FAR EASTERN UNIVERSITY

N. REYES, SAMPALOC, MANILA

INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE Financial
Statement Analysis

1. A company reported P18,000 of net income for 2014, P24,000 for 2015 and P26,000 for 2016. The percentage
change in net income 2015 to 2016 was?

2. Assuming the inventory balance at the end of 2015 if P20,000 and it has increased by 15% since the end of 2014,
the balance at the end of 2014 was? (rounded to the nearest whole peso)

3. If the year one equals P700 and year two equals P742 and year three equals P770, the percentage to be assigned
to year 3 in a trend analysis, assuming that year one is the base year is:

4. Assume the following sales data for a company: 2017, P1,000,000; 2016, P900,000; 2015, P750,000; 2014,
P600,000. If 2014 is the base year, what is the percentage increase in sales from 2014 to 2015?

5. A company had a balance in the accounts receivable account of P780,000 at the beginning of the year and a
balance of P820,000 at the end of the year. Net credit sales during the year amounted to P5,840,000. The average
collection period of receivables in terms of days was:

6. A company had a balance in accounts receivable account of P780,000 at the beginning of the year and a balance
of P820,000 at the end of the year. Net credit sales during the year amounted to P5,840,000. The receivable
turnover ratio was:

Use the information for questions 7 to 8:

Red Corporation had a net income of P250,000 and paid dividends to common stockholders of P50,000 in 2015. The
weighted average number of shares outstanding in 2015 was 50,000 shares. Red corporation’s common stock is selling
for P50 per share on the Stock Exchange.

7. The company’s price/earnings ratio is:

8. The company’s payout ratio for 2015 is:

9. Orange Company reported the following on its income statement: Income before income taxes, P420,000; Income
Tax Expense, P120,000; Net Income, P300,000. An analysis of income statement revealed that interest expense
was P80,000. The company’s times interest earned was:

10. A company has a receivables turnover ratio of 10. The average net receivables during the period are P400,000.
What is the amount of net credit sales for the period?

11. A company has an average inventory on hand of P60,000 and its average days in inventory is 29.2 days. What is
the cost of Goods Sold?

12. Net sales are P1,500,000, beginning total assets are P700,000, and the asset turnover is 3.0. what is the ending
total asset balance?

Use the information for questions 13 to 20:

The following information pertains to Yellow, Inc. assume that all balance sheet amounts represent both average and
ending balance figures. Assume that all sales were on credit.

Statement of Financial Position

Assets
Cash and short-term investment 40,000.00
Accounts Receivable, Net 25,000.00
Inventory 20,000.00
Property Plant and Equipment 210,000.00
Total Assets 295,000.00

Liabilities and Stockholder's Equity

Current Liabilities 60,000.00
Long-Term Liabilities 85,000.00
Stockholder's
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 Total Liabilities and Stockholder's Equity 295,000.00

Income Statement
Sales 85,000.00
Cost of Goods Sold 45,000.00
Gross Profit 40,000.00
Operating Expenses 20,000.00
Net Income 20,000.00

Number of Shares of Common Stock 6,000

Market price of common stock 20.00
Dividend per share 0.90
cash provided by operations 30,000.00

13. What is the Current Ratio?

14. What is the Receivable Turnover for this company?
15. What is the Inventory Turnover for this company?
16. What is the return on assets for this company?
17. What is the profit margin for this company?
18. What is the return on common stockholder’s equity for this company?
19. What is the price earnings ratio for this company?
20. What is the total capitalization for this company?

21. A company’s net accounts receivable were P250,000 at December 31, 2015, and P300,000 at December 31, 2016.
Net cash sales for 2016 were P100,000 and the accounts receivable turnover ratio for 2016 was 5.0. what is the
company’s total net sales for 2016?

22. A company has the following balance sheet information:

Current Assets P 4,000,000
Current Liabilities 1,000,000
Long term Assets 8,000,000
Long term Liability 2,000,000
Common Stock 4,000,000
Retained Earnings 5,000,000

There was no interest expense and no dividends were declared. What is the debt to equity ratio at year end?

