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Mac Trading Company Comparative Balance Sheet For The Year Ended December 20CY 20CY 20PY
Mac Trading Company Comparative Balance Sheet For The Year Ended December 20CY 20CY 20PY
1. Prepare a comparative Balance Sheet for 20-PY and 20-CY and an Income Statement. (2 items x 25 points)
Non-Current Asset
Land ₱500,000 ₱500,000
Building, net ₱500,000 ₱550,000
Machinery and Equipment, net ₱1,500,000 ₱1,700,000
Other Assets ₱90,000 ₱100,000
Goodwill ₱400,000 ₱400,000
Total Non-Current Asset ₱2,990,000 ₱3,250,000
Total Asset ₱5,773,000 ₱5,500,000
Current Liabilities
Notes Payable, Trade ₱150,000 ₱100,000
Accounts Payable, net ₱790,000 ₱610,000
Expenses Payable ₱60,000 ₱40,000
Total Current Liabilities ₱1,000,000 ₱750,000
Non-Current Liabilities
Long-term Notes ₱2,250,000 ₱2,500,000
Total Liabilities ₱3,250,000 ₱3,250,000
Stockholder’s Equity
15% Preferred Stock, ₱100 par ₱500,000 ₱500,000
Common Stock, ₱10 par ₱1,500,000 ₱1,500,000
Retained Earnings ₱523,000 ₱250,000
Total Stockholder’s Equity ₱2,523,000 ₱2,250,000
2. Perform a horizontal analysis for the comparative balance sheet showing the peso and percentage changes of each item. (44 points: 1 point for each correct peso and
percentage changes)
MAC TRADING COMPANY
Condensed Balance Sheet
For the year December 31 20CY and 20PY
Current Asset 20CY 20PY Amount %
Cash ₱283,000 ₱150,000 ₱133,000 89%
Marketable Securities ₱1,000,000 ₱850,000 ₱150,000 18%
Accounts Receivable, net ₱1,000,000 ₱500,000 ₱500,000 100%
Inventories ₱500,000 ₱750,000 (₱250,000) (33%)
Total Current Asset ₱2,783,000 ₱2,250,000 ₱533,000 24%
Non-Current Asset
Land ₱500,000 ₱500,000 0 0
Building, net ₱500,000 ₱550,000 (₱50,000) (9%)
Machinery and Equipment, net ₱1,500,000 ₱1,700,000 (₱200,000) (12%)
Other Assets ₱90,000 ₱100,000 (₱10,000) (10%)
Goodwill ₱400,000 ₱400,000 0 0
Total Non-Current Asset ₱2,990,000 ₱3,250,000 (₱260,000) (8%)
Total Asset ₱5,773,000 ₱5,500,000 ₱273,000 5%
Current Liabilities
Notes Payable, Trade ₱150,000 ₱100,000 ₱50,000 50%
Accounts Payable, net ₱790,000 ₱610,000 ₱180,000 30%
Expenses Payable ₱60,000 ₱40,000 ₱20,000 50%
Total Current Liabilities ₱1,000,000 ₱750,000 ₱250,000 33%
Non-Current Liabilities
Long-term Notes ₱2,250,000 ₱2,500,000 (₱250,000) (10%)
Total Liabilities ₱3,250,000 ₱3,250,000 0 0
Stockholder’s Equity
15% Preferred Stock, ₱100 par ₱500,000 ₱500,000 0 0
Common Stock, ₱10 par ₱1,500,000 ₱1,500,000 0 0
Non-Current Asset
Land ₱500,000 8.66% ₱500,000 9.09%
Building, net ₱500,000 8.66% ₱550,000 10%
Machinery and Equipment, net ₱1,500,000 25.98% ₱1,700,000 30.91%
Other Assets ₱90,000 1.56% ₱100,000 1.82%
Goodwill ₱400,000 6.93% ₱400,000 7.27%
Total Non-Current Asset ₱2,990,000 51.79% ₱3,250,000 59.09%
Total Assets ₱5,773,000 100% ₱5,500,000 100%
Current Liabilities
Notes Payable, net ₱790,000 13.68% ₱610,000 11.09%
Expenses Payable ₱60,000 1.04% ₱40,000 0.73%
Total Current Liabilities ₱1,000,000 17.32% ₱750,000 13.64%
Non-Current Liabilities
Long-term Notes ₱2,250,000 38.97% ₱2,500,000 45.45%
Total Liabilities ₱3,250,000 56.30% ₱3,250,000 59.09%
Stockholder’s Equity
15% Preferred Stock, ₱100 par ₱500,000 8.66% ₱500,000 9.09%
Common Stock, ₱10 par ₱1,500,000 25.98% ₱1,500,000 27.27%
Retained Earnings ₱523,000 9.06% ₱250,000 4.55%
Total Stockholder’s Equity ₱2,523,000 43.70% ₱2,250,000 40.91%
4. Perform a ratio analysis using the items from the comparative balance sheet and income statements to evaluate the firm's activity, liquidity, solvency, and profitability for the
current year. (125 points: 25 items x 5 points)
LIQUIDITY RATIOS
Current Ratio
Current Assets ₱2,783,000
Divide by: Current Liabilities ₱1,000,000
Current Ratio 2.78
Acid – Test ratio
Quick Assets (Cash + Marketable Sec. + AR) ₱2,283,000
Divide by: Current Liabilities ₱1,000,000
Acid Test Ratio 2.28
Cash Ratio
Cash plus Marketable Securities ₱1,283,000
Divide by: Current Liabilities ₱1,000,000
Cash Ratio 1.28
SOLVENCY RATIOS
Debt Ratio
Total Liabilities ₱3,250,000
Divide by: Total Assets ₱5,773,000
Debt Ratio 0.56
Profit ₱750,000
Add:
Income Tax Expense ₱225,000
Interest Expense ₱250,000
Earnings before Interest and Taxes ₱1,225,000
EFFICIENCY RATIOS
Receivable Turnover
Net Credit Sales ₱5,000,000
Average Accounts Receivable (20CY + 20PY)/2 ₱750,000
Receivable Turnover 6.67 times
Days in Inventory
Business days during the year 300
Divide by: Inventory Turnover 4.80
Days in Inventory 76.04 days
Inventory Turnover
Cost of Goods Sold ₱3,000,000
Divide by: Average Merchandise Inventory (20CY + 20PY)/2 ₱625,000
Inventory Turnover 4.80
PROFITABILITY RATIO
Return on Assets
Profit after Tax ₱525,000
Divide by: Average Total Assets (20CY + 20PY)/2 ₱5,636,500
Return on Assets 0.09
Multiple by: 100%
Return on Assets Percentage 9%