MIDTERM EXAMINATION

FINANCIAL MANAGEMENT

Name: Ronnie Mae Galvez Score:

Course/Year: BSA – 3rd yr. Class Schedule: Friday

Problem 1- Financial Statement Analysis

Phina Asa Trading

Statement of Financial Position
As of December 31, XXXX

Assets
2020 2019
Current Assets
Cash Php 58,000 Php 64,000
Trade Receivables 228,000 170,000
Merchandise Inventory 226,000 222,000
Prepaid Expenses 12,000 16,000
Total Current Assets Php 524,000 Php 472,000
Non-Current Assets
Property, Plant, and Equipment 1,050,000 816,000
Total Assets Php 1,574,000 Php 1,288,000

Liabilities & Owner's Equity

Current Liabilties 284,000 252,000
Non-Current Liabilities 578,000 396,000
Total Liabilities 862,000 648,000
Owner's Equity 712,000 640,000
Total Liabilities & Owner's Equity Php 1,574,000 Php 1,288,000
 Phina Asa Trading
Income Statement
As of December 31

2020 2019

Net Sales Php 1,716,000 Php 1,606,000

Cost of Goods Sold 1,026,000 1,018,000
Gross Profit 690,000 588,000
Selling and Admin.Expenses 488,000 474,000
Operating Income 202,000 114,000
Interest Expense 40,000 28,000
Income Before Income Taxes (IBIT) 162,000 86,000
Income Tax Expense 66,000 34,000
Net Income Php 96,000 Php 52,000

Required: Compute the following ratios for 2020:

1. Current Ratio = 524,000 / 284,000 = 1.845

2. Quick Ratio = (58,000 + 228,000) / 284,000 = 1.007
3. Receivable Turnover = 1,716,000 / 199,000 = 8.623 times
ATR = (170,000 + 228,000) / 2 = 199,000

4. Average Collection Period = 360 / 8.623 = 41.7488 or 42 days

ADS = 1,716,000 / 360 = 4,766.67
5. Inventory Turnover = 1,026,000 / 224,000 = 4.58 times
AI = (222,000 + 226,000) / 2 = 224,000
6. Average Sales Period = 360 / 4.58 = 78.60 days
7. Working Capital = 524,000 – 284,000 = 240,000
8. Debt Ratio = 862,000 / 1,574,000 = 0.5476
9. Equity Ratio = 712,000 / 1,574,000 = 0.452
10. Debt to Equity Ratio = 862,000 / 712,000 = 1.21
11. Time Interest Earned = 202,000 / 40,000 = 5.05
12. Gross Profit Ratio = 690,000 / 1,716,000 = 0.402
13. Operating Profit Margin = 202,000 / 1,716,000 = 0.1177

14. Net Profit Margin = 96,000 / 1,716,000 = 0.0559

15. Return on Assets = 96,000 / 1,431,000 = 0.067
ATA = (1,288,000 + 1,574,000) / 2 = 1,431,000
Problem 2- Financial Statement Analysis
The following data represent selected information from the comparative Income
Statement and Balance Sheet for Starla Company for the years ended December
31,2019 and 2020:

2020 201 9

Net Sales (all on Credit) P370,000 P333,000

Cost of Goods Sold 160,000 150,000
Gross Profit 210,000 183,000
Income from operations 95,000 87,000
Interest Expense 8,000 8,000
Net Income 70,000 57,000
Cash 10,000 14,000
Accounts receivable, net 30,000 25,000
Inventory 43,000 40,000
Prepaid Expenses 5,000 7,000
Total Current Assets 88,000 86,000
Total Noncurrent Assets 112,000 104,000
Total Current Liabilities 70,000 60,000
Total Noncurrent Liabilities 40,000 45,000
Ordinary Share capital,no-par* 60,000 60,000
Retained earnings 30,000 25,000

*Note:10,000 ordinary shares have been issued and outstanding since the company was established.
They had a market value of P90 per share at 12/31/19 and they were selling for P91.50 per share at
P91.50 per share at 12/31/2020.

Required: Compute the following ratios for 2020:

1. Current Ratio = 88,000 / 70,000 = 1.257
2. Quick Ratio = (10,000 + 30,000) / 70,000 = 0.571
3. Receivable Turnover = 370,000 / 27,500 = 13.45 times
ATR = (25,000 + 30,000) / 2 = 27,500
4. Average Collection Period = 360 / 13.45 = 26.766 days
ADS = 370,000 / 360 = 1,027.78
 5. Inventory Turnover = 160,000 / 41,500 = 3.855 times
AI = (40,000 + 43,000) / 2 = 41,500
6. Average Sales Period = 360 / 3.855 = 93.385

7. Working Capital = 88,000 – 70,000 = 18,000

8. Debt Ratio = 110,000 / 200,000 = 0.55
9. Equity Ratio = 90,000 / 200,000 = 0.45
10. Debt to Equity Ratio = 110,000 / 90,000 = 1.22
11. Time Interest Earned = 95,000 / 8,000 = 11.875
12. Gross Profit Ratio = 210,000 / 370,000 = 0.568
13. Operating Profit Margin = 95,000 / 370,000 = 0.257
14. Net Profit Margin = 70,000 / 370,000 = 0.189
15. Return on Assets = 70,000 / 195,000 = 0.359
ATA = (190,000 + 200,000) / 2 = 195,000

END OF TEST

Success does not happen by chance. It takes dedication, hard effort, learning, studying,
sacrifice, and, most importantly, a love of what you are doing and not doing what you
love.
-FPDL

Prepared by:
Florante P. De Leon, CTT, DBA (CAR)