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    3 - FS - Exercises - Questions

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    mikheal beyber
    The document contains exercises involving financial ratio calculations. Exercise 1 defines common financial ratios and their calculations. Exercise 2 involves horizontal analysis of comparative financial statements. Exercises 3-11 present word problems requiring calculation of ratios such as accounts receivable balance, debt ratio, return on equity, current ratio, quick ratio, market-to-book ratio, days sales outstanding, and net income.

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    3 - FS - Exercises - Questions

    Uploaded by

    mikheal beyber
    36 views3 pages
    The document contains exercises involving financial ratio calculations. Exercise 1 defines common financial ratios and their calculations. Exercise 2 involves horizontal analysis of comparative financial statements. Exercises 3-11 present word problems requiring calculation of ratios such as accounts receivable balance, debt ratio, return on equity, current ratio, quick ratio, market-to-book ratio, days sales outstanding, and net income.

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    3 - FS - Exercises - Questions (1)

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    The document contains exercises involving financial ratio calculations. Exercise 1 defines common financial ratios and their calculations. Exercise 2 involves horizontal analysis of comparative financial statements. Exercises 3-11 present word problems requiring calculation of ratios such as accounts receivable balance, debt ratio, return on equity, current ratio, quick ratio, market-to-book ratio, days sales outstanding, and net income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    36 views3 pages

    3 - FS - Exercises - Questions

    Uploaded by

    mikheal beyber
    The document contains exercises involving financial ratio calculations. Exercise 1 defines common financial ratios and their calculations. Exercise 2 involves horizontal analysis of comparative financial statements. Exercises 3-11 present word problems requiring calculation of ratios such as accounts receivable balance, debt ratio, return on equity, current ratio, quick ratio, market-to-book ratio, days sales outstanding, and net income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Exercise 1

    Match the term below to the correct definition. Write your answer on the space provided before each
    number.
    a. acid test ratio
    b. current ratio
    c. vertical analysis
    d. horizontal analysis
    e. times interest earned ratio
    f. working capital
    g. profit margin
    h. debt ratio
    i. cash conversion cycle
    j. return on equity

    A more stringent test as compared to current ratio.

    Current assets less current liabilities.

    It shows comparative financial statements for two or more years.

    The portion of the total assets financed by liabilities.

    It measures the capacity to pay fixed charges.

    Profit margin x Asset turnover x Equity multiplier

    Current assets divided by current liabilities.

    Items in the financial statement is in proportion to a particular base for each statement.

    It measures the percentage of net income over sales

    Age of receivables + age of inventories – age of payables

    Exercise 2
    Comparative information taken from the PH Corporation financial statements is shown below:

    2014 2013
    (a) Accounts receivable 175,000 140,000
    (b) Retained earnings 30,000 (40,000)
    (c) Sales 855,000 750,000
    (d) Operating expenses 170,000 200,000
    (e) Income taxes payable 22,000 20,000

    Instructions
    Using horizontal analysis, show the percentage change from 2013 to 2014 with 2013 as the base year.
    Answer
    (a) Accounts receivable _________
    (b) Retained earnings _________
    (c) Sales _________
    (d) Operating expenses _________
    (e) Income taxes payable _________

    Exercise 3
    1. Maruwa Co. has a DSO of 35 days, and its annual sales are P6,800,000. What is its accounts
    receivable balance? Assume that it uses a 365-day year.

    2. RMIH has an equity multiplier of 2.2, and its assets are financed with some combination of
    long-term debt and common equity. What is its debt ratio?

    3. Sa Sa International has an ROA of 12%, 2.2% profit margin, and an ROE of 16%. What is its
    total assets turnover? What is its equity multiplier?

    4. Kasen has P11 billion in total assets. Its balance sheet showsP1.2 billion in current liabilities,
    P3.3 billion in long-term debt, and P6.2 billion in common equity. It has 846 million shares of
    common stock outstanding, and its stock price is P36 per share. What is Kasen’s market/book
    ratio?

    5. IRICO has an EPS of P2.40, a cash flow per share of P3.20, and a price/cash flow ratio of 8.2x.
    What is its P/E ratio?

    6. Meiban Group Ltd. has a profit margin of 2.2% and an equity multiplier of 2.4. Its sales are
    P124 million, and it has total assets of P56 million. What is its ROE?

    7. The following is part of Want Want China's financial data:

    Long-term liabilities P2,000,000


    StockhoIders' equity 1,500,000
    Fixed assets and other assets 3,600,000
    Inventory 700,000
    Current assets 1,600,000

    What is the current ratio and quick ratio of Want Want?

    8. A firm has current assets of P3,000,000 with a current ratio of 1.2. Its quick ratio is 0.8. What is
    its (a) current liabilities, and (b) inventory?

    9. At the end of year, PICC P&C's stockholders’ equity is P7,500,000. The outstanding shares are
    15,000. The common stock price is 1,300 renminbi per share. What is the market-to-book ratio?
    10. The sales of Magnus Energy Group Ltd.’s was P100,000 and their account receivables was
    P12,000. What was Magnus’ days sales outstanding?

    11. Titan Petrochem has P6 million in sales, its ROE is 12%, and its total assets turnover is 3.2x.
    The company is 50% equity financed. What is its net income?

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