GRADE 12

W3-W4 BUSINESS FINANCE

Learning Area Grade Level
Quarter THIRD QUARTER Date
March 21 to April 4, 2022

I. LESSON TITLE Planning and Working Capital Management

II. MOST ESSENTIAL • identify the steps in the financial planning process
LEARNING COMPETENCIES • illustrate the formula and format for the preparation of budgets and
(MELCs) projected financial statement
• explain tools in managing cash, receivables, and inventory
•
III. CONTENT/CORE CONTENT • illustrate the financial planning process
• prepare budgets such as projected collection, sales budget, production
budget, income projected statement of comprehensive income, projected of
financial position, and projected cash flow statement
• describe concepts and tools in working capital management

Suggested
IV. LEARNING PHASES Learning Activities
Timeframe

INTRODUCTION

Review OF Financial Statement Preparation, Analysis, and Interpretation

DEVELOPMENT
Basic Financial Position or Balance Sheet
The statement of Financial position is the new name that the International Accounting Standards
Board (IASB) suggested for the “balance sheet” since 2009 to better reflect the kind of information
found in the financial report. This financial report provides information regarding the liquidity
position and capital structure of a company as of a given date. It must be noted that the
information found in this report are only true as of a given date.

Liquidity refers to the ability of a company to pay maturing obligations. The current assets of a
company are compared with its current liabilities to determine its paying capacity. Generally assets
which are expected to be converted to cash within one year such as accounts receivable and
inventories are classified as current assets.
Capital structure provides information regarding the amount of assets financed by debt or
liabilities and equity. For example, if a company has P1million assets and has liabilities of P400,000,
its capital structure is 40% liabilities (P400,000 + P 1,000,000.00) and 60 percent equity(P10,000 -
400,000)+ (P1,000.000. While debt or liabilities are not necessarily bad in business, too much of it
is not also good as it exposes the company to higher probability of bankruptcy.
Statement of Profit or Loss or Income Statement
The statement of profit or loss or otherwise known as income statement provides information
regarding the revenues or sales, expenses and next income of a company over a given accounting
period. This accounting period may be for a month, a quarter or a year. The income reported by a
company is not that useful if the accounting period is not stated. In analyzing earnings performance
, a comparison with the previous periods and with other companies, especially those coming from
the same industry, is a must. In analyzing statement of profit or loss, it is important to identify how
much of the income comes from core business and how much comes from the non-core business.
Core Business refers to the main business of a company.

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 Statement of Cash Flows
The statement of cash flows provides an explanation regarding the change in cash balance from
one accounting period to another. The cash flows are also classified into three main categories:
operating, investing and financing.
The statement of cash flows is a very important financial statement because it provides information
regarding the quality of earnings of a company as shown in the cash flows from operating activities.
Statement of Changes in Stockholders Equity.
This financial statement provides information that explains the changes in the stockholders’s
equity account from one accounting period to another. The changes may be due to the following:
1. Profit or loss for the accounting period
2. Cash dividend declaration
3. Issuance of a new shares of stock
4. Other transactions that affect the stockholders equity such as other comprehensive income,
treasury stocks, and revaluation of assets

Notes to financial Statements

The notes to Financial statements are integral part of the financial statements. Among the additional
information that the notes to financial statements provide are the following:
1. Brief description of the company. Information may include the nature of business of the
company and the owners behind the company.
2. Summary of significant accounting policies. This is very important because the existing
generally accepted accounting principles provide alternative accounting policies to
companies. It is therefore important to find out what specific accounting policies are used
by the company.
3. Breakdown of amounts found in the financial statements. The company’s property, plant,
and equipment (PPE) account may have too many components. This breakdown may be
provided for other financial statement accounts such as accounts receivable, inventories,
loans, operating expenses, among others.

