NAME: ANDREA MONIQUE MAHINAY ALEJAGA DATE: SEPT.

12, 2020
YEAR AND COURSE: FIRST YEAR- BSA
BSA 105 – FINANCIAL MANAGEMENT
PROFESSOR: MR. BOB AGUSTIN M. GELACIO, CPA, MBA

PROJECT ON WEEK 4

The following are the financial position and income statement data of Simple Company:
2017 2018
Cash 150,000 283,000
Marketable Securities 850,000 1,000,000
Accounts Receivable, net 500,000 1,000,000
Inventory 750,000 500,000
Land 500,000 500,000
Building, net 550,000 500,000
Machinery and Equipment, net 1,700,000 1.500,000
Goodwill 400,000 400,000
Deferred Charges 100,000 90,000
Notes Payable, trade 100,000 150,000
Account Payable, trade 610,000 790,000
Accrued Expenses 40,000 60,000
Long-term Notes Payable 2,500,000 2,250,000
15% Preferred Stock, P100 par 500,000 500,000
Common Stock, P10 par 1,500,000 1,500,000
Retained Earnings ? ?
Sales 5,250,000
Sales returns and Allowance 250,000
Inventory, December 31, 2108 500,000
Inventory, December 31, 2017 750,000
Purchases 2,750,000
Selling Expenses 400,000
Administrative Expense (including depreciation of P250,000) 600,000
Interest on Long-term notes 250,000
Income Taxes, 30%
Additional Information:
Dividends paid on preferred stock 75,000
Dividends paid on common stock 177,000
Market price per share of common stock 18
REQUIREMENTS:

Compute the following ratios, write your answer on the answer sheet below and round off decimal to
two decimal places:

RATIO COMPUTATION/SOLUTION ANSWER

1. Working Capital
(2018)= Current Assets of 2,783,000 - (2018)=
Current Liabilities of 1,000,000 ₱1,783,000
= ₱1,783,000

(2017)= Current Assets of 2,250,000 - (2017)=

Current Liabilities of 750,000 ₱1,500,000
= ₱1,500,000

2. Current Ratio
Current Assets of 2,783,000
(2018)= Current Liabilities of 1,000,000 (2018)= 2.78:1

= 2.78:1

Current Assets of 2,250,000 (2017)= 3:1

(2017)= Current Liabilities of 750,000

= 3:1

3. Acid-test Ratio
Quick Assets or (Cash+ Trading
Securities+ Receivables) of
283,000+ 1,000,000+ 1,000,000 (2018)= 2.28:1
(2018)= Current Liabilities of 1,000,000

= 2.28:1

Quick Assets or (Cash+ Trading

Securities+ Receivables) of 150,000+ 850,000+ (2017)= 2:1
500,000
(2017)= Current Liabilities of 750,000

= 2:1

4. Cash Flow from

Operations to Current Net Income- Changes in
Liabilities Working Capital
(2018)= Current Liabilities of 1,000,000 0.325 or 32.5%

Changes in Current Asset: (1,000,000+

1,000,000+ 500,000)-(50,000+ 500,000+
500,000+ 750,000)= 400,000

Changes in Current Liabilities: (790,000+

60,000)- (610,000- 40,000)= 200,000

= 525,000- 400,000+ 200,000

1,000,000
 = 0.325 or 32.5%

5. Receivable Turnover
Net Credit Sales of 5,000,000
(2018)= Average Trade Receivables of 6.67 times(x)
(500,000+ 1,000,000) ÷ 2

Net Credit Sales of 5,000,000

(2018)= Average Trade Receivables
of 750,000
= 6.67 times(x)
6. Age of Receivables
(Use 360 days) 360 days
Receivable
(2018)= Turnover of 6.67 times 53.97 or 54 days

= 53.97 or 54 days

7. Inventory Turnover
Cost of Goods Sold of 3,000,000
(2018)=
Average Inventory of 4.8 times(x)
(750,000+ 500,000) ÷ 2

Cost of Goods Sold of 3,000,000

(2018)= Average Inventory of 625,000

= 4.8 times(x)

8. Days’ Supply in
Inventory 360 days 75 days
(2018)= Turnover of 4.8 times
Inventory

= 75 days
9. Working Capital
Turnover Net Sales of 5,000,000
(2018)=
Average Working Capital of (1,500,000+ 3.05 times(x)
1,783,000) ÷ 2

Net Sales of 5,000,000

(2018)= Average Working Capital of
1,641,500
= 3.05 times(x)

10. Current Asset

Turnover Net Sales of 5,000,000
Average Current Assets of (2,250,000+ 1.99 times(x) (2018)=
2,783,000) ÷ 2
 Net Sales of 5,000,000
Average Current Assets of (2018)=
2,516,500
= 1.99 times(x)

11. Gross Margin Ratio

Gross Profit of 2,000,000 ₱0.4:₱1 or 40%
(2018)=
Net Sales of 5,000,000

= 0.4:1 or 40%

12. Profit Margin Ratio

Net Profit of 525,000 ₱0.11:₱1 or 11%
(2018)=
Net Sales of 5,000,000

= 0.11:1 or 11%
13. Return on Total
Assets Profit+ Interest Expense (net of tax)
of 525,000+ 250,000 0.14 or 14%
Average Total Assets of
(2018)=
(5,500,000+ 5,773,000) ÷ 2

Profit+ Interest Expense

(net of tax) of 775,000
(2018)= Average Total Assets of 5,636,500

= 0.14 or 14%

14. Return on Owner’s

Equity Net Income of 525,000
Average
(2018)= Shareholders’ Equity of 0.22:1 or 22%
(2,250,000+ 2,523,000) ÷ 2

Profit of 525,000
(2018)= Average Shareholders’
Equity of 2,386,500
= 0.22:1 or 22%

15. Asset Turnover Ratio

Net Sales of 5,000,000
Average Total Assets of
(2018)= 0.89:1 or 89%
(5,500,000+ 5,773,000) ÷ 2

Net Sales of 5,000,000

(2018)= Average Total Assets of
5,636,500
= 0.89:1 or 89%

16. Return on Ordinary

Earnings Available to Ordinary Shareholders of

(2018)=
Shareholders’ Equity 525,000- 75,000
Average Ordinary Shareholders’ 0.24:1 or 24%
Equity of (1,750,000+ 2,023,000) ÷ 2

Earnings Available to Ordinary

Shareholders of 450,000 (2018)=
Average Ordinary Shareholders’
Equity of 1,886,500
= 0.24:1 or 24%

17. Earnings per Share

(Net Income- Preferred Dividends) ₱3
of 525,000- 75,000
Average Ordinary Shares
(2018)=
Outstanding of 1,500,000/10
= ₱3

18. Price-earnings Ratio

Market price per share of 18 6:1
(2018)=
Earnings per Share of 3
= 6:1

19. Pay-out Ratio to

Ordinary Shares Dividends per Share of 1.18 0.39 or 39%
(2018)=
Earnings per Share of ₱3

= 0.39 or 39%
20. Divided Yield per
Ordinary Share Dividends per Share of 1.18 0.07 or 7%
(2018)= price per share of 18
Market

= 0.07 or 7%