FRANCISCAN COLLEGE OF THE IMMACULATE CONCEPTION, BAYBAY, LEYTE INC.

BAYBAY CITY, LEYTE

GRADUATE SCHOOL
2nd Sem. AY 2020-2021

MIDTERM EXAM
Part II.
Name: Ian Mark L. Remanes Course: _____________ March 13, 2021

1. Assess Blueberry’s liquidity (use 2 ratios) and determine how it is compared with the industry
and how the liquidity position has changed over time.

ANSWER- Based on the given financial information of blueberry corporation, the current ratio
shows that the current asset will/can cover the current liabilities of the company. While the
current ratio will explain that the current assets less inventories is not sufficient to cover the
current liabilities of the company compared with the other industry the liquidity position of the
blueberry company is better because its liquidity ratio is higher than the other industry. The
liquidity position of blueberry company is constant because based on the two-year financial
statements in the year 2006, current assets is decreasing and also current liabilities is also
current liabilities is also decreasing, therefore, there is only a little change in the ratio of liquidity
in the year 2005 and year 2006.
2005 2006

Current asset
Current Ratio= 1,405,000/602,000= 2.33 1,206,000/571,500=
current liabilities
2.11

C urrent Asset −Inventories

Quick ratio= 514,000/602,000= .0853
current liabilities
393,000/571,500=0.688

2. Assess Blueberry’s asset management position (asset management ratios) and determine how it
compares with other industry and how its asset management efficiency has changed over time.

ANSWER- The asset management of the company indicates that the company successfully
utilizing its asset to generate revenues. Compared to other industry, their data indicates that the
other industry has better asset management position because it has higher asset management
ratio compared to blueberry corporation. The asset efficiency management of blueberry
corporation decreases from year 2005 to year 2006, having a ratio of 9.84 in 2005 and 7.88 in
the year 2006
2005 2006
Sales 4,240,000 3,635,000
Fixed Assets= Assets ¿ = 9.89 = 7.88
Net ¿ 431,000 461,000
3. Asses Blueberry’s profitability ratios (use 3 ratios) and compare it with the other industry and
how its profitability position has changed over time.

ANSWER- The profitability ratio of the company is quiet depressing because it results to a small
ratio. This ratio result id quiet alarming to the business, if it continues to decrease, this will lead
to company’s bankruptcy. Compared to the other industry, the blueberry is far behind with the
profitability ratio. The profitability position of blueberry is decreasing from 2005 to year 2006.
2005 2006
Profit after tax 18,408 95,490
Net Profit Margin= = 0.033 = 0.146
total Sales 560,000 213,550
Profit after tax 18,408
Return on Equity= = 0.072
Total share capital∧revenue 254,710
95,490
= 0.367
261,602
Profit after tax 18,408 95,970
Return on Assets= =0.010
total assets 1,836,000 1,667,000
= 0.058
Sales 4,240,000 3 ,635,000
Net Assets Turnovers= = 2.31 =
t otal asset s 1,836,000 1,667,000
2.18

4. Assess Blueberry’s debt management position, leverage ratios, (use 3 ratios) and compare it
with the other industry and how its profitability position has changed over time.

ANSWER- The debt management position of the company id properly managed because the
debt of the company is lesser and easily cover up with the assets, equity and capital. Compared
with the other industry its debt to assets ratio is 50. % which means the other industry has
bigger or higher debts than its assets. The debt management position of the company is
manageable because its ratio is decreasing, meaning the smaller ratio is showing positive
outcome to the company because its debt is smaller than its assets, equity and capital.

2005 2006
total debt 404,290 258,898
Debt to asset ratio= = 0.220 =
tot al asset s 1,836,000 1, 206,000
0.214
Total Debt 4 04,290 258,898
Debt to Equity ratio= = 0.487 =
total Equity 1,836,000 836,602
0.309
Total Debt 4 04,290 258 ,898
Debt to capital ratio= = 0.328 =
Total debt +Total Equity 1234,000 1, 095,500
0.236

5. What do you think would happen to its ratios if the company-initiated cost cutting measures
that allowed it to hold lower levels of inventory and substantially decreased the cost of good
sold? No calculations are necessary. Think about which ratios would affected by changes in
these two accounts.
ANSWER- If the company will initiate cost cutting measure to hold lower its inventory and
decreased its cost of good sold, it will create good financial position of the company because its
profits will increase. The ratios that will be affected will be the liquidity ratio which will decrease
and the profitability ratios that will definitely increase because the variable that will affect its
sales will decrease.