FIN 1A(FINANCIAL MANAGEMENT)

MIDTERM QUIZ #2

1. Given the following financial statements of Davidson corporation, Compute the following
ratios: (20 POINTS)

RATIOS 2019 2018

1. CURRENT RATIO

2. QUICK RATIO

3. MERCHANDISE INVENTORY TURNOVER

4. NO. OF DAYS SUPPPLY IN INVENTORY

5. DEBT/EQUITY RATIO

6. DEBT RATIO

7. RATE OF RETURN ON SALES

8. RATE OF RETURN ON ASSETS

9. RATE OF RETURN ON OWNER’S EQUITY

10. ASSET TURNOVER

DAVIDSON
CORPORATION
Income Statement

2018 2019
Sale P 300,000 P200,000
Less: Cost of Sale 120,000 100,000
Gross Profit on Sales 180,000 100,000
Less: Operating Expenses 125,000 60,000
Income before Income Tax 55,000 40,000
Less: Provisions for Income tax 17,600 12,800
NET INCOME 37,400 27,200

DAVIDSON
CORPORATION
Balance Sheet
ASSETS 2018 2019
Current assets:
Cash 15,500 12,200
Marketable Securities 5,000 16,000
Accounts Receivable, Net 25,000 15,000
Inventory 52,000 47,500
Supplies 1,200 2,000
Prepaid Expenses 1,800 2,300
TOTAL CURRENT ASSETS 100,500 95,000
Non-current Assets:
Investments 25,000 20,000
Fixed Assets, net of accum. Dep. 75,000 60,000
TOTAL NON-CURRENT ASSETS 100,000 80,000
TOTAL ASSETS 200,500 175,000

LIABILITIES AND OWNER'S EQUITY

CURRENT LIABILITIES
Accounts Payable 15,000 22,000
Income Taxes Payable 19,250 14,000
Accrued Expenses 5,000 9,000
TOTAL CURRENT LIABILITIES: 39,250 45,000
LONG-TERM DEBT 60,000 50,000
TOTAL LIABILITIES 99,250 95,000

STOCKHOLDERS' EQUITY
Common Stock 50,000 45,000
Premium on Common stock 15,000 13,000
Retained earnings 36,250 22,000
TOTAL STOCKHOLDERS' EQUITY 101,250 80,000
TOTAL LIABILITIES AND EQUITY 200,500 175,000