A. The following information pertains to Cenon Company for 2008 .

Accounts Receivable , Jan 1,200B 8000

Accounts Receivable , dec. 31,200B 9600
Net cash sales 3200
Accounts Receivable turnover for 200B 5 times

Compute for the company's net sales in 200B ./

Beginning of the year: 8,000

End of the year: 9,600
Total: 17,600
Divided by 2: 2
Average Receivable 8,800

Net Credit Sales = 8,800 x 5 Times

44,000
Net Sales = Net Credit Sales + Net Cash Sales
44,400 + 3,200
Net Sales = 47,200

B. For the year 200B - Lim Company's return on common stockholders' equituy was 12.5 %.
Its average stockholders' equity for the same period was 500,000 ,
inclusive of 50,000 par value preferred stock with a dividend rate of 8% .

How much was the company's net income for 200B ?

Net income = Return on common stock - Dividend

= 62,500 - 4,000
= 58,500.00

C. The following information was taken from last year's financial statements
D Industries :
Current liabilities 60,000
Long-term liabilities 180,000
Preferred stocks 50,000
Number of common shares outstanding 10,000

The company has a debt-to-equity ratio of .96 to 1 as at the end of last year .
What was the book value per share at the end of last year ?

Current Liabilities 60,000

Long-term Liabilities 180,000
Total Liabilities 240,000

Debt to Equity Ratio 0.96:1

Total Shareholder's Equity (240,000 / 0.96) 250,000

Less: Prefered Stocks 50,000
Common Stocks 200,000
Number of common shares outstanding 10,000
Book Value per Share (200,000/10,000) 20
 EBC Enterprises
Statement of Financial Position at December 31, 20x3 and 20x2
( in thousands )

20x3 20x2
Assets
Current Assets
Cash 2,030.50 1,191.00
Marketable Securities 2,636.00 4,002.00
Accounts Receivable 4,704.00 4,383.50
Allowance for doubtful account (224.00) (208.50)
Inventories 23,520.50 18,384.50
Prepaid expenses 256.00 379.50
Total Current Assets 32,923.00 28,132.00

Property , Plant and Equipment

Land 405.50 405.50
Buildings and Leasehold Improvements 9,136.50 5,964.00
Equipment 10,761.50 6,884.00
20,303.50 13,253.50
Less : Accumulated depreciaition and amortization (5,764.00) (3,765.00)
Net property , plant and equipment 14,539.50 9,488.50
Other assets 186.50 334.00
Total Assets 47,649.00 37,954.50

Liabilities and Equity

Current Liabilities
Accounts Payable 7,147.00 3,795.50
Notes payable -banks 2,807.00 3,006.00
Current maturities of long-term debt 942.00 758.00
Accrued liabilities 2,834.50 2,656.50
Total current liabilities 13,730.50 10,216.00
Deferred Income taxes 421.50 317.50

Long-term debt 10,529.50 8,487.50

Total liabilities 24,681.50 19,021.00

R. Santos Capital 22,967.50 18,933.50

Total Liabilities and equity 47,649.00 37,954.50

 EBC Enterprises
Income statement
For the Years Ended December 31 , 20x3,20x2 and 20x1

20x3 20x2 20x1

Net sales 107,800.00 76,500.00 70,350.00
Cost of goods sold 64,682.00 45,939.50 40,803.00
Gross Profit 43,118.00 30,560.50 29,547.00
Selling and administrative expenses 16,332.00 13,191.00 12,749.00
Advertising 7,129.00 5,396.00 4,770.50
Lease payments 6,529.00 3,555.50 3,633.50
Depreciation and amortization 1,999.00 1,492.00 1,250.50
Repairs and maintenance 3,843.00 2,228.50 2,412.00
Miscellaneous 1,507.50 1,023.00 1,515.50
Total 37,339.50 26,886.00 26,331.00
Operating income 5,778.50 3,674.50 3,216.00
Other Income ( expense)
Interest Income 211.00 419.00 369.00
Interest Expense (1,292.50) - 1,138.50 - 637.00

Net Income 4,697.00 2,955.00 2,948.00

 EBC Enterprises
Statement of Cash Flows for the Years Ended December 31 , 20x3 and 20x2
( in thousands )

20x3 20x2
Cash Flows from operating activities -Direct Method
Cash received from customers 107,495.00 74,830.50
Interest Received 211.00 419.00
Cash paid to suppliers for inventories - 66,466.50 - 49,968.00
Cash paid to employees ( S & A expense ) - 16,332.00 - 13,191.00
Cash paid for other operating expenses - 14,864.00 - 10,675.00
Interest paid - 1,292.50 - 1,138.50
Taxes paid - 3,739.00 - 2,160.50
Net cash provided(used) by operating activities 5,012.00 - 1,883.50

