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Enero - ACC 222 Exercise - FS Analysis

The document provides financial analysis of Amor Amorata Corporation for years 200B and 200A. It includes horizontal and vertical analysis of the income statement and balance sheet, as well as calculations of key financial ratios to analyze profitability, liquidity, leverage, and stock valuation. Specifically, it shows sales and profits increased from 200A to 200B, while fixed assets and the stock price declined. Current assets exceeded current liabilities, but debt levels were high.

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297 views4 pages

Enero - ACC 222 Exercise - FS Analysis

The document provides financial analysis of Amor Amorata Corporation for years 200B and 200A. It includes horizontal and vertical analysis of the income statement and balance sheet, as well as calculations of key financial ratios to analyze profitability, liquidity, leverage, and stock valuation. Specifically, it shows sales and profits increased from 200A to 200B, while fixed assets and the stock price declined. Current assets exceeded current liabilities, but debt levels were high.

Uploaded by

regine
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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Regine M.

Enero BSA 2nd year


ACC 222 Exercises

HORIZONTAL ANALYSIS
AMOR AMORATA CORPORATION
Statement of Income and Retained Earnings
For the year ended December 31
Increase (Decrease)
200B 2000A
Sales 100,000 97,500 2,500.00 2.56%
Less: Cost of Goods Sold 61,250 55,000 6,250.00 11.36%
Gross Profit 38,750 42,500 (3,750.00) -8.82%
Less: Operating Expenses (26,000) (26,250) 250.00 -0.95%
Interest Expense (2,500) (2,250) (250.00) 11.11%
Income before taxes 10,250 14,000 (3,750.00) -26.79%
Less: Income taxes (3,590) (4,900) 1,310.00 -26.73%
Income after taxes 6,660 9,100 (2,440.00) -26.81%
Add: Beginning Retained
Earnings 10,000 4,750 5,250.00 110.53%
Total 16,660 13,850 2,810.00 20.29%
Less: Dividends (4,750) (3,850) (900.00) 23.38%
Retained Earnings, End 11,910 10,000 1,910.00 -49.61%

AMOR AMORTA CORPORATION


Statement of Financial Position
As of December 31
ASSETS 200B 200A Increase (Decrease)
Cash 7,500 5,250 2,250.00 42.86%
Accounts Receivable (net) 11,000 8,250 2,750.00 33.33%
Inventories 20,500 19,000 1,500.00 7.89%
Fixed Assets 34,410 37,500 (3,090.00) -8.24%
Total assets 73,410 70,000 3,410.00 4.87%

LIABILITIES
Current Liabilities 11,000 12,500 (1,500.00) -12.00%
Bonds Payable 25,000 22,500 2,500.00 11.11%
Common Stocks, P2.50 par 25,000 25,000 - 0.00%
Retained Earnings 11,910 10,000 1,910.00 19.10%
Total Equities 73,410 70,000 3,410.00 4.87%

Year-end market price stock P6.25 P8.75 (2.50) -28.57%


VERTICAL ANALYSIS
AMOR AMORATA CORPORATION
Statement of Income and Retained Earnings
For the year ended December 31

200B 2000A
Sales 100,000 97,500 100.00% 100.00%
Less: Cost of Goods Sold 61,250 55,000 61.25% 56.41%
Gross Profit 38,750 42,500 38.75% 43.59%
Less: Operating Expenses (26,000) (26,250) -26.00% -26.92%
Interest Expense (2,500) (2,250) -2.50% -2.31%
Income before taxes 10,250 14,000 10.25% 14.36%
Less: Income taxes (3,590) (4,900) -3.59% -5.03%
Income after taxes 6,660 9,100 6.66% 9.33%
Add: Beginning Retained
Earnings 10,000 4,750 10.00% 4.87%
Total 16,660 13,850 16.66% 14.21%
Less: Dividends (4,750) (3,850) -4.75% -3.95%
Retained Earnings, End 11,910 10,000 11.91% 10.26%

AMOR AMORTA CORPORATION


Statement of Financial Position
As of December 31
ASSETS 200B 200A
Cash 7,500 5,250 10.22% 7.50%
Accounts Receivable (net) 11,000 8,250 14.98% 11.79%
Inventories 20,500 19,000 27.93% 27.14%
Fixed Assets 34,410 37,500 46.87% 53.57%
Total assets 73,410 70,000 100.00% 100.00%

LIABILITIES
Current Liabilities 11,000 12,500 14.98% 17.86%
Bonds Payable 25,000 22,500 34.06% 32.14%
Common Stocks, P2.50 par 25,000 25,000 34.06% 35.71%
Retained Earnings 11,910 10,000 16.22% 14.29%
Total Equities 73,410 70,000 99.32% 100.00%

Year-end market price stock P6.25 P8.75


a. Current ratio = Current asset/Current liabilities
200B 200A
= 39,000/11,000 = 32,500/12,500
= 3.55 : 1 = 2.6 : 1

b. Quick Ratio (acid test ratio) = Quick assets/Current liabilities


200B 200A
= 18,500/11,000 = 13,500/12,500
= 1.68 : 1 = 1.08 : 1

c. Receivables turnover = Sales on account/Average accounts receivable


200B
= 100,000 / (19,250/2)
= 10.39 times
d. Inventory turnover = Cost of goods sold/Average inventory
200B
= 61,250 / (39,500/2)
= 3.10 times

e. Times interest earned = Net income before interest and taxes/Interest expense
200B 200A
= 12,750/2,500 = 16,250/2,250
= 5.1 = 7.22

f. Debt-equity ratio = Total liabilities/Total shareholder’s equity


200B 200A
= 36,000/36,910 = 35,000/35,000
= 0.98 =1

g. Debt ratio = Total liabilities/Total assets


200B 200A
= 36,000/73,410 = 35,000/70,000
= 0.49 = 0.50

h. Equity ratio = Stockholder’s equity/Total assets


200B 200A
= 36,910/73,410 = 35,000/70,000
= 0.50 = 0.50

i. Return on sales = Net income/Net sales


200B 200A
= 6,660/100,000 = 9,100/97,500
= 0.07 = 0.09
j. Return on total assets = {Net income + Interest expense (net of tax)} / Average total assets
200B
= {6,660 + 2,500 (1-.35)} / (143,410/2)
= 6,660 + 1,625 / 71,705
= 0.12

k. Return on owner’s equity = Net income/Average shareholder’s equity


200B
= 6,660 / (49,410/2)
= 0.27

l. Earnings per share (EPS) = Earnings avail. to ord. shareholder’s/Ave. ordinary shares outstanding
200B
= 6,660 / (50,000/2)
= 0.27

m. Price-earnings ratio (PE) = MV/share of O/S/Earnings per share


200B 200A
= 6.25/0.27 = 8.75/0.27
= 23.15 = 32.41

n. Dividend yield = Dividend per share/MV/ share of O/S


200B 200A
= 0.475/6.25 = 0.385/8.75
= 0.08 = 0.04

o. Dividend payout = Dividend per share/Earnings per share


200B 200A
= 0.475/0.27 = 0.385/0.27
= 1.76 = 1.43

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