Review of the Financial Statement Preparation

1. Analyzing business transactions. In this step a transaction is analyzed to find out if it affects
the company and if it needs to be recorded. Personal transactions of the owners and
managers that do not affect the company should not be recorded. In this step , a decision
may have to be made to identify if a transaction needs to be recorded in special journals such
as sales journal or purchases journals.
2. Recording in the journals- Once a transaction is identified and analyzed, the next step is the
preparation of the journal entry. For repetitive transactions, special journals are made. These
special journals include sales journal, purchases journals, cash receipts journal and cash
disbursements journal, Transactions which do not fall under any of these four may be
recorded in general journal.
3. Posting ledger accounts - After transactions have been recorded in the journals, the next step
is posting the transaction to the ledgers. Ledgers provide chronological details as to how
transactions affect individual accounts. There are two types of ledgers, the transactions affect
individual accounts. There are two types of ledgers the general ledger and subsidiary leger.
The general ledger is a summary of the different subsidiary ledgers and can serve as a control
account For example a general ledger for accounts, receivable summarizes the balances found
in the different subsidiary ledgers for different customer.
4. Preparing the unadjusted trial balance – at the end of each accounting period, unadjusted
trial balance is prepared form the financial statement account balances found in the general
ledgers. Accounts with debit balances and credit balances are then added. The sum for the
debit balances must exactly equal that of the credit balances. If there are discrepancies, steps
have to be taken to identify the sources of discrepancies. Possible sources of discrepancies
can be erroneous posting and additions or improper recording of a transaction
5. Making the adjusting entries -once the unadjusted trial balance is prepared, adjusting entries
are then prepared to account for the following among others;
a. Accruals. These include unpaid salaries for the accounting period, unpaid interest
expense, or unpaid utility expenses.
b. Prepayments. If a company has prepaid expenses such as prepaid rent or prepaid
insurance, then the correct balances for these accounts have to be established at the end
of each accounting period to reflect their correct balances.

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 c. Depreciation and amortization expenses. Depreciation expenses are recognized at the
end of each accounting period through adjusting entries. If there are intangible assets
such as franchise, the allocation of their costs which is called amortization expense, is
also recognized at the end of each accounting period through adjusting entries.
d. Allowance for uncollectible accounts. Bad debt expense from accounts receivable is also
recognized adjusting entries.
6. Preparing the adjusted trial balance -An adjusted trial balance is prepared after taking into
consideration the effects of the adjusting entries. Again, this is to ensure that the total debit
balances equal the credit balances.
7. Preparing the Financial statements. Once the adjusted trial balance is available, the financial
statements can then be prepared. These are the statement of financial position, statement
of profit or loss, and the statement of cash flows.
8. Making the closing entries. Income statement accounts such as revenues and expenses are
closed to prepare the system for the next accounting period. These income statement
accounts are closed to the retained earnings. If the revenues exceed expenses during an
accounting period, retained earnings will increase. The reverse is true which means that if the
expenses exceed revenues, the retained earning will decrease.
9. Post-closing trial balance. The post-closing trial balance is prepared to test if the debit
balance equal the credit balance after closing entries are considered. This is to ensure that
the accounting system is working.
Financial Statement Analysis
There are different users of financial statements. Financial statement analysis can be used by
managers, equity investors, creditors, regulators, labor unions employees, the public, and potential
investors and creditors. Financial statement analysis is used for investment and credit decisions.
It is also used for regulating companies such as what the Energy Regulatory Commission does for
power distribution companies and other energy companies.
Financial statement analysis is definitely used by management for monitoring performance and for
identifying strategies to further improve the company’s registration operation.
Fort this chapter, the following financial ratios will be discussed:
1. Profitability ratios
2. Efficiency ratios
3. Liquidity ratios
4. Leverage ratios
Vertical and horizontal analysis will also be discussed, How to evaluate the quality of earnings of a
company shall likewise be discussed in this module.
Profitability Ratios
The following ratios are used to measure the profitability of a company:
1. Return on equity (ROE)
2. Return on assets (ROA)
3. Gross profit margin
4. Operating profit margin
5. Net profit margin

Return on Equity (ROE)

ROE is a profitability measure that should be of interest to stock market investors. It measures
the amount of net income earned in relation to stockholders equity. ROE is computed as follows:
ROE = Net Income ÷ Stockholders Equity
To illustrate, let us use the financial statements of of JSC Foods Corporation in 2014.
ROE = (Net Income ÷ Stockholder’s Equity) x 100%
ROE = (2,659,087 ÷12,478,559) x 100 %
ROE = 21.31 %
The ROE of 21.31 % means that for every P1 of stockholder’s equity P0.2131 or 21.31 centavos was
earned in 2014. To be more meaningful, this rate of return is compared with the returns on
alternative investments such as the returns on time deposits and other fixed income instruments.
For example, if the interest on time deposits is only 2 % then the 21.31 % ROE seems better.
However, before a conclusion is made that the 21.31% ROE is better than the time deposit rate of 2
% the risks associated with the company earning 21.31% have to be assessed. Unless a bank will
experience a bank run, the 2% time deposit rate is guaranteed while the 21.31 % ROE is not.
Return on Assets (ROA)

