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Silva - Activity 3 Financial Statements Analysis

The document provides information and solutions to three activities analyzing financial statements: 1. It prepares a comparative income statement with vertical analysis for years 2019 and 2020 for BYP Company, showing each item as a percentage of net sales. 2. It calculates the working capital, current ratio, and quick ratio for JAPRILL Company using data from its balance sheet, obtaining ratios of 351,000, 2.0, and 1.9 respectively. 3. It determines the inventory turnover and number of days' sales in inventory for two years using cost of goods sold and average/ending inventory figures, obtaining ratios such as 5.6 and 67.9 days for the first year.

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Mhericka Silva
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125 views3 pages

Silva - Activity 3 Financial Statements Analysis

The document provides information and solutions to three activities analyzing financial statements: 1. It prepares a comparative income statement with vertical analysis for years 2019 and 2020 for BYP Company, showing each item as a percentage of net sales. 2. It calculates the working capital, current ratio, and quick ratio for JAPRILL Company using data from its balance sheet, obtaining ratios of 351,000, 2.0, and 1.9 respectively. 3. It determines the inventory turnover and number of days' sales in inventory for two years using cost of goods sold and average/ending inventory figures, obtaining ratios such as 5.6 and 67.9 days for the first year.

Uploaded by

Mhericka Silva
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Name: Silva, Marthaley Mhericka C.

BSHRM-1 Sub: HOSM111B

Activity 3
FINANCIAL STATEMENTS ANALYSIS

1. (a) Prepare a comparative income statement, with vertical analysis, stating each item for both
2020 and 2019 as a percent of sales.
Ans:

BYP COMPANY
INCOME STATEMENT
FOR THE YEAR 2019

Net sales 700,000


Cost of Goods Sold 320,000
Less Administrative Expenses 20,000
Selling Expenses 110,000
Add: Income tax 32,000
Net: Income 282,000

BYP COMPANY
INCOME STATEMENT
FOR THE YEAR 2020

Net sales 800,000


Cost of Goods Sold 350,000
Less Administrative Expenses 37,000
Selling Expenses 150,000
Add: Income tax 40,000
Net: Income 303,000
2. The following data are taken from the balance sheet of JAPRILL COMPANY at the end of the
current year.
Determine the (a) working capital, (b) current ratio, and (c) quick ratio. Present figures used in
your computations. Round -off ratios to the nearest tenth.
Ans:
(a) Working Capital= Current Assets Current Liabilities
= 695,000-344,000
= 351,000
(b) Current Ratio= Current Assets/ Current Liabilities
= 695,000/344,000
=2.0
(c) Quick Ratio= (cash + cash equivalents + marketable securities + account receivable)
current liabilities
= (90,000+350,000+210,000)
344,000
= 650,000
344,000
= 1.9
3. The following data are taken from the financial statements of:
(a) Determine for each year (1) the inventory turnover and (2) the number of days' sales in
inventory.
Ans:

Inventory turnover= Cost of Goods Sold


Average Inventory
= 2,000,000
359,500
= 5.6

Number of days sales in inventory


= Ending Inventory/ Cost of Goods Soldx36
= (372,000/2,000,000) 365
= 67.9

(preceding)

Inventory turnover= 2,700,000


328,000
= 8.2

Number of sales in inventory= (328,000/2,700,000) 365


= 44.3

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