FINANCIAL STATEMENT ANALYSIS (FSA)

A. Vertical Analysis
The Comparative Income Statement of TSU Corporation follows:
2018 % 2019 % 2020 %
Net Sales P 5,500,000 P 5,250,000 P 6,550,000
Cost of Goods Sold 1,760,000 2,100,000 1,637,500
Gross Profit P 3,740,000 P 3,150,000 P 4,912,500
Operating Expenses 1,265,000 1,312,500 1,342,750
Operating Income P 2,475,000 P 1,837,500 P 3,569,750
Interest Expense 165,000 262,500 294,750
Earnings Before Tax P 2,310,000 P 1,575,000 P 3,275,000
Income Tax Expense 660,000 630,000 786,000
Earning After Tax P 1,815,000 P 945,000 P 2,489,000
REQUIRED: Construct the common-size income statement for the three years presented.

B. Horizontal Analysis
The Asset Section of the comparative Statement of Financial Position of TCC Corporation follow:
Assets 2018 2019 % 2020 %
Cash P 155,000 P 170,500 P 124,000
Accounts Receivable 280,000 252,000 420,000
Inventory 300,000 450,000 315,000
Other Current Assets 240,000 288,000 192,000
Total Current Assets P 975,000 P 1,160,500 P 2,167,000
Property, & Equipment 425,000 552,500 680,000
TOTAL ASSETS P 1,400,000 P 1,713,000 P 2,847,000
REQUIRED: Using 2018 as base year, perform trend analysis.

C. Capital Structure Ratio

Company A Company B Company C
Total Assets P 200,000 ? P 300,000
Total Liabilities 120,000 ? ?
Total Equity 80,000 P 60,000 ?
Debt Ratio ? .40 ?
Equity Ratio ? ? ?
Debt to Equity Ratio ? ? 3

D. Liquidity Ratio
Company A Company B Company C
Current Assets P 100,000 ? P 240,000
Current Liabilities 40,000 ? ?
Inventory 20,000 P 40,000 ?
Current Ratio ? 1.2 : 1 1.5 : 1
Acid Test Ratio ? 0.8 : 1 1.2 : 1
Working Capital ? ? ?
E. Solvency Ratio
Company A Company B Company C
Operating Income P 40,000 ? ?
Interest Expense 10,000 P 20,000 ?
Income Before Tax 30,000 ? ?
Tax (40%) 12,000 ? P 50,000
Net Income ? ? ?
Times Interest Earned ? 5 6

F. Activity Ratio (use 360 days)

Company A Company B Company C
Sales P 480,000 ? P 320,000
Cost of Sales 250,000 ? 200,000
Purchases 300,000 ? 160,000
Accounts Receivable 40,000 P 400,000 ?
Inventory 50,000 200,000 ?
Accounts Payable 25,000 60,000 ?
Inventory Turnover ? 2.5 times ?
Days in Inventory ? ? 36 days
Receivable Turnover ? 2 times ?
Days in Receivable ? ? 18 days
Payable Turnover ? ? ?
Days in Payable ? ? 72 days
Operating Cycle ? ? ?
Cash Conversion Cycle ? 264 days ?

G. Performance Ratio
Company A Company B Company C
Net Income P 200,000 ? P 50,000
Total Assets 1,000,000 ? ?
Total Liabilities 200,000 P 125,000 ?
Total Equity 800,000 ? ?
Total Sales 2,000,000 ? ?
Return on Assets ? 12.5% ?
Return on Equity ? 1/3 50%
Assets Turnover ? 2 times 4 times
Profit Margin ? ? 5%
Capital Multiplier ? ? ?

H. Dividend Ratio
Company A Company B Company C
Earnings Per Share P 10 P 16 ?
Market Value of Share 20 ? P 40
Dividend Per Share 2 8 ?
Dividend Payout ? ? 50%
Dividend Yield ? ? 25%
Price-Earnings Ratio ? 5 times ?