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 Return on assets measures the abilityof a company to generate income out of its resources. Below
is the formula for computing ROA:
ROA = (operating Income + Total Assets) x 100%
This ratio can be useful in making investment decision. For example, if a company has an
opportunity to expand and is not sure how finance the expansion, The ROA can be used in making
a decision. If the borrowing rate is greater than ROA , then it does not make sense to borrow for
expansion. However, if the expected ROA with the expansion is greater than the borrowing rate,
then management may consider borrowing to finance expansion. It must be noted at this point that
this comparison borrowing cost and RIA is not the only factor considered in expansion.
Example:
ROA = (4,048,696 ÷22,298,020) X100%
=18.16 %
The 18.16% ROA means that the company generated 18.16 centavos for every P1.00 of asset in the
company.
Gross profit margin
The formula for computing gross profit margin is shown below
Gross profit Margin = (Gross Profit ÷sales) x 100%
Gross profit margin is profitability ratio that measures the ability of a company to cover its cost of
goods sold from its sales. To illustrate, leet us compute the gross profit margin of JSC Fodds
Corporation in 2014.
Gross profit margin = (10,546,355 + 52,501,085) x 100%
Gross profit Margin = 20.09% This ratio means that for every P1.00 of sale the company
generates it earns 20.09 centavos in gross profit. Companies in a very competitive industry have
to watch out for this gross profit margin because stiff competition can substantially bring down this
margin if the manager of a company wants to improve its gross profit margin two things can be
done
1. Raise prices
2. Find ways to bring down production cost. For trading or merchandising companies. Find a
supplier which can sell finished goods to the company at low prices.
Operating Profit Margin and Net Profit Margin
Operating profit margin measures the amount of income generated from the core business of a
company. It is computed as the difference tween revenues and the sum of cost of revenues or
sales and operating expenses.
Formula:
Operating Profit Margin = ((Operating Income ÷Sales) x 100%
= (4,048,696 ÷52,501,085) x 100 %
= 7.71%
The 7.71% operating profit margin means that out of P1.00 sales or revenues that JSC Foods
Corporation generated in 2014 , the company earned 7.71 centavo after deducting cost of sales
and operating expenses. This amount is before the effects of income taxes.

Net Profit margin

Net profit margin measures how much net profit a company generates for every peso of sales or
revenues that it generates . The formula for computing net profit margin is shown below.
Net Profit Margin = (Net Income ÷ sales) x100%
Net income is the amount after all expenses including income taxes are deducted from sales or
revenues.
Net Profit margin = 2,659,087 ÷52501,085 x 100%
=5.06% the company earned 5.06 centavos for every P1.00 of revenues
generated
Liquidity Ratio measure the ability of a company to pay maturing obligations from its current
assets. Two commonly used liquidity ratios will be discussed in this section
Current Ratio. The formula for computing current ratio is shown below:
Current ratio = Current Assets ÷Current Liabilities
Current liabilities include obligations that are expected to be settled or paid within 12 months.
These include accounts payable, accrued expense payable such as accrued salaries , and current
portion of long-term debt. Current portion of long-term debt is the principal amount of a long-
term loan expected to be paid within the next 12 months from the balance sheet date.
To illustrate, let us compute the current ratio of JSC Foods Corporation in 2014

