Mae Anne I.

Sawali October 9,2020-Friday

BSBA OM-501 Mrs. Maritess Hicban

TASK PERFORMANCE

I. HORIZONTAL ANALYSIS

Accomplish the comparative statement of financial position by showing the peso changes and
percentage changes for 201B as compared with 201A. (38 items x 1 point)

201B 201A Peso Change % Change

Cash P 290,000 P 150,000 140,000 93.33%
Marketable Securities 1,000,000 850,000 150,000 17.65%
Accounts Receivable, net 1,000,000 500,000 500,000 100%
Inventories 500,000 750,000 (250,000) (33.33%)
Prepaid expenses 90,000 100,000 (10,000) (10%)
Total Current Assets 2,880,000 2,350,000 530,000 22.55%
Land 700,000 500,000 200,000 40%
Building, net 500,000 550,000 (50,000) (9.09%)
Machinery and Equipment, net 1,500,000 1,700,000 (200,000) (11.76%)
Total Noncurrent Assets 2,700,000 2,750,000 (50,000) (1.82%)
Total Assets P 5,580,000 P 5,100,000 480,000 9.41%

Notes Payable, trade P 150,000 P 100,000 50,000 50%

Accounts Payable, net 635,000 610,000 25,000 4.10%
Expenses Payable 20,000 40,000 (20,000) (50%)
Total Current liabilities 805,000 750,000 55,000 7.33%
Long-Term Notes 2,250,000 2,350,000 (100,000) (4.26%)
Total Liabilities 3,055,000 3,100,000 (45,000) (1.45%)
Owner’s Capital 2,525,000 2,000,000 525,000 26.25%
Total Liabilities and Equity P 5,580,000 P 5,100,000 480,000 9.41%

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 II. VERTICAL ANALYSIS

Create a vertical analysis for the income statement for 201B given below. (12 items x 1 point)

201B Percentage
Gross Sales P 5,250,000 105%
Less: Sales Returns and Allowances 250,000 5%
Net Sales 5,000,000 100%
Less: Cost of Goods Sold
Inventory, Dec. 31, 2018 P 750,000
Purchases 2,750,000
Inventory, Dec. 31, 2019 500,000 3,000,000 60%
Gross Profit 2,000,000 40%
Less: Selling Expenses 400,000 8%
Administrative expenses 600,000 12%
Income from operations 1,000,000 20%
Interest expense 250,000 5%
Income before taxes 750,000 15%
Income taxes 225,000 4.5%
Net Income 525,000 10.5%

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 III. RATIO ANALYSIS

Compute for the following ratios using the financial statements above. (10 items x 5 points)

1. Net working capital

201B 201A
Current Assets 2,880,000 2,350,000
Current Liabilities 805,000 750,000
Net working Capital 2,075,000 1,600,000

2. Current ratio
201B 201A
Current Assets 2,880,000 2,350,000
Current Liabilities 805,000 750,000
3.58 3.13

3. Acid-test ratio
201B 201A
Quick Assets 2,290,000 1,500,000
Current Liabilities 805,000 750,000
2.84 2

4. Profit margin

Net Income / Net sales = 525,000 / 5,000,000 = 0.105 or 10.5%

5. Return on equity
Net Income / Average Shareholder’s Equity = 525,000 / ((2,525,000+2,000,000) / 2)
= 0.23 or 23.20%
6. Return on assets
525,000 / ((5,580,000 + 5,100,000) / 2) = 0.0983 or 9.83%

7. Accounts receivable turnover

Net Sales / Average AR = 5,000,000 / ((1,000,000 + 500,000) /2) = 6.66 or 7 times

8. Inventory turnover
COGS / Average Inventory = 3,000,000 / ((500,000 + 750,000) / 2) = 4.8 times
9. Debt ratio
Total Liabilities / Total assets = 201B = 3,055,000 / 5,580,000 = 0.55
= 201A = 3,100,000 / 5,100,000 = 0.61
10. Debt-to-equity ratio
Total Liabilities / Total stockholder’s equity = 201B = 3,055,000 / 2,525,000 = 1.21
= 201A = 3,100,00 / 2,000,000 = 1.55

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