BM1915

NAME: PONCIANO,RALPH LOUISE DATE: SCORE:

QUIZ

I. PROBLEM SOLVING
Answer the following items using the financial statements below. Encircle the letter of the correct
answer. Show your computations. (8 items x 5 points)

ABC Corporation
Comparative Statement of Financial Position
For the Years Ended 201B and 201A (in pesos)
201B 201A
Cash and Cash Equivalents 2,450 2,094
Receivables 1,813 1,611
Inventories 1,324 1,060
Prepaid Expenses 1,709 2,120
Total Current Assets 7,296 6885
Noncurrent Assets 18,500 15,737
Total Assets 25,796 22,622

Current Liabilities 7,230 8,467

Long-Term Liabilities 4,798 3,792
Common Stock 6,568 4,363
Retained Earnings 7,200 6,000
Total Liabilities and Equity 25,796 22,622

ABC Corporation
Income Statement
For the Year Ended 201B (in pesos)
201B
Sales 20,941
Less: Cost of Goods Sold 7,055
Gross Profit 13,886
Less: Operating expenses 7,065
Income from operations 6,821
Less: Interest expense 210
Income before taxes 6,611
Less: Income tax 2,563
Net Income 4,048

1. Which statement best describes ABC’s acid-test ratio for 201B?

a. Greater than 1 c. Less than 1

b. Equal to 1 d. None of the above
2. Inventory turnover (amount rounded)?
a. Six (6) times c. Eight (8) times
b. Seven (7) times d. Cannot be determined
3. Days’ sales in receivables (amounts rounded)?
60.8 or 61 days c. 32 days
a. 28 days d. 34 days
b. 30 days
4. Times-interest-earned ratio? c. 32 times
a. 54.7% d. 34 times
b. 19 times

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5. The company has 2,500 shares of common stocks outstanding. What is the earnings-per-share?
a. 1.62 c. 2.63
b. 1.75 d. 2.73
6. Current ratio?
a. 0.99 c. 1.05
b. 1.01 d. 1.09
7. Profit margin?
a. 19.33% c. 59.34%
b. 31.57% d. 66.31%
8. Debt ratio?
a. 46.62% c. 87.36%
b. 53.38% d. Cannot be determined

II. ESSAY (2 items x 5 points)

Read and analyze the items. Write your answer on the space provided.

1. One of the limitations of financial statement analysis is that financial statements are based on
historical costs. What is the danger in focusing solely on the data found in the historical financial
statements?
- I think that the danger focusing solely on the data found in the historical financial statements
is that things change, rules change, competition changes and many issues have emerged.
Just like the others say that “past performance does not necessarily indicative of future

results.”

2. Describe a business that operates where you live and explain how knowing the working capital of
that company would be useful to the management of that company and to outside investors.

- The business of my lolo was selling Hito, in fact he became a secret millionaire because of his
business and he was featured. Working capital is very useful because it has helped him in the
operations to be success as business. Working capital serves as a metric for how efficiently a

company is operating and how financially stable it is in the short-term. It can also help to
improve the company's earnings and profitability

Rubric for Problem Solving:

Performance Indicators Points
Correct accounts and amounts used 3
Computed final amounts are correct/balanced 2
Total 5

Rubric for Essay:

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Criteria Performance Indicators Points
Content Provided pieces of evidence, supporting details, and 3
factual scenarios
Organization of ideas Expressed the points in a clear and logical 2
arrangement of ideas in the paragraph
TOTAL 5

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