St.

Paul School of Professional Studies

Palo, Leyte
Accounting Review 3

TEGIO

Problem 1
Kaemil Corporation reported the following figures:
2015
Cash and cash equivalents
Receivables
Inventory
Prepaid Expenses
Total current assets

P 2,450
1,813
1,324
1,709
P 7,296

Other assets
Total assets

18,500
25,796

2014
P

2,094
1,611
1,060

2,120
P 6,885
P

15,737
22,622

Total current liabilities

7,230

8,467

Long-term liabilities
Common stock
Retained earnings
Total liabilities and equity

4,798
6,568
7,200
25,796

3,792
4,363
6,000
22,622

Sales
Cost of Sales
Operating expenses
Operating income
Interest expense
Income tax
Net Income
Required:

1.

P
P
P

20,941
7,055
7,065
6,821
210
2,563
4,048

Horizontal analysis of Kaemils balance sheet for 2015 would report

a. Cash as 9.5% of total assets
b. 17% increase in cash

2.

c.
d.

Current ratio of 1.01

Inventory turnover of 6times

Vertical analysis of Kaemils balance sheet for 2015 would report

a. Cash as 9.5% of total assets
b. Inventory turnover of 6 times

c.
d.

Current ratio of 1.01

17% increase in cash

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St. Paul School of Professional Studies

Palo, Leyte
Accounting Review 3

3.

TEGIO

A common-size income statement for Kaemil would report (amounts

rounded)
a. Net income of 19%
b. Sales of 100%

4.

8 times
Not determine from the given
data

c.
d.

32 days
28 days

c.
d.

34 times
32 times

The company has 2,500 shares of common stocks outstanding. What is

Kaemils earnings per share?
a. P1.62
b. P1.75

9.

c.
d.

Which measures expresses Kaemils times-interest-earned ratio?

a. 54.7%
b. 19 times

8.

Less than 1
None of the above

During 2015, Kaemils days sales in receivables ratio

a. 34 days
b. 30 days

7.

c.
d.

Kaemils inventory turnover during 2015 was (amounts rounded)

a. 6 times
b. 7 times

6.

Cost of sales of 34%

All of the above

Which statement best describes Kaemils acid test ratio?

a. Greater than 1
b. Equal to 1

5.

c.
d.

c.
d.

P2.73
2.63 times

Kaemils stock has traded recently around P48 per share. Use your
answer to Question 8 to measure the companys price earnings ratio.
a.
b.

1.01
30

c.
d.

48
78

1601

St. Paul School of Professional Studies

Palo, Leyte
Accounting Review 3

TEGIO

Problem 2
Assume the net income was P 6,000. No other information is known, except the
following:
Return on equity
Gross margin percentage
Current ratio
Inventory turnover
Long term debt to equity

10%
60%
3:1
4
2:3

Return on Sales
Income tax rate
Return on Assets
Days sale in receivable

4%
40%
5%
90

REQUIRED: Using the preceding ratios, construct an income statement and a balance
sheet with as much detail as possible.

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