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Activity 1 FinMa

1. Mega Inc.'s income statement for 2021 shows sales of P150,000 and net profit of P10,500. Its balance sheet for 2020 and 2021 shows total assets increasing from P109,000 to P119,000 and retained earnings increasing from P24,000 to P28,000. 2. The financial statements provided for New Trend Corporation need to be analyzed to calculate various financial ratios for 2021 such as working capital, current ratio, receivables turnover, inventory turnover, gross profit margin, book value per share, net profit margin, earnings per share, return on assets, debt ratio, and return on equity. Additional calculations include average collection period and average sale period. 3

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340 views3 pages

Activity 1 FinMa

1. Mega Inc.'s income statement for 2021 shows sales of P150,000 and net profit of P10,500. Its balance sheet for 2020 and 2021 shows total assets increasing from P109,000 to P119,000 and retained earnings increasing from P24,000 to P28,000. 2. The financial statements provided for New Trend Corporation need to be analyzed to calculate various financial ratios for 2021 such as working capital, current ratio, receivables turnover, inventory turnover, gross profit margin, book value per share, net profit margin, earnings per share, return on assets, debt ratio, and return on equity. Additional calculations include average collection period and average sale period. 3

Uploaded by

Diomela Biongan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 1

Mega, Inc.
Income Statement
For the Year Ended December 31, 2021
Sales revenue P150,000
Cost of goods sold 117,500
Gross Profits P32,500
Selling expense 4,500
General and administrative expense 4,000
Depreciation expense 4,000
Operating profits P20,000
Interest expense 2,500
Net profit before taxes P 17,500
Taxes (40%) 7,000
Net profit after taxes P 10,500

Magna Fax, Inc.


Balance Sheet
For the Years Ended December 31, 2020 and 2021
2021 2020
Assets
Cash P24,000 P21,000
Accounts receivable 45,000 39,000
Accounts receivable 45,000 39,000
Gross fixed assets 42,000 P40,000
Acc. Depreciation 22,000 18,000
Net fixed assets 20,000 22,000
Total assets P119,000 109,000
Liabilities and Equity
Accounts payable P25,000 P30,000
Notes payable 50,000 40,000
Accruals 1,000 2,000
Long-term debts 10,000 8,000
Common stock at par 1,000 1,000
Paid-in capital in excess of par 4,000 4,000
Retained earnings 28,000 24,000
Total liabilities and equity P119,000 P109,000

Required: Prepare a statement of cash flows for the year ended December 31, 2005, organized by cash
flow from operating activities, cash flow from investment activities, and cash flow from financing activities.

Problem 2 - Analysis of Financial Statements

The data below were obtained from the financial records of New Trend Corporation:
New Trend Corporation
Income Statement
For the year ended December 31, 2021

Sales 1,000,000
Cost of Goods Sold
Inventory, Jan 1 2021 250,000
Purchases 720,000
Inventory, Dec 31 (220,000)
750,000
Gross margin 250,000
Selling & Admin (including Depreciation of P20,000) 115,000
Income Before Tax 135,000
Provision for Income Tax 45,000
Net Income 90,000

New Trend Corporation


Statement of Financial Position
December 31, 2021 & 2020

ASSETS 2020 2021


Current Assets
Cash 75,000 85,000
Marketable Secrities 25,000 25,000
Trade Receivable, net 185,000 245,000
Inventory, at cost 250,000 220,000
Prepaid Expenses 15,000 10,000
Total Current Assets 550,000 585,000
Property & Other Assets
Equipment, net 340,000 320,000
Other Assest 15,000 15,000
Total Property and Other Assets 355,000 335,000
Total Assets 905,000 920,000

Liabilities & Equity


Current Liabilities
Trade Payables 185,000 165,000
Accrued Expenses 20,000 25,000
Other Current Liabilities 10,000 10,000
Total Current Liabilities 215,000 200,000
Long-Term Liability
Mortgage Payable 120,000 120,000
Total Liabilities 335,000 320,000

Equity
Capital Stock, par P100 300,000 300,000
Share Premium 30,000 30,000
Retained Earnings, Appropriated 80,000 80,000
Retained Earnings, Unappropriated 160,000 190,000
Total Stockholders' Equity 570,000 600,000
Total Liabilities & Equity 905,000 920,000

Dividends paid for the year P30,000


Market Price: P10
No of days in a year: 360

Required: Compute the following:


a. Amount of Net Working Capital
b. Current Ratio
c. Acid-Test Ratio
d. Receivable turnover
e. Inventory Turnover
f. Rate of Gross Profit to Sales
g. Book Value per share of stock
h. Ratio of Net Income to Net sales
i. Earnings per share
j. Rate of Return on Assets
k. Debt ratio
L. Return on Equity
M. Average Collection Period
N. Average sale period
O. Payable turover

Problem 3 - Cash Budget

Coney’s Zucene wants to prepare a cash budget for months of September


through December. Using the following information, prepare the cash budget schedule and interpret
the results.
 Sales were P50,000 in June and P60,000 in July. Sales have been forecasted to be P65,000,
P72,000, P63,000, P59,000, and P56,000 for months of August, September, October, November,
and December, respectively. In the past, 10 percent of sales were on cash basis, and the
collection were 50 percent in the first month, 30 percent in the second month, and 10 percent in
the third month following the sales.

 Every four months (three times a year) P500 of dividends from investments are expected. The
first dividend payment was received in January.
 Purchases are 60 percent of sales, 15 percent of which are paid in cash, 65 percent are paid one
month later, and the rest is paid two months after purchase.
 P8,000 dividends are paid twice a year (in March and September).
 The monthly rent is P2,000.
 Taxes are P6,500 payable in December.
 A new cooking eqpt- press will be purchased in October for P2,300.
 P1,500 interest will be paid in November.
 P1,000 loan payments are paid every month.
 Wages and salaries are P1,000 plus 5 percent of sales in each month.
 August’s ending cash balance is P3,000.
 Coney’s would like to maintain a minimum cash balance of P10,000

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