Current ratio Gross profit margin

= current asset / current liab = gross profit / net sales

Acid-test ratio/quick ratio Operating profit margin

= *quick assets / current liab = operating profit / net sales
*cash + marketable securities + A/R
- In case of allowance for doubtful accounts, Net profit margin
deduct it = net profit / net sales

Working capital Rate of return on assets

= current asset - current liab = net profit / ave. total assets
= asset turnover * net profit margin
Trade receivable turnover Has interest-bearing debt
= *net credit sales / ave. trade receivable = net income + [interest (1 - tax rate)] / ave. total assets
*or net sales
Rate of return on equity
Ave. collection period = net income / ave. ordinary equity
= 360 days / receivable turnover = sinking fund before taxes = sinking fund after taxes / 1
= A/R / net sales / 360 - tax rate

Inventory turnover Earnings per share

= cost of goods sold / ave. inventory balance = net income - preference dividends / ave. ordinary
shares outstanding
Average sales period
= 365 days / inventory turnover Price earnings ratio
= market value per share of ordinary share / earnings per
Working capital turnover share
= net sales / ave. working capital
Dividend payout
Current asset turnover = dividends per share / earnings per share
= cost of sales + operating expenses + income taxes +
other expenses(excluding dep & amortization) / ave. CA Dividend yield
= annual dividend per share / market value per share
Accounts receivable turnover
= net sales / ave. accounts receivable balance Dividends per share
= dividends paid / ordinary shares outstanding
Debt ratio
= liab / assets

Equity ratio
= equity / asset

Debt to equity ratio

= liab / equity

Book value per share

= ordinary shareholders’ equity / no. of outstanding
ordinary shares
6/30/2021 FS Analysis

FS Analysis Total points 4/5

The respondent's email ([email protected]) was recorded on submission of this

form.

Multiple Choice 4 of 5 points

1) If a firm has P10,000 in inventories, P50,000 in cash, P20,000 1/1

machinery, and P10,000 current liabilities, what is the firm's Working
Capital? *

40,000

50,000

60,000

80,000

2) If a firm has P40,000 in inventories, P70,000 in cash, P40,000 in 1/1

machinery, and P40,000 accrued liabilities, what is the firm's current
ratio? *

3.75

1.00

2.75

1.75

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6/30/2021 FS Analysis

3) If a firm has P60,000 Accounts Receivable, P50,000 in cash, P20,000 0/1

allowance for bad debts, and P40,000 current liabilities, what is the
firm's quick ratio? *

2.75

2.25

1.50

3.25

Correct answer

2.25

If a firm has P10,000 in ending inventories, P20,000 in beginning 1/1

inventory, P20,000 cost of goods sold, what is the firm's inventory
turnover? *

0.66

1.00

2.00

1.33

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6/30/2021 FS Analysis

If a firm has P35,000 in ending inventories, P76,000 in beginning 1/1

inventory, P95,000 Cost of Goods Sold, what is the firm's average sales
period? (Average Sale Period = Days in a year / Inventory Turnover) Use
365 days. *

213.32

250

121.50

220.34

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6/29/2021 True or False

True or False Total points 7/10

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form.

Acid test ratio the most commonly used ratio in measuring the ability of 0/1
a business to pay its short-term *

True

False

Correct answer

False

Feedback

Current ratio

Quick ratio is used to measure the ability of a business to pay its short- 1/1
term debts. *

True

False

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6/29/2021 True or False

Activity ratios provide a measure of how efficient a business is utilizing 1/1

its resources *

True

False

Leverage ratios provide a measure of the ability of a business to pay its 1/1
liabilities. *

True

False

Quick assets include cash, marketable securities, accounts receivable 0/1

net of allowance for bad debts. *

True

False

Correct answer

True

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6/29/2021 True or False

Average sale period is a measure of the number of times inventory is 0/1

sold and replenished during a period. *

True

False

Correct answer

False

Feedback

Inventory Turnover

Inventory turnover is measure of the number of days inventory is held 1/1

before it is sold. *

True

False

Accounts receivable turnover indicates efficiency in collection. * 1/1

True

False

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6/29/2021 True or False

Debt ratio is a measure of the average time to collect a receivable. * 1/1

True

False

Equity ratio measures the proportion of assets financed through equity. * 1/1

True

False

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6/29/2021 True or False

True or False Total points 10/10

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form.

