Business Finance

Seatwork
Name: Date:
Course: Schedule:

I. Preparing Common-Size Financial Statements

PRUFROCK CORPORATION PRUFROCK CORPORATION

Balance Sheets as of Common-Size Balance Sheets as of
December 31, 2017 and 2018 December 31, 2017 and 2018
(PhP in millions) (PhP in millions)
Assets 2017 2018 Assets 2017 2018 Change
Current assets Current assets 2.49%
Cash 84 98 Cash 4.89%
Accounts receivable 165 188 Accounts receivable 11.65%
Inventory 393 422 Inventory 19.03%
Total 642 708 Total
Fixed assets Fixed assets 80.97%
Net plant and equipment 2731 2880 Net plant and equipment 100.00%
Total assets 3373 3588 Total assets 100% 0%
Liabilities and Owners’ Equity Liabilities and Owners’ Equity
Current liabilities Current liabilities 9.25%
Accounts payable 312 344 Accounts payable 6.85%
Notes payable 231 196 Notes payable 16.10%
Total 543 540 Total 15.74%
Long-term debt 531 457 Long-term debt
Owners’ equity Owners’ equity 14.82%
Common stock and paid-in surplus 500 550 Common stock and paid-in surplus 53.34%
Retained earnings 1,799 2,041 Retained earnings 68.16%
Total 2299 2591 Total 100.00%
Total liabilities and owners’ equity 3373 3588 Total liabilities and owners’ equity 2.49% 100% 0%

PRUFROCK CORPORATION PRUFROCK CORPORATION

Income Statement as at December 31, 2018 Income Statement as at December 31, 2018
(PhP in millions) (PhP in millions)
Sales 2311 Sales 100%
Cost of goods sold 1,344 Cost of goods sold
Depreciation 276 Depreciation
Earnings before interest and taxes 691 Earnings before interest and taxes
Interest paid 141 Interest paid
Taxable income 550 Taxable income
Taxes (34%) 187 Taxes (34%)
Net income 363 Net income

Dividends 121 Dividends

Addition to retained earnings 242 Addition to retained earnings

We assume that Prufrock has 33 million shares outstanding and the stock sold for Php88.00 per share at the end of
the year.