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 Current ratio =Current Assets ÷Current Liabilities
Current Ratio =9,262,331 ÷ 7819,461
Current Ratio = 1.18 The current ratio of 1.18 means that for every P1.00 current liabilities that
the company has it has 1.18 pesos current assets as of December 31, 2014. A high current ratio
provides comfort that a company will be able to pay obligation as time, but does not guarantee
that no liquidity problem or payment problem or payment problems will arise. The ability of a
company to pay on time also depends on the quality of receivables and inventories. For example,
a company with current ratio of 2.5 may end up having difficulty paying on time. Perhaps, it is
because accounts receivable takes 90 days on the average to be collected.
Acid-test Ratio or Quick Asset Ratio
Below is the formula for quick, asset ratio
Quick Asset Ratio = (Cash + Current Accounts Receivable + Short term Marketable
Security)÷Current Liabilities
The quick Asset ratio is a stricter measure of a company’s liquidity position. There are some
textbooks which compute quick assets as current assets less inventories which this definition, quick
asset ratio can also be computed as follows:
Quick Asset Ratio = (Current Assets – Inventories)÷Current Liabilities
Note that the first formula is a stricter measure of quick asset ratio
Example:
Quick Asset Ratio = (1,062,527 ÷ 2,300,500)) ÷7,819461
Quick Asset Ratio = 0.43 this ratio means that for every 1.00 current liability it has a 0.43 centavos
quick assets is this something to be alarmed about? The answer depends on the quality of accounts
receivable which can be determined by its collection period.
Leverage Ratio
Leverage ratios show the capital structure of a company, that is, how much of the total assets of a
company is financed by debt and how much is financed by stockholders equity. Leverage ratios
can also be used to measure the company’s ability to meet long term obligations.
Factors influencing capital structure o a company.
1. Nature of business. If a company is in a risky business and operating cash flows are uncertain
like mining operations, it has to be more conservatively financed. Conservative financing
means there should be more stockholder’s equity. If the business is characterized by stable
operating cash flows like what is true form SM mall where cash flows from rent are almost
certain then a more aggressive capital structure can be considered stable operating cash flows
allow the company to pay periodic debt amortizations.
2. Stage of business development. A company which is starting its operations may encounter
difficulties borrowing from banks. Banks generally look for the historical performance of a
company in making decisions regarding loan applications. A new company does not have that
historical record.
3. Macroeconomic conditions. Measured by gross domestic product and this trend is expected
to continue in the foreseeable future.
4. Prospects of the industry and expected growth rates. If the industry where the company
operates has good prospects and growth rates are expected to be high, management can
considered borrowing more expand operations.
5. Bond and stock market conditions The liability of a company to raise more funds from the
stock market and the bond market also depends on how bullish players are in these markets
6. Financial flexibility. Refers to the ability of a company to raise funds, be it the stock market or
the bond market, when the need for cash arises
7. Regulatory environment. There are operations which are heavily regulated such as banks
which are monitored by the Bangko Sentral ng Pilipinas BSP
8. Taxes Interest expensive provides tax shield while cash dividend does not provide tax shield.
Interest expenses are allowed to be deducted from operating income to compute taxable
income.
9. Management style. Some managers are aggressive and some are conservative
Debt Ratio
Debt ratio measures how much of the total assets are fifnanced by liabilities.
Formula:
Debt Ratio: Total Liabilities ÷Total Assets

Let us compute the debt ratio of JSC Foods Corpoation in 2014

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 Debt Ratio = 9,819,461 ÷22,298,020
Debt Ratio = .44 the debt ratio of less than .50 means that the company has less liabilities as
compare to its stockholders’s equity. If the debt ratio is .50 this means that the amount of total
liabilities is exactly equal to stockholders equity.
Debt to Equity Ratio
Debt to equity ratio is a variation of the debt ratio. A debt to equity ratio of more than one means
that a company has more liabilities as compared to stockholder’s equity. The formula for debt to
equity ratio is shown below:
Debt to Equity Ratio = Total Liabilities ÷ Total Stockholder’s Equity
Debt to Equity Ratio = 9,819,461 ÷12,478,559
Debt to Equity Ratio = .79 since the company’s debt ratio is less than one, it is expected that
the debt to equity ratio is less than one.
Interest Coverage Ratio
Interest coverage ratio provides information if a company has enough operating income to cover
interest expense. Below is the formula for interest coverage ratio.
Interest Coverage Ratio = EBIT ÷ Interest Expense
EBIT stands for earnings before interest and taxes. Let us compute the interest coverage ratio of
jsc foods Corporation in 2014.
Interest Coverage Ratio = 4,048,696 ÷250,000
Interest Coverage Ratio = 16.19
The interest coverage ratio of 16.19 means that JSC Foods Corporation has more than enough
operating income on earning before interest and taxes to cover its interest expense. It has EBIT
which is a little more than 16 times its interest expense in 2014. This high interest coverage ratio
is also a reflection of a more conservative capital structure JSC Foods Corporation has.
Efficiency Ratios or Turnover Ratios
Efficiency ratios, otherwise known as turnover ratios, are called as such because they measure the
management;s efficiency in utilizing the assets of the company. /the following efficiency ratios will
be discussed in this chapter.
1. Total asset turnover ratio
2. Fixed asset turnover ratio
3. Accounts receivable turnover ratio
4. Inventory turnover ratio
5. Accounts payable turnover ratio
Total Asset Turnover Ratio
Total asset turnover ratio measures the company’s ability to generate revenues for every peso of
asset invested. It is an indicator of how productive the company is in utilizing its resources.
Asset Turnover Ratio = SALES ÷Total Assets
Let us compute asset turnover ratio of JSC Foods Corporation in 2014.
Asset turnover Ratio = 52,501,085 ÷22,298,020
Asset Turnover Ratio = 2.35 The asset turnover ratio of 2.35 means that for every P1 of asset of
JSC Foods Corporation has in 20q4, it is able to generate sales of P2.35
Fixed Asset Turnover Ratio
If a company is heavily invested in property, plant, and equipment (PPE) or fixed asset, it pays to
know how efficient the management of these assets is. This can be applied to companies which
are characterized by high PPE such as utility companies, like teleom companies, power generation
and distribution companies and water distribution companies. . It can also be applied to
manufacturing companies.
Fixed Asset Turn over Ratio = Sales ÷PPE
Let us compute the fixed asset turnover for JSC Foods Corporation
Fixed Asset Turnover Ratio = 52,501,085 ÷12,200,000
Fixed asset turnover ratio = 4.30 In 2014 JSC Foods Corporation was able to generate P4.30 for
every P1.00 of PPE that it has. Ending balance of PPE or average PPE for the accounting period can
be used Consistency, however must be applied in the application of the formula.
Accounts Receivable Turnover Ratio
Accounts receivable turnover ratio measure the efficiency by which accounts receivable are
managed. A high accounts receivable turnover ratio means efficient management of receivables.
Formula: Accounts Receivable Turnover Ration = Sales ÷Accounts Receivables
If there are different types of receivables, consider only the trade account receivable. These are the
accounts receivable created in the ordinary course of business. Also if there are allowance for