Cash Flows from Investing Activities

Additions to property ,plant and equipment - 7,050.00 - 2,386.50
Other investing activities 147.50
Net cash provided (used) by investing activities - 6,902.50 - 2,386.50

Cash Flows from Financing Activities

Sales of ordinary shares 128.00 91.50
Increase(decrease) in short-term borrowings (includes
current maturities of long-term debts ) - 15.00 927.00
Addition to long-term borrowings 2,800.00 3,941.00
Reduction of long term borrowings - 758.00 - 796.50
Withdrawals of R . Santos - 791.00 - 931.00
Net cash provided (used) by financing activities 1,364.00 3,232.00

Increase(decrease ) in cash and marketable securities - 526.50 - 1,038.00

, 20x3 and 20x2
Using the financial ratios , evaluate the company's financial position
and operating results for the years 20x3 and 20x2

1 Analysis of liquidity or short-term solvency

Current Ratio
Quick or acid test ratio
Cash flow liquidity ratio ( Cash + marketable securities + cash flow from operating activities)/Current Lia

2 Analysis of Activity/Asset management Efficiency

Accounts receivable turnover
Average collection period
inventory turnover
Average sale period/days supply in inventory
Total assets turnover

3 Analysis of debt management and leverage

Debt Ratio
Debt to Equity ratio
Times Interest earned

4 Analysis of operating efficiency and profitability

Gross profit margin
Operating profit margin
net profit margin
Return on investment on assets
Return on Equity
perating activities)/Current Liabilities
1 Analysis of liquidity or short-term solvency
Current Ratio
Quick or acid test ratio
Cash flow liquidity ratio ( Cash + marketable securities + cash flow from

1. Analysis of liquidity or short-term solvency

Current Ratio
Formula: Current Assets
Current Liabilities
20x3
Current Assets 32,923
Current Liabilities 13703.5
Current Ratio 2.4

Current Ratio
Formula: Current Assets
Current Liabilities
20x2
Current Assets 28,132
Current Liabilities 10,216
Current Ratio 2.75

Quick or Acid test ratio

Formula: Quick Assets (Cash + Marketable Securities + Accounts Receivable, net)
Current Liabilities
20x3
Quick Assets 9,146.50
Current Liabilities 13,730.50
Quick or Acid test ratio 0.67

Quick or Acid test ratio

Formula: Quick Assets (Cash + Marketable Securities + Accounts Receivable, net)
Current Liabilities
20x2
Quick Assets 9,368.00
Current Liabilities 10,216.00
Quick or Acid test ratio 0.92

Cash-Flow Liquidity Ratio:

Formula: Cash + Marketable Securities + Cash Flow from Operating Activities
 Current Liabilities
20x3

Cash + Marketable Securities +

Cash Flow from Operating 2,030+2,636+5,012 = 9678
Activities
Current Liabilities 13,703.50
Cash-Flow liquidity ratio 0.7
Cash-Flow Liquidity Ratio:
Formula: Cash + Marketable Securities + Cash Flow from Operating Activities
Current Liabilities
20x2

Cash + Marketable Securities +

Cash Flow from Operating 1,191+4,002+(1,883.5) 3309.5
Activities
Current Liabilities 10,216.00
Cash-Flow liquidity ratio 0.32
+ marketable securities + cash flow from operating activities)/Current Liabilities

Securities + Accounts Receivable, net)

Current Liabilities

Securities + Accounts Receivable, net)

Current Liabilities

ash Flow from Operating Activities

 Current Liabilities

ash Flow from Operating Activities

Current Liabilities
Analysis of Activity/Asset management Efficiency
Accounts receivable turnover
Average collection period
inventory turnover
Average sale period/days supply in inventory
Total assets turnover

Accounts Receivable Turnover

Formula: Net sales
Average Accounts Receivable Balance

20x3
Net Sales 107,800
Average Accounts Receivable Balance (4,480 + 4,175) / 2
Accounts Receivable Turnover 24.91
Accounts Receivable Turnover
Formula: Net sales
Average Accounts Receivable Balance

20x2
Net Sales 76,500
Average Accounts Receivable Balance 4,175
Accounts Receivable Turnover ###

