Module 1 - Financial Statement Analysis - P2

FS Analysis Trainer
Problem 1: White Corporation's financial statements for the last year are shown below.
All figures are in thousands (P000). The firm paid a P1,000 dividend to its stockholders
during the year. Two million shares of stock are outstanding. The stock is currently
trading at a price of P50. There were no sales of new stock. Lease payments totaling
P400 are included in cost and expense.
BALANCE SHEET
ASSETS
Cash P 2,000
Accounts receivable 12,000
Inventory 14,000
Current Assets P28,000
Gross Fixed assets P27,000
Accumulated depreciation (16,000)
Net fixed assets 11,000
Total assets P39,000
LIABILITIES
Accounts payable P 3,000
Accruals 1,000
Current Liabilities P 4,000
Long term Debt 10,000
Equity 25,000
Total liabilities & equity P39,000
INCOME STATEMENT
Sales P100,000
COGS 80,000
Gross Margin P 20,000
Cash Expenses 8,000
Depreciation 1,600
9,600
EBIT P 10,400
Interest 800
EBT P 9,600
Tax 2,600
Net Income P 7,000
Requirements: Compute the following for White Corporation:
1. Current Ratio
2. Quick Ratio
3. Fixed Asset Turnover
4. Total Asset Turnover
5. Debt Ratio
6. Debt to Equity ratio
7. Times Interest Earned (TIE)
8. Return on Sales (ROS)
9. Return on Assets (ROA)
10. Return on Equity (ROE)
Problem 2: We are given the following information for the Pudge Tools Corporation:
Sales (credit) 7,200,000

Cash 300,000
Inventory 2,150,000
Current Liabilities 1,400,000
Asset Turnover 1.20 times
Current ratio 2.50 times
Debt-to-assets ratio 40%
Receivables turnover 8 times
Current assets are composed of cash, marketable securities, accounts receivable, and
inventory. Calculate the following balance sheet items:
a. A/R
b. Marketable Securities
c. Fixed Assets
d. Long-term debt
Problem 3: Assume that net income was P 6,000. No other information is known, except the
following:
Return on equity 10% Return on sales 4%

Gross margin percentage 60% Income tax rate 40%
Current ratio 3:1 Return on assets 5%
Inventory turnover 4 Days sales in receivables 90
Long-term debt to equity 2:3
Required: Using the preceding ratios, construct an income statement and a balance sheet with
as much detail as possible.
Problem 4:
a. The current ratio is 2.5 to 1; the acid-test ratio is 0.9 to 1; cash and receivables are
P270,000. The only current assets are cash, receivables, and inventory. (a) What are
current liabilities? (b) How much is inventory?
b. Accounts receivable turnover is 5 times; inventory turnover is 4 times. The company
recently bought inventory. (a) On the average, how long will it be before the new inventory
is sold? (b) On the average, how long after the inventory is sold will cash be collected?
c. Accounts receivables equal 45 days’ credit sales. The coming year should see sales of
P900,000 spread evenly over the year. What should accounts receivable be at the end of
the year?
d. GGG, Inc. has a debt ratio of 50%, and an equity multiplier of 2. What is GGG's
stockholders' equity if total debt is P100,000?
e. If Basyos has a total asset turnover of 1.8, a fixed asset turnover of 3.2, a debt ratio
of .5 and a total debt of P200,000, how much then the amount of fixed assets?
f. What is Babi's times interest earned, if its total interest charges are P20,000, sales
are P220,000, and its net profit margin is 6 percent? Assume a tax rate of 40 percent.
g. Determine the cost of sales for a firm with the following financial ratios and data:
Current ratio = 3.0 Quick ratio = 2.0
Current liabilities P1,000,000 Inventory turnover = 6 times.
h. Find the sales of the Bengge Company using the
following information:
Current ratio 2.0
Quick ratio 1.6
Current liabilities P200,000
Inventory turnover based
on COGS 8.0
Gross margin % 10%
Problem 5: Tinker Corporation experienced a fire on December 31, 2021, in which its
financial records were partially destroyed. It has been able to salvage some of the records
and has ascertained the following balances:
December 31, 2021 December 31, 2020

Cash P 300,000 P100,000
Receivables (net) 720,500 1,260,000
Inventory 2,000,000 1,800,000
Accounts payable 500,000 200,000
Notes payable 300,000 600,000
Common stock, P100 par 4,000,000 4,000,000
Retained earnings 1,135,000 1,010,000
Additional information:
1. The inventory turnover is 3.6 times
2. The return on common stockholders’ equity is 22%. The company had no additional
paid in capital.
3. The receivables turnover is 9.4 times
4. The return on assets is 20%
5. Total assets as at December 31, 2020, were P6,050,000.
Requirements: Compute the following:
1. Cost of goods sold for 2021

2. Net income for 2021
3. Total assets as at December 31, 2021
Problem 6: Badosa Company prepared the following budgetary information for January of 2022 for its
tennis racket:
Sales (12,000 units) P 432,000

Cost of Goods Sold P 288,000
Gross Profit P 144,000
In January, actual operations resulted in the production and sale of 13,000 units which were sold for a
selling price of P 34 per unit. The unit cost of goods sold increased by P 3.
Required:
1. Overall Gross Profit Variance
2. Sales Price Variance
3. Sales Volume Variance
4. Cost Price Variance
5. Cost Volume Variance
Problem 7: Ons Company has requested you to determine the cause of the difference between its
2021 and 2022 gross profit based on the following data:
2021 2022
Sales P 200,000 P 252,000
Cost of Goods Sold P 120,000 P 180,000
Gross Profit P 80,000 P 72,000
No additional data was made available except that unit sales increased by 20% in 2022.
Required:
1. Overall Gross Profit Variance
2. Price Factor
3. Cost Factor
4. Volume Factor
-END-

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FS Analysis Trainer

Sales (credit) 7,200,000

Return on equity 10% Return on sales 4%

December 31, 2021 December 31, 2020

Requirements: Compute the following:

1. Cost of goods sold for 2021

Sales (12,000 units) P 432,000

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