FIN1_MQ2

Problem 1. The financial statements of Midwest Tours

Required: Compute for the following: (2points each)

a. 2009 Current Ratio
b. 2009 Quick Ratio
c. 2009 Leverage Ratio
d. 2009 TIE Ratio
e. 2009 Average Collection Period
f. 2009 Inventory Turn-over ratio
g. 2009 Fixed Asset Turn over ratio
h. 2009 Total Assets Turn over ratio
i. 2009 Return on Sales
j. 2009 Return on Equity
k. 2009 Price/Earnings Ratio
l. 2009 Market to book value ratio

Problem 2. Supply the missing data.

II

III

10%

12%

10%

Assets Turn-over

(e)

Equity Multiplier

1.25

(c)

(f)

ROE

(a)

(d)

20%

Debt Ratio

(b)

40%

25%

Profit Margin

Problem 3. Clik and Co. has a debt ratio of 0.50, total assets turn over of 0.25 and a profit
margin of 10%. The president is unhappy with the current return on equity and he thinks it
could be doubled. This could be accomplished (1) by increasing the profit margin to 14%
and (2) by increasing debt utilization. Total assets turn over will not change. What new
debt ratio, along with the 14% profit margin is required to double the return on equity?

Problem 4. At December 31, 2012, Morgan Inc. had 100,000 shares of P10 par
value ordinary shares issued and outstanding. There was no change in the number
of shares outstanding during 2012. Total shareholders equity at December 31, 2012
was P2,800,000. The profit for the year ended December 31, 2012 was P800,000.
During 2012, Morgan paid P3 per share in dividends on its ordinary shares. The
quoted price of Morgans ordinary shares was P48 per share on December 31, 2012.
What was the price-earnings ratio on ordinary shares for 2012?

Problem 5. During 2012, Lilia Company purchased P960,000 of inventory.

The cost of goods sold was P900,000 and the ending inventory at
December 31, 2012 was P180,000. What was the inventory turn-over for
2012?

Problem 6. It is the policy of E-prompt Corporation that

the current ratio cannot fall below 1.5 to 1. Its current
liabilities are P400,000 and the present current ratio is 2 is
to 1. How much is the maximum level of new short term
loans it can secure without violating the policy?

Problem 7. Selected data from the year-end financial

statements of World Cup Corporation are presented
below. The difference between the average and the ending
inventories is immaterial.
Current Ratio
2.0
Quick Ratio
1.5
Current Liabilities
P6,000,000
Inventory Turnover
8 times
Gross Profit Margin
40%
What is the net sales for the year?

Problem 8. Selected information from the operating

records of Kay Company is as follow:
Net Sales
P1,800,000
Cost of sales for 2012
1,200,000
Inventory at 12/31/11
360,000
Inventory at 12/31/12
312,000
Kays inventory turnover for 2012 is ______