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Problem 1 2 3

The document provides income statements and balance sheets for three companies - Ecstasy Ltd, Kapol Auto Limited, and XYZ Company. It asks the reader to calculate various financial ratios for each company such as gross profit ratio, current ratio, debt-equity ratio, inventory turnover ratio, and others. The ratios will help analyze the financial position and performance of each company.

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Ma Theresa Maguad
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Download as PDF, TXT or read online on Scribd
73 views

Problem 1 2 3

The document provides income statements and balance sheets for three companies - Ecstasy Ltd, Kapol Auto Limited, and XYZ Company. It asks the reader to calculate various financial ratios for each company such as gross profit ratio, current ratio, debt-equity ratio, inventory turnover ratio, and others. The ratios will help analyze the financial position and performance of each company.

Uploaded by

Ma Theresa Maguad
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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MA 17 - Financial Management

Problem # 1

The following Income Statement of Ecstasy Ltd. for the year ended December 31, 2021
is given below:

Revenue: 500,000.00
Salaes
Less: Cost of Sales
Inventory, Beg. 76,250.00
Add: Purchases 315,250.00
Frieght In 7,000.00 322,250.00
Total Godd Available for Sale 398,500.00
Inventory, End. (98,500.00) 300,000.00
Gross profit 200,000.00
Operating Expenses:
Administrative Expenses 101,000.00
Sales & Marketing Expenses 12,000.00
Other Expenses 2,000.00
Interest Expenses 7,000.00 122,000.00
Net Income from Operation 78,000.00
Non-Operating Expenses:
Interest on Securities 1,500.00
Dividend on shares 3,750.00
Dividend on shares 750.00 6,000.00
Net Income 84,000.00

Required :Calculate the following


1. Gross Profit Ratio 4. Net Profit Ratio
2. Expenses Ratio 5. Operating (Net) Profit Ratio
3. Operating Ratio 6. Inventory Turnover Ratio.

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Problem # 2
The Balance Sheet of Kapol Auto Limited as on December 31, 2021 was as follows:

ASSETS :
Current Assets:
Cash in hand 12,000.00
Accounts Receivables 12,000.00
Inventory 12,000.00
Investments (Short‐term) 4,000.00 40,000.00

Property, Plant, & Equipment:


Land and Building 40,000.00
Plant & Machinery 24,000.00
Furnitures & Fixtures 16,000.00 80,000.00

Total Assets 120,000.00

LIABILITIES & CAPITAL


Liabilities:
Current Liabilities
Accounts Payable 16,000.00
Payable - Others 4,000.00
Income Tax Payable 8,000.00 28,000.00

Non - Current Liabilities


8% Loan on Mortgage 32,000.00
Total Liabilities 60,000.00

Equity :
Capital 48,000.00
Retained Earning 12,000.00 60,000.00
Total Liabilities & Capital 120,000.00

Required : From the above, compute


(a) Current Ratio (c) Debt‐Equity Ratio
(b) Quick Ratio, (d) Proprietary Ratio.

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Problem # 3

The Balance Sheet and Income Statement of XYZ Company are as follows:

XYZ Company
Balance Sheet
As of December 31, 2021

Current Assets:
Cash in hand 225,000.00
Accounts Receivables 400,000.00
Inventory 175,000.00 800,000.00

Non - Current Assets 100,000.00

Property, Plant, & Equipment:


Land & Building 5,500,000.00

Total Assets 6,400,000.00

LIABILITIES & CAPITAL


Liabilities:
Current Liabilities
Accounts Payable 145,000.00
Payable - Others 155,000.00 300,000.00

Non - Current Liabilities


10% Debentures 1,000,000.00
Total Liabilities 1,300,000.00

Equity :
Common Stock 2,000,000.00
10% Preference share capital 2,000,000.00
Retained Earning 1,100,000.00 5,100,000.00
Total Liabilities & Equity 6,400,000.00
XYZ Company
Income Statement
for the year ended December 31, 2021

Revenue:
Sales (40% cash sales) 1,500,000.00
Less: Cost of Sales (750,000.00)
Gross profit 750,000.00
Operating Expenses:
Administrative Expenses 125,000.00
Sales & Marketing Expenses 125,000.00 250,000.00
Net Income Before Tax 500,000.00
Less: Income Tax 250,000.00
Net Income After Tax 250,000.00

Other details mentioned above, the opening stock was of 325,000. Taking 360 days of the
year.

Required: calculate the following ratios; also discuss the position of the company.
(1) Gross profit ratio (5) Quick ratio
(2) Stock turnover ratio (6) Debtors ratio
(3) Operating ratio (7) Creditors ratio
(4) Current ratio (8) Proprietary ratio

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