BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Tutorial Week 5 – Topic 4

Topic 4
Textbook Chapter 1

Questions – 1.26

Q1.26) Ratio analysis is an important tool in financial analysis. Identify at least four
ratios using:
a. Balance sheet data exclusively.
b. Income statement data exclusively.
c. Both balance sheet and income statement data.

a. Current ratio, acid test ratio, cash ratio, total debt ratio
b. times interest earned, gross margin ratio, operating profit margin ratio, effective tax
rate
c.inventory turnover, days sales in receivables, return on total assets, return on total
equity.

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BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Exercise: 1.4

E1.4)

Mixon Company’s year-end balance sheets show the following:

Express the balance sheets in common-size percents. Round to the nearest one-tenth
of a percent.

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BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

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BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Problem: 1.6

P1.6) You are an analyst reviewing Foxx Company. The following data are available
for your financial analysis (unless otherwise indicated, all data are as of December 31,
Year 2):

Current ratio = 2 Days’ sales in inventory = 36 days

Accounts receivable turnover = 16 Gross profit margin ratio = 50%

Beginning A/R = $50,000 Expenses (excluding COGS) = $450,000

Return on end-of-year common equity = 20% Total debt to equity ratio = 1

Sales (all on credit) = $1,000,000 Noncurrent assets = $300,000

Required:

Using these data, construct the December 31, Year 2, balance sheet for your analysis.
Current assets consist of cash, accounts receivable, and inventory. Balance sheet
classifications include cash, accounts receivable, inventory, total noncurrent assets,
total current assets, total current liabilities, total noncurrent liabilities, and equity.

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BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

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BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Questions are from Subramanyam, K. R., Financial Statement Analysis, 11th Edition,
McGraw Hill

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