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 doubtful accounts, use the gross amount of trade accounts receivable. This amount is generally
found in the notes to financial statements where more information about accounts receivable is
disclosed.
Example: Accounts Receivable Turnover Ratio = 52,501,085 ÷2,300,500
Accounts Receivable Turnover Ratio = 22.82 the accounts receivable turnover ratio
becomes more meaningful when converted to days receivable or average collection period. In our
illustrative example, 22.82 accounts receivable turnover ratio can be converted to days by dividing
360 days if information is based on annual data and use 90 days if based on quarterly data by the
accounts receivable turnover ratio.
Average Collection Period = 360 ÷22.82
Average Collection Period = 15.78 or 16 means that in 2014 JSC Foods Corporation had an average
of 16 days collecting it saccounts receivable. This means that form the day the sale was made. It
took the company q6 days on the average, to collect its accounts receivable.
Inventory Turnover Ratio
Inventory Turnover ratio measures the company’s efficienty in managing its inventories. Trading
and manufacturing companies and companies that are dealing with highly perishable products and
those that are prone to technological obsolence must pay close attention to this ratio to minimize
losses. The formula for computing inventory turnover ratio is shown below:
Inventory turn over Ration = Cost of sales ÷ Inventories
Example:
Inventory Turnover Ratio = 41,954,731 ÷4,849,304
Inventory Turnover Ratio = 41.62 or 42 days
This 42 days inventories means that in 2014 JSC Foods Corporation took 42 days on the average to
sell its inventories form the time they were bought.

Accounts Turnover Ratio

The accounts payable turnover ratio provides information regarding the rate by which trade
payables are paid. Any operating company will prefer to have a longer payment period for its
accounts payable but this should be done only with the concurrence of the suppliers
The formula below shows the computation for the accounts payable turnover ratio:
Accounts Payable Turnover Ratio = Cosst of Sales ÷Trade Accounts Payable
The accounts payable turn over ratio of JSC Foods Corporation in 2014 is 8. 31 computed as follows:
Accounts Payable Turnover Ratio = 41,954,730 ÷ 5,050,810
Accounts Payable Turnover Ratio = 8.31 Ideally purchases should have the numerator in the
formula, but this amount is not available in the income statement. A close substitute for purchase
si the cost sales or sometimes called cost of goods sold.Purchases are definitely a function of sales
and cost of sales is a function of sales. Given this line of reasoning cost of sales can be a very good
substitute for purchases.
From the accounts payable turnover ratio, days payable can be computed. For JSC Foods
Corporation, days payable in 2014 is 43.32 days or 43 days computed as follows
Days Payable = 360 ÷Accounts Payable Turnover Ratio
Days Payable = 43.32 or 43 days this number suggests that 2014 , the average payment period of
the company for its trade accounts payable was 43 days.
Operating Cycle and Cash Conversion Cycle
By adding the average collection period and days inventories, the operating cycle can be computed.
This operating cycle covers the period from the time the merchandise is bought to the time the
proceeds from the sale are collected. Managers of companies will prefer to have a short operating
cycle as compared to a long one.