Profitability ratios provide measure of the performance of a business in 1/1

terms of its ability to generate profit from its resources. *

True

False

Average sale period is a measure of the number of days inventory is held 1/1
before it is sold. *

True

False

Return on assets measures profitability after considering all income and 1/1
expenses. *

True

False

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6/29/2021 True or False

Net profit ratio measures the profit generated in relation to the total 1/1
resources available to the business. *

True

False

Long-term solvency is also referred to as liquidity. * 1/1

True

False

Horizontal analysis involves the proportional analysis of the financial 1/1

statements of an entity in one reporting period, whereby each amount in
the financial statements is shown as a percentage of another item. *

True

False

Financial statement analysis is a process of evaluating and interpreting an1/1

entity's financial statements to assess its financial health for the purpose
of making better economic decisions. *

True

False

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6/29/2021 True or False

Vertical analysis is the comparison of financial information over two or 1/1

more reporting periods. *

True

False

Solvency refers to the ability of the business to pay its debts and remain 1/1
as a going concern. *

True

False

A negative working capital means that the business is currently unable to 1/1
meet its short-term obligations. *

True

False

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6/30/2021 FS Analysis

FS Analysis Total points 9/12

ANALYSIS OF THE EFFECTS OF TRANSACTIONS TO RATIOS

The respondent's email ([email protected]) was recorded on submission of this

form.

Show the effect of each of the transactions below on total assets and the
current ratio by using one of the symbols in each box to complete the table. If
the numerator and denominator of a ratio both increase or both decrease by
the amount, the effect of the event on the ratio is zero (0) or no effect.
EFFECT Symbol

Increase +

Decrease -

No Effect N

Insufficient Data n/a

1) * 1/1

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6/30/2021 FS Analysis

2) * 1/1

3) * 1/1

4) * 1/1

5) * ···/1

Correct answer

6) * ···/1

Correct answer

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6/30/2021 FS Analysis

7) * 1/1

8) * 1/1

9) * 1/1

10) * ···/1

Correct answer

11) * 1/1

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6/30/2021 FS Analysis

12) * 1/1

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6/30/2021 FS Analysis

FS Analysis Total points 4/6

ANALYSIS OF THE EFFECTS OF TRANSACTIONS TO RATIOS

The respondent's email ([email protected]) was recorded on submission of this

form.

Show the effect of each of the transactions below on total assets and the
current ratio by using one of the symbols in each box to complete the table. If
the numerator and denominator of a ratio both increase or both decrease by
the amount, the effect of the event on the ratio is zero (0) or no effect.
EFFECT Symbol

Increase +

Decrease -

No Effect N

Insufficient Data n/a

1) * 1/1

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6/30/2021 FS Analysis

2) * 1/1

3) * ···/1

Correct answer

4) * ···/1

Correct answer

5) * 1/1

6) * 1/1

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6/30/2021 FS Analysis

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Angelica S. Rubios

Problem 1
DSO = AR / (Sales / 365)
40 days = AR / (7,300,000 / 365 days)
40 days = AR / (20,000)
AR = (40 days) (20,000)
AR = 800,000

Problem 2
Equity multiplier = 2.4
Debt to asset ratio = 1 - (1 / 2.4)
= 1 - 0.4166
= 0.5834 = 58.34%

Problem 3
Total asset = 10B
Current liabilities = 1B
Long-term debt = 3B
Common equity = 6B
Shares outstanding = 800M shares
Stock price = 32 per share

Book value = common equity / shares outstanding

= 6B / 800M
= 7.5
Market/book ratio = stock price / book value
= 32 / 7.5
Market/book ratio = 4.2667

Problem 4
EPS = 2
Book value per share = 20
Market/book = 1.2 x

Market/book = P / book value per share

P = (1.2x) (20)
P = 24

P/E = P / EPS
P/E = 24 / 2
P/E = 12x

Problem 5
ROA = net income / total assets
.08 = 600,000 / total assets
TA = 600,000 / .08
TA = 7,500,000

(EBIT - interest) = net income / (1 - tax rate)

= 600,000 / (1 - .35)
= 600,000 / 0.65
= 923,077

Tax = (EBIT - interest) * tax rate

= 923,077 * .35
= 323,077

Net income = EBIT - interest - tax

600,000 = EBIT - 225,000 - 323,077
EBIT = 1,148,077
BEP = EBIT / total assets
= 1,148,077 / 7,500,000
= 15.31%
5. Total assets
Credit sales = 750,000
Total assets turnover = 2.5 times
= Credit sales / total assets
= 750,000 / 2.5
= 300,000

