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QUESTION 4 (25 MARKS) Catlia Bhd (CB) sells varieties of muslimah veils that has a...

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QUESTION 4 (25 MARKS) Catlia Bhd (CB) sells varieties of muslimah veils that has a number of stores across Peninsular Malaysia. The manager of the company is an ambitious person, and looking to expand her activities, by continuously adding the number of stores. The market of CB is increasing rapidly. The stores of the company, at an average, have a gross profit ratio of around 40% CB assesses the performance of each of their stores individually. The expected return on investment (ROI) of CB is 10%. Some of the stores have been able to achieve an ROI above this target. Below is financial data given for two of CB's stores for the last year: Store KL in Kuala Lumpur and Store JB in Johor Bahru, Sales Gross Profit Net Profit Assets employed investment) Store KL (RM'000) 2,064 868.8 180 1,404 Store JB (RM'000) 1,620 684 120 864 Required: a) Discuss the past financial performance of Store KL and Store JB using: i. ROI (4 marks) ii. Gross Profit Ratio (4 marks) iii. Net Profit Ratio (4 marks) iv. Residual Income (5 marks b) Discuss TWO (2) disadvantages of ROI as divisional performance measures (8 marks *** END OF QUESTIONS ***

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