1. 1.

099

2. .53%/5.33

3. 1,700,000

4. 450,000,000

5. 0.0167

6. 8.8

7. 860,000

8. 5,110

9. 240,000,000

10. 10.8%

11. 2,500,000,000

12. 0.24

13. 624,000,000

ANSWER SHEET
UNIVERSITY OF ST. LA SALLE
YAL-College of Business and Accountancy
FINANCIAL MANAGEMENT 1 - Midterm Exam

II. SHORT PROBLEM (40 points) Show necessary computations. Write your final answers in
the answer sheet.

1. Your firm has the following balance sheet items (in thousands): total current liabilities, P805;
total assets, P2,655; fixed and other assets, P1,770; and long term debt of P200. What is the
amount of the firm’s net working capital?

2. LuckYou Co. has sales of P20 million, total debt of P1.5 million and a debt ratio of 40%. What
is LuckYou’s total asset turnover?

3. Lovid Lumber recently reported that its earnings per share were P3.00. The company has
400,000 shares of common stock outstanding, its interest expense was P500,000 and its
corporate tax is 40%. What is the company’s EBIT?

4. An analyst has collected the following information regarding Migs Growers: EBIT was P700
million; EBITDA was P850 million; interest expense was P200 million; tax rate is 40 percent.
What is the company’s operating cash flow?

5. Ball and Pen Office Supply had P24 million in sales last year. It’s total asset turnover was 6.0
times. Interest expenses was P100,000 (10% of P1 million debt). The firm is financed entirely
with debt and common eqwuity. What is Ball and Pen’s debt ratio?

6. White Hair Spa, Inc. has P5 million of retained earnings on its balance sheet at the end of
2018. One year later, White Hair had P8 million of retained earnings on its balance sheet.
White Hair had one million shares of common stock outstanding, and paid a dividend of P0.80
per share in 2019. What was White Hair’s earnings per share in 2019?

7. The 2Balls Co.’s sales are forecasted to double from P1million in 2020 to P2 million in 2021.
The figures in the Dec. 31, 2020, balance sheet (in thousands) follows: Current assets, P500;
Net fixed assets, P500; Accounts payable and accruals, P100; Notes payable, P150; Long term
debt, P400; Common stock, P100; Retained earnings, P250. The 2Balls fixed assets were used
to only 50% of capacity in 2020, but its current assets were at their proper level in relation to
sales. All assets except fixed assets must increase in the same rate as sales and fixed assets
would also have to increase at the same rate if the current excess capacity did not exist. 2Balls’
after tax profit margin is forecasted to be to be 5 percent and its payout ratio to be 60%. What is
2Balls Co.’s additional fuind needed (AFN) for the coming year?

8. The firm has the following income statement items (in thousands): Sales of P50,250; income
tax of P1,744; operating expenses of P10,115; cost of sales of P35,025, and interest expense
of P750. What is the amount of the firm’s EBIT?

9. An analyst has forecasted the following numbers for Easy Sha Corp.: Sales, P70 million,
EBITDA is P20 million, Depreciation is P7 million, Tax rate is 40%. The company does not
expect any changes in its net operating working capital. This year the company’s planned gross
expenditure will total P12 million. What is the company’s forecasted free cash flow for the year?
10. A fire has destroyed a large percentage of the financial records of LaNa Corp. You have the
task of piecing together information in order to release a financial report. You have found the
return on equitry to be 18%. If sales were P4 million, the debt ratio was 0.40, and the total
liabilities were P2 million, what would be the return on assets {ROA}?

Questions for 11-13). Buzzy Manufacturing Company has P2 billion in sales and P0.6 billion in
fixed assets. Currently, the company’s fixed assets are operating at 80% of capacity.
11. What level of sales could Buzzy have obtained if it have been operating at full capacity?
12. What is Buzzy’s target fixed assets to sales ratio?
13. If Buzzy’s sales increased by 30%, how large is the increase in fixed assets will the
company need to meet its target fixed assets to sales?