Activity 1 - FS Analysis Answer

MACARANAS, Melvert A.
BSA 2-1
Test I:
ANSWERS:
1. Current Ratio A
2. Dividend Yield P
3. Book value per share O
4. Inventory turnover D
5. Operating Cycle F
6. Average collection period C
7. Dividend payout Q
8. Average age of inventory E
9. Profit margin K
10. Return on common M
11. Fixed asset turnover G
12. Debt-to-equity ratio I
13. Total asset turnover L
14. Earnings per share N
15. Debt ratio H
Test II:
1. Friendster Corp
ASSETS LIABILITIES AND STOCKHOLDER’S EQUITY
Cash P60,000 Accounts Payable P80,000
Trade Receivables 68,000 Current Notes Payable 40,000 1.4
Inventory 100,000 Long-term payable 160,000
Fixed Assets 252,000 Common Stock 140,000 1
Retained earnings 60,000
P480,000 P480,000 2.4
SOLUTIONS FOR NO.1:
Inventory: Current Liabilities:

CR= 1.9 = CA = 228,000
Inventory TO based on sales 15 CL CL
Inventory TO based COGS (10) CL= 228,000
Inventory TO based on Gross 5 1.9
Profit CL= 120,000
5= Gross Margin for 2014 500,000 Accounts Payable:

Inv. 5 AP= 120,000-40,000
AP= 80,000
Inventory 100,000
Total Liabilities:
Trade Recievable: =480,000(1.4/2.4)
=480,000-252,000-100,000-60,000 L=280,000
=68,000
Long-term payable:
=280,000-40,000-80,000
=160,000
Retained Earnings:
Total Equity= 480,000(1/1.4)
= 200,000
Retained Earnings= 200,000-140,000
= 60,000
2. Bucharest Corp.
ASSETS LIABILITIES AND STOCKHOLDER’S EQUITY
Cash P320 Accounts Payable P300
Accounts receivable 80 Short-term debt 100 2.5
Inventory 200 Long-term debt 400
Fixed Assets 400 Equity 200 1
Total Assets P1,000 Total Liabilities and P1,000 3.5

Stockholder’s equity
SOLUTIONS FOR NO.2:
Cash:
Quick ratio = 1.0
1.0 = Quick assets
CL
1.0 = Quick assets
400
QA = 1.0 x 400
QA = 400
Cash = 400-80
Cash = P320
= 1,000 – 200 – 80 – 320
= P400
Inventory:
Long-term debt:
Networking capital = 200
Debt-to-equity ratio: 2.5
200 = CA – CL = 700 (2.5/3.50)
200 = CA – 400 L = 500
CA = 400 + 200 Long-term debt = 500 – 100
CA = P600 Long-term debt = P400
Inventory = 600-320-80
Inventory = P200 Equity:
=1000 – 400 – 1 – 300
Fixed Assets: =P200
3. BMA Industry
BMA
Pro-forma Balance Sheet, 2014
Cash P17,780.82 Current Liabilities P55,000
Accounts Receivables 48,219.18 Long-term Liabilities 33,000
Inventory 55,000 Total Liabilities P88,000
Total Current Assets P121,000 Stockholder’s Equity 110,000
Fixed Assets 77,000
Total Assets P198,000 Total Liabilities and P198,000

Stockholder’s Equity
SOLUTIONS FOR NO.3:
Net Sales:
Net Sales/Inventory = 8
Net Sales/55,000 = 8
Net Sales = 440,000
Shareholder’s Equity:
Sales to Shareholder’s equity is 4
440,000/Shareholder’s equity = 4
Shareholder’s equity = 110,000
Current Liabilities:
Current Liabilities to stockholder’s equity is 50%
Current Liabilities/110,000 = 50%
Current Liabilities = 55,000
Current Assets:
Current ratio 2.2
Current assets/Current liabilities = 2.2
Current assets/55,000= 2.2
Current assets = 121,000
Fixed Assets to stockholder’s equity is 70%

Fixed Assets/Stockholder’s equity = 70%
Fixed Assets/110,000 = 70%
Fixed Assets = 77,000
Total Assets:
Shareholder’s equity = Total Assets – Total Liabilities
110,000 = Total Assets – 88,000
Total Assets = 198,000
Long-term Liabilities:
Long-term Liabilities = Total Liabilities – Current Liabilities
= 88,000 – 55,000
= 33,000
Accounts receivable turnover ratio:
365/Average collection period = AR Turnover ratio
365/40 = 9.125
Average accounts receivable:

Accounts receivable turnover ratio = Net sales/ Average accounts receivable
9.125 = 440,000/ Average Accounts Receivable
Average accounts receivable = 48,219.18
Cash:
Cash = Total Assets – Fixed Assets – Inventory – Receivables
= 198,000 – 77,000 – 55,000 – 48,219.18
= 17,780.82
4. Hardwood Inc.
Cash P4M Current debt P8M

Accounts Receivables 4M Long-term debt 2.67
Inventory 8M Total debt P10.67M
Total Current Assets P16M Equity 16M
Fixed Assets 10.67M
Total Assets P26.67M Total debt and Stockholder’s P26.67M

Equity
SOLUTIONS FOR NO.4:
Total Assets:
Sales to Total Assets = 3 times
Sales/Total Assets = 3
80 million/Total Assets = 3
80 million/3 = Total Assets
Total Assets = P26.67M
Total debt:
Total debt/Total asset = 40%
Total debt = 26.67 million x 40%
Total debt = P10.67M
Fixed Asset:
Fixed asset turnover ratio = Net sales/Fixed Asset
7.5 times = 80 million/Fixed asset
Fixed asset = 80 million/7.5
Fixed asset = 10.67M
Current asset = Total Assets – Fixed Assets

= 26.67 million – 10.67 million
= 16M
Current ratio = Current assets/Current Liabilities

2 = 16 million/Current Liabilities
Current Liabilities = 16M/2
Current Liabilities = 8M
Long term debt = Total debt – Current Liabilities

= 10.67M – 8M
= 2.67M
Equity:
Assets = Equity + Total debt
26.67M = Equity + 10.67M
26.67M – 10.67M = Equity
Equity = 16M
Inventories:
Inventory Turnover Ratio = COGS/Inventories
10 times = 80/Inventories
Inventories = 80/10
Inventories = 8M
Accounts Receivable Turnover Ratio:

= 360 days/ 18 days (Average collection period)
= 20 times
Accounts Receivable Turnover Ratio = Net sales/Average Receivables

20 times = 80M/Average Receivables
Average Receivables = 80M/20 times
Average Receivables = P4M

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MACARANAS, Melvert A.

Inventory: Current Liabilities:

5= Gross Margin for 2014 500,000 Accounts Payable:

Total Assets P1,000 Total Liabilities and P1,000 3.5

Total Assets P198,000 Total Liabilities and P198,000

Fixed Assets to stockholder’s equity is 70%

Average accounts receivable:

Cash P4M Current debt P8M

Total Assets P26.67M Total debt and Stockholder’s P26.67M

SOLUTIONS FOR NO.4:

Current asset = Total Assets – Fixed Assets

Current ratio = Current assets/Current Liabilities

Long term debt = Total debt – Current Liabilities

Accounts Receivable Turnover Ratio:

Accounts Receivable Turnover Ratio = Net sales/Average Receivables

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