insurance and road tax 1,800
Children education insurance – value as at 2018 25,000
Takaful medical insurance – value as at 2018 20,000
Savings account in Bank Islam 16,800
Based on the above information, you are required to:

a) Construct Yuhani’s balance sheet and cash flow statement as at 31 December 2018.

(20 marks)

b) Calculate all liquidity and debt ratios. (10 marks)

 ANSWER: QUESTION 1 (20 ticks @ 0.5 = 10 marks)

Yuhanis
Balance Sheet as at 31 Dec 2018
ASSETS RM RM LIABILITIES RM RM
Liquid Assets: Current Liabilities:
Savings in Bank Islam 16,800/ Credit card outstanding 20,500/
Total Liquid Assets 16,800 Total Current Liabilities 20,500
Lifestyle Assets:
Clothing 8,000/ Long-Term Liabilities:
i-pad 1,500/ Housing loan balance 680,000/
Textbooks 2,200/ Car loan balance 130,000/
Laptop n desktop 4,000/ Personal loan 40,000/
House 450,000/ Total Long- Term Liab 850,000
VW Jetta 85,000/
Household furnishings 50,000/ Total Liabilities 870,500/
Total Lifestyle Assets 600,700
Net Worth (182,000)//
Investment Assets:
Maxis share 20,000/
Takaful medical 20,000/
insurance
Children education ins 25,000/
Tabung Haji Account 6,000/
Total Investment Assets 71,000

Total Assets 688,500/ Total Liabilities and 688,500

Net Worth

(25 ticks x 0.4 = 10 marks)

Cash Flow for year ended 31 December 2018 RM

Income:
Salary (8,000x12) 96,000/
Bonus (8,000x 3) 24,000/
Alimony (400x12) 4,800/
Children living allowance (350x4x12) 16,800/
Dividend 3,000/
Total Income 144,600/
Less: Expenses
Income tax (700x12) 8,400/
EPF (8,000x12 x11% + 8,000x3x11%) 13,200/
MBA fees 2,500/
Groceries 6,000/
Dining out 6,000/
Petrol etc 9,600/
Utilities etc 7,200/
House installment 21,600/
Car installment 13,200/
Children education insurance premium 4,800/
Takaful medical card premium 3,600/
Children tuition fees 7,200/
Bought textbooks 800/
Quit rent etc 1,000/
Personal loan Bank Rakyat 9,600/
Vacation Istanbul 20,000/
Other expenses 1,000/
Car insurance and road tax 1,800/
Total Expenses 137,500
Contributions to Savings 7,100/

Ratios: (2.5 marks each x 4 = 10 marks)

Liquid assets to take home pay ratio (0.5 mark) = Liquid assets / **take home pay

(1 mark) = 16,800/(96,000- 8,400 = 87,600)

(1 mark) = 19.18%

Current ratio = Liquid assets/ current liabilities

= 16,800/20,500 = 0.82

Debt ratio = Total liabilities/total assets

= 870,500/688,500 = 126.43%

Debt service coverage ratio = **Take-home pay/ total mthly payments

= 87,600/ (21,600+13,200+9,600)

= RM1.97

** Take home pay = Gross/Basic Salary - tax