In 2014 JSC Foods Corporation had an operating cycle of 58 days computed as follows
Operating Cycle = days inventories + days receivable
Operating Cycle = 42+16 when JSC Foods Corporation bouth the merchandise did it already pay
the merchandise bought? Chanses are the company was given credit terms. As our days payable
suggest payment to suppliers averaged 43 days in 2014. If we are interested to find out how long it
takes the company to collect recievables from the time the cost of the merchandise sold was actually
paid a cash conversion cycle or cometimes called net trade cycle can be computed. Formula is shown
below:
Cash Conversion Cycle == Operating Cycle – Days payable
For JSC Food orporarion, its cash conversion cycle is 15 days computed as follows:

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 Cas Conversion Cycle = 58 - 43 days
Cash Conversion Cycle = 15 days
PLANNING WORKING CAPITAL MANAGEMENT
Planning is very much related to another management function, controlling, These two
management functions reinforce each other, and both are very important for the success of an
organization.
Management planning is about setting goals of the organization and identifying ways to achieve
them. /this may be broken down into long0term plans and short term plans. Long term plans
reflected in a company’s business strategy. In the process of planning, resources have to be
identified. These resources include manpower resources production capacity and financial
resources
Steps in planning
1. Set goals or objectives
2. Identify resources
3. Identify related tasks
4. Establish responsibility centers for accountability and timeline
5. Establish an evaluation system for monitoring and controlling
6. Determine contingency plans.
Budget Preparation
1. Sales Budget the most important financial statement account in forecasting sales because
almost all other accounts in the financial statements are affected by sales. If you analyze
the statement of profit or loss, the accounts such as cost of sales, gross profit, and variable
operating expense are based on the sales figure
Production Budget
Production budget is a schedule which provides information regarding the number of units that
should be produced over a given accounting period based on expected sales and targeted level
of ending inventories
Steps in projecting financial statement
1. Forecast sales
2. Forecast sales and operating expenses
3. Forecast net income and retained earnings.
4. Determine balance sheet items that will vary with sales or whose balance will behighly
correlated with sales.
5. Determine payment schedule for loans
6. Determine how external funds needed will be financed

Working Capital Management

Working capital refers to the current assets used in the operation of business. This includeds
cash, accounts receivable, inventories, and prepaid expenses. The amount of resources that a
company sets aside to these working capital accounts can be reduced by current liabilities such
as trade accounts payable and accrued expenses payable.
Good management of working capital accounts allows the company to pay maturing obligation
on time. This helps in developing good business relationsps with suppliers and other vendors
such as utility companies. Good management of working capital accounts also relieves manager
os unnecessary stress and gives them more executive time to improve the business operations

ENGAGEMENT
Below are the summarized financial statemetn of ABM Corporation for 2021 and 2020 (in million of
peso)
2021 2020
Revenues 168,331 163,033
Cost and Operating 125,515 122,529
Expenses
Operating Pfrofit 42,816 40,504
Net Income 35,453 36,099
Current Assets 67663 84,741

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 Property And Equipment 192,665 200,078
Net
Total Assets 399,638 405,815
Current Liabilities 129,047 119,673
Total Liabilities 262,312 260,081
Total Equity 137,326 145,734

Compute for the Following:

a. Return on Equity
b. Return on assets
c. Operating profit margin
d. Net profit margin
e. Current Ratio
f. Debt Ratio
g. Total asset turnover ratio
h. Fixed asset turnover ratio

Answer the following Question.

ASSIMILATION
1. How would you analyze your business having an interest coverage ration of 19.11?
2. Is it possible for a company to miss payment of its maturingobligation in spite of having
high current ratio and quick asset ratio? Explain.

Answer the followng question

V. ASSESSMENT
1. What are the steps in planning - briefly explain

2. How is controlling related to planning

3. Enumerate the three working capital financing polices and describe each breifly
VI. REFLECTION Explain how financial statement analysis helps the owners to decide regarding the business. What
economic information does it provides. Cite example.

References: Business FinancePrinted in the Philippines by the Department of Education – Schools Division Office of Bataan
https://bit.ly/3gUG4N3

Prepared by: Checked by: Validated by: Approved:

Melody M. Cuevas Richard G. Del Mundo Claire G. Tabaong Nelia B. Espiritu

Subject Teacher SHS COORDINATOR MASTER TEACHER I SHOOL PRINCIPAL 1

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