Mhecaila Canciller Ms.

Maria Luisa Dy
BSA-BSAC02 FINMGT1
UNDERSTANDING THE FINANCIAL STATEMENTS
PROBLEM 1: (Statement of Financial Position)
GIVEN:
Total Asset 2,500,000 Notes Payable 150,000
Net Fixed 2,000,000 Long-Term Debt 750,000
Asset
Total Common 1,500,000
Equity

REQUIREMENTS:
**need proforma balance sheet
A. 2,500,000
Solution:
Asset= Liabilities + Equity

(Total Asset) 2,500,000= (Total Liabilities and Equity) 2,500,000

B. 500,000
Solution:
Work back from total Asset:

Current Assets 500,000

Net Fixed Assets 2,000,000
Total Assets 2,500,000

C. 250,000
Solution:
Work back from total liabilities and equity:
Current Liabilities 250,000
Long-Term Debt 750,000
Total Liabilities 1,000,000
Common Equity 1,500,000
Total liabilities and equity 2,500,000

D. 100,000
Solution:
Work back from current liabilities:

Accounts Payable 100,000

and Accruals
Notes Payable 150,000
Current Liabilities 250,000
Mhecaila Canciller Ms. Maria Luisa Dy
BSA-BSAC02 FINMGT1

E. 250,000
Solution:
Net Working Capital= Current Assets- Current Liabilities

Net Working Capital= 500,000 – 250,000

Net Working Capital= 250,000

F. 400,000
Solution:
Net Operating Working Capital= Current Assets- (Current Liabilities – Interest-bearing current liabilities)

Net Operating Working Capital= 500,000- (250,000–150,000)

Net Operating Working Capital= 500,000- 100,000
Net Operating Working Capital= 400,000