23. A financial records of a company reveal the following:

Net sales P 180,000
Cost of Goods Sold 120,000
Ending Inventory 25,000
Beginning Inventory 35,000

Assuming a 360 day year, what was the average days to sell an inventory?

24. Assuming that the company has an average inventory of P80,000, sales of P560,000, cost of sales of P480,000,
what is the inventory turnover ratio?

25. A company reported net income of P10,000 and paid cash dividend on common stock of P2.00 per share on each
of P2,000 shares outstanding. What is the EPS?

26. A company’s income statement showed no extraordinary items but showed a net income of P50,000. There are
100,000 common shares outstanding during the period. Dividends totaled P20,000 was declared and paid. What is
the EPS of the Company?

27. Assume liabilities total P25,000; average common stockholder’s equity totals P80,000; expenses total P43,000 and
return on common stockholder’s equity is 12%. Total revenues earned for the period is:

28. A company has a total assets of P80,000 and stockholder’s equity of P60,000. Total current liabilities is P10,000.
The debt to equity ratio is:

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 Answer Key

1 Increase in Net Income 2,000.00

0.0833
Base Amount 24,000.00
2 inventory 2015 20,000.00
Base Amount / 1.15
Inventory 2014 17,391.30
3 Year 3 770.00
1.1
Base Amount 700.00
4 Increase in Sales 2015 150,000.00
0.25
Base Amount 2014 600,000.00
5 Receivable x 365 292,000,000.00
50
Net Credit Sales 5,840,000.00
6 Net Credit Sales 5,840,000.00
7.3
Receivable 800,000.00
7 Earnings 50.00
10
Earnings per share 5.00
8 Dividend per share 1.00
0.2
Earnings per share 5.00
9 Dividend per share 500,000.00
6.25
Earnings per share 80,000.00
1
0 Average Receivables 400,000.00
Receivable turnover ratio 10.00
Net Credit Sales 4,000,000.00
1
1 Number of days in a year 365.00
Inventory in days 29.20
Inventory turnover 12.50
Average Inventory 60,000.00
Cost of Goods Sold 750,000.00
1
2 Net Sales 1,500,000.00
Asset Turnover 3.00
Average turnover 500,000.00
2.00
Total 1,000,000.00
Beginning Total Assets 700,000.00
Ending Total Assets 300,000.00
1
3 Current Assets 85,000.00 1.4166
Current Liabilities 60,000.00
1
4 Net Credit Sales 85,000.00 3.4
Receivables 25,000.00
1
5 Cost of Goods Sold 45,000.00 2.25
Inventory 20,000.00
1
6 Net Income 20,000.00 0.0677
Total Assets 295,000.00
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 1
7 Net Income 20,000.00 0.2352
Net Sales 85,000.00

1
8 Net Income 20,000.00 0.1333
Total Equity 150,000.00
1
9 Price per share 20.00 6
Earnings per share 3.33
2
0 Total Longterm Debt 85,000.00
Total Equity 150,000.00
Total Capitalization 235,000.00
2
1 Average receivables 275,000.00
Receivable Turnover 5.00
Net Credit Sales 1,375,000.00
Net Cash Sales 100,000.00
Net Sales 1,475,000.00
2
2 Total Debt 3,000,000.00 0.3333
Total Equity 9,000,000.00
2
3 Inventory x 360 10,800,000.00 90
Cost of Goods Sold 120,000.00
2
4 Cost of Goods Sold 480,000.00 6
Inventory 80,000.00
2
5 Net Income 10,000.00 5
CS Outstanding 2,000.00
2
6 Net Income 50,000.00 0.5
CS Outstanding 100,000.00
2
7 CS Equity 80,000.00
Return on Equity % 0.12
Return on Equity 9,600.00
Total Expenses 43,000.00
Total Revenues 52,600.00
2
8 Total Debt 20,000.00 0.3333
Total Equity 60,000.00

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