q1) compare these to companies ratios RATIO AFFIN BANK CITIBANK BERHAD 2019 RM’000 2019 RM’000 Asset Management Efficiency Ratio 5

The Asset Management Turnover Ratio assist an organization to equate the assets of an organization to its sales revenue. This ratio indicates how efficaciously an organization is utilizing its assets to generate the revenues. Further, it indicates the ability of a company to transform its assets into the sales.

High asset turnover ratios are appropriate and desirable as it signifies the message to the stakeholders and prospective investors of an organization that they are utilizing their assets proficiently to produce sales. The higher the asset turnover ratios, the more sales an organization is engendering from its assets.

Thus, in the present case, it can be stated that Affin Bank generated RM 5.58 in sales on every RM 1 they have invested in the assets. Whereas, Citi Bank generated RM 6.99 in sales on every RM 1 they have invested in the assets. Consequently, it can be clearly stated that Citi Bank have utilised their assets in a better way as compared to Affin Bank. Accordingly, an investor or any stakeholder will prefer Citi Bank over Affin Bank while comparing both of them on Asset Management Turnover Ratio.

Solution:

Forward price = Spot Price * ( 1+ Interest rate in the US) / (1+ Interest rate in the UK)

1st Row

Forward price = Spot Price * ( 1+ Interest rate in the US) / (1+ Interest rate in the UK)

Forward rate = 2.0 * ( 1+10%) /(1+5%) = 2.10

2nd Row:

Forward price = Spot Price * ( 1+ Interest rate in the US) / (1+ Interest rate in the UK)

2.04 = 2.0 * ( 1+8%) /(1+Interest rate in the UK)

1+ interest rate in the UK = 2.16/2.04 = 1.0588

Interest rate in the UK = 1.0588-1 = 5.88% = 6%

3rd row

Forward price = Spot Price * ( 1+ Interest rate in the US) / (1+ Interest rate in the UK)

2.1 = Spot rate * ( 1+10%) /(1+0%)

Spot rate = 2.1 /1.1 = 1.90

4th Row:

Forward price = Spot Price * ( 1+ Interest rate in the US) / (1+ Interest rate in the UK)

1.98= 2.0 * ( 1+interest rate in the US) /(1+9%)

1+ interest rate in the US = 1.10

Interest rate in the US = 10%