Average Collection Period

Formula: 365 days
Accounts Receivable Turnover

20x3
365 days 365
Accounts Receivable Turnover 24.9
Average Collection Period 14.6 or 15 days
Average Collection Period
Formula: 365 days
Accounts Receivable Turnover

20x2
365 days 365
Accounts Receivable Turnover 18.32
Average Collection Period 19.9 days or 20 days
Inventory Turnover
Formula Cost of good sold
Average inventory
Balance

20x3
Cost of good sold 64,682
Average inventory balance (23,520 + 18,384.5) / 2 20952.25
Inventory Turnover 3.09
Inventory Turnover
Formula Cost of good sold
Average inventory
Balance

20x2
Cost of good sold 45,940
Average inventory balance 18,384.50
Inventory Turnover 2.50

Average Sale Period

Formula: 365 days
Inventory Turnover
20x3
365 days 365 days
Inventory Turnover 3.09
Average Sale Period 118 days
Average Sale Period
Formula: 365 days
Inventory Turnover
20x2
365 days 365 days
Inventory Turnover 2.5
Average Sale Period 146 days

Total Assets Turnver

Formula: Net Sales
Average Total Assets
20x3
Net Sales 107,800
Average Total Assets (47,649 + 37,954.5) /2 42801.75
Total Assets Turnver 2.52
Total Assets Turnver
Formula: Net Sales
Average Total Assets
20x2
Net Sales 76,500
Average Total Assets 37,954.50
Total Assets Turnver 2.02
Analysis of debt management and leverage
Debt Ratio
Debt to Equity ratio
Times Interest earned

Analysis of leverage: Debt Financing and Coverage

Debt Ratio

Formula: Total Liabilities

Total Assets
20x3
Total Liabilities 24,681.50
Total Assets 47,649
Debt Ratio 51.80%
Debt Ratio

Formula: Total Liabilities

Total Assets
20x2
Total Liabilities 19,021.00
Total Assets 37,954.5
Debt Ratio 50.12%

Debt to equity ratio

Formula: Total Liabilities
Total Equity
20x3
Total Liabilities 24,681.50
Total Equity 22,967.50
Debt to equity ratio 107.46%
Debt to equity ratio
Formula: Total Liabilities
Total Equity
20x2
Total Liabilities 19,021.00
Total Equity 18,933.50
Debt to equity ratio 100.46%

Time Interest Earned

Formula: Operating Profit
Interest Expense
20x3
Operating Profit 5,778.50
Interest Expense 1,292.50
Time Interest Earned 4.47
Time Interest Earned
Formula: Operating Profit
Interest Expense
20x2
Operating Profit 3,674.50
Interest Expense 1,138.50
Time Interest Earned 3.23
Analysis of operating efficiency and profitability
Gross profit margin
Operating profit margin
net profit margin
Return on investment on assets
Return on Equity

Gross Profit Margin

Formula: Gross Profit
Net Sales
20x3
Gross Profit 43,118
Net Sales 107,800
Gross Profit Margin 40%

Gross Profit Margin

Formula: Gross Profit
Net Sales
20x2
Gross Profit 30,560.5
Net Sales 76,500
Gross Profit Margin 39.95%

Operating Profit Margin

Formula: Operating Profit
Net Sales
20x3
Operating Profit 5,778.50
Net Sales 107,800
Operating Profit Margin 5.36%
Operating Profit Margin
Formula: Operating Profit
Net Sales
20x2
Operating Profit 3,674.50
Net Sales 76,500
Operating Profit Margin 4.80%

Net Profit Margin

Formula: Net Income
Net Sales
20x3
Net Income 4,697
Net Sales 107,800
Net Profit Margin 4.36%
Net Profit Margin
Formula: Net Income
Net Sales
20x2
Net Income 2,955
Net Sales 76,500
Net Profit Margin 3.86%

Return on Invesment on Assets (ROA)

Formula: Net Income
Average Total Assets
20x3
Net Income 4,697
Average Total Assets 42,801.75
ROA 10.97%
Return on Invesment on Assets (ROA)
Formula: Net Income
Average Total Assets
20x2
Net Income 2,955
Average Total Assets 37,954.5
ROA 7.79%

Return on Equity (ROE)

Formula: Net Income
Average Stockholders' Equty
20x3
Net Income 4,697
Average Stockholders' Equity (22,967.5 + 18,933.5) / 2
Return on Equity (ROE) 22.42%
Return on Equity (ROE)
Formula: Net Income
Average Stockholders' Equty
20x2
Net Income 2,955
Average Stockholders' Equity 18,933.50
Return on Equity (ROE) 15.60%
20950.5