1. Cash
Cash to total assets = 2%
Total assets = 300,000
= Cash to total assets / total assets
= 2% * 300,000
= 6,000

2. Accounts receivable
Accounts receivable turnover = 10 times
Credit sales = 750,000
= Credit sales / Accounts receivable turnover
= 750,000 / 10
= 75,000

3. Inventory
Inventory turnover = 15 times
Credit sales = 750,000
= Credit sales / Inventory turnover
= 750,000 / 15
= 50,000

4. Total current assets

Cash = 6,000
Accounts receivable = 75,000
Inventory = 50,000
= Cash + Accounts receivable + Inventory
= 6,000 + 75,000 + 50,000
= 131,000

6. Current debt
Current ration = 2 times
Current assets = 131,000
= current assets / current ratio
= 131,000 / 2
= 65,500
7. Long-term debt
Total debt = 135,000
Current debt = 65,500
= Total debt - Current debt
= 135,000 - 65,500
= 69,500

8. Total debt
Debt to total assets = 45%
Total assets = 300,000
= debt to total assets * total assets
= 45% * 300,000
= 135,000

9. Net worth
Total assets = 300,000
Total debt = 135,000
= Total assets - Total debt
= 300,000 - 135,000
= 165,000

10. Total liabilities and equity

Total debt = 135,000
Net worth = 165,000
= Total debt + Net worth
= 135,000 + 165,000
= 300,000
7/1/2021 Quiz

Quiz Total points 10/20

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form.

0 of 0 points

What is the passcode? *

164920475829

Quiz - FS Analysis 10 of 20 points

It is a financial ratio computed by dividing the current liabilities by the 0/1

current assets *

current ratio

working capital

debt ratio

quick ratio

Correct answer

current ratio

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7/1/2021 Quiz

Which of the following is least likely to be considered a role of financial 1/1

statement analysis? *

Determining whether to invest in the company's securities

Assessing the management skill of the company's executives.

To make economic decisions.

None of the above

A company collects cash from a customer to settle an account 1/1

receivable. What effect does this transaction have on the company's
total assets and total shareholders' equity? *

Assets: Increase - Equity: Increase

Assets: No effect - Equity: Increase

Assets: No effect - Equity: No effect

None of the above

In the expanded form of the accounting equation, assets equal liabilities 1/1
plus contributed capital plus: *

ending retained earnings minus beginning retained earnings.

beginning retained earnings plus revenue minus expenses.

ending retained earnings.

common stock

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7/1/2021 Quiz

Prema Singh is the bookkeeper for Octabius Industries. Singh has been 1/1
asked by the CFO of Octabius to review all purchases that occurred
between February 1 and February 8 to investigate an error on the
receiving dock. Singh will most likely look at the: *

initial trial balance

general ledger

general journal

worksheet

What is owner equity? * 1/1

The value of the business after liabilities are subtracted from assets; the value of
the owner's investment in the business.

What a company owes.

Documents that are used to record and analyze the financial performance of a
business.

All income a company receives overtime.

Financial ratios that tell how well a company can pay off its short-term 1/1
debts and meet unexpected needs for cash. *

liquidity ratios

leverage ratios

profitability ratios

efficiency ratios

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7/1/2021 Quiz

The difference between current assets and current liabilities at a point in 1/1
time. The amount of money that would be left over if all the current
liabilities were paid off by current assets. *

current ratio

working capital

acid test/ quick ratio

asset turnover ratio

What is the formula for Gross Profit Margin * 1/1

Profit / Net sales revenue X 100

Gross profit / Net sales revenue X 100

Gross profit / Sales revenue X 100

Profit / Cost of sales X 100

It is a financial ratio computed by dividing the profit over total assets * 1/1

return on assets

return on equity

net profit ratio

debt-to-equity ratio

gross profit ratio

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7/1/2021 Quiz

If a firm has P80,000 credit sales, P50,000 in beginning accounts 1/1

receivable, P73,000 ending accounts receivable, what is the firm's
accounts receivable turnover? *

1.30

0.65

1.60

1.10

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7/1/2021 Quiz

Calculate the indicated ratios for Barry, given the following: (round off to one
decimal place for the final answers)

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7/1/2021 Quiz

Current ratio * ···/1

Quick ratio * ···/1

1.3

Days sales outstanding * ···/1

76.3

Inventory turnover * ···/1

6.7

Total Assets turnover * ···/1

1.7

Profit margin * ···/1

1.7

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7/1/2021 Quiz

ROA * ···/1

2.9

ROE * ···/1

7.6

Total Debt/Total Assets * ···/1

61.9

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