National University

Manila, Philippines
College of Business and Accountancy
Financial Management Part I
Exercise No. 2: Financial Statement Analysis
Ratio Analysis
Student Number:

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Section:

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Score:

General Instruction: Read instructions in each set of questions carefully. Show your
solutions in good form.
Problem No. 1. The following are selected financial and operating data taken from the
financial statements of Zumba Corporation:

Cash
Notes and Accounts Receivable, net
Merchandise Inventory
Marketable Securities-Short Term
Land and Buildings, net
Bonds Payable-Long Term
Accounts Payable-Trade
Notes Payable-Short Term

Sales (20% Cash, 80% Credit Sales

Notes and Accounts Receivable, net

As of December
2015
2014
80,000
640,000
400,000 1,200,000
720,000 1,200,000
240,000
80,000
2,720,000 2,880,000
2,160,000 2,240,000
560,000
880,000
160,000
320,000
For the Year Ended December
2015
2014
18,400,000
19,200,000
8,000,000
11,200,000

Compute for the following:

1. The companys working capital.
2. Financial Statement Ratios:
a. Current ratio as of December 31, 2015.
b. Acid Test Ratio as of December 31, 2015.
c. Accounts Receivable Turnover for 2015.
d. Merchandise Inventory Turnover for 2015
e. Gross Margin Rate for 2014.
f.

The average age of accounts receivable for 2015 (use 360 days).

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Problem No. 2. Given the following financial information of MerongQuiz Corporation:

Net Sales
Cost of Goods Sold
Operating Expenses
Earnings Before Interest and Tax
Net Income
Total Shareholders Equity
Total Assets

1.8 M
1.08M
315,00
0
405,00
0
195,00
0
0.75M
1.0M

Required:
1. Compute for the Return on
Investment.

2. Compute for Gross Margin

Rate.

3. Compute for the Total Asset

Turnover.

4. Compute for the Return on

Sales.

5. Compute for the Basic

Earning Power

Problem No. 3. IkawNa! Corporation has current assets of 200,000, including inventory of
80,000 and a quick ratio of 2:1. What is the value of the companys current liabilities?

Problem No. 4. Consider the following data of PushMoYan Corporation:

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Current Ratio
Acid-Test Ratio
Current Liabilities at year end
Inventory, beginning of the year
Inventory Turnover

3.5:1
3.0:1
150,000
125,000
8 times

Required:
a. What is the value of the companys inventory at the end of the year?
b. How much is the cost of goods sold during the year?
Problem No. 5. Consider the following data of Trending, Inc.:
Net Sales
Cost of Goods Sold
Ending Inventory
Beginning Inventory

180,000
120,000
25,000
35,000

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

Problem No. 6. Given the following data, reconstruct the balance sheet of Juno Company
for the year 2015.
1. Acid Test Ratio was 1.3 to 1;
2. Gross Profit was 35% of net sales;
3. The age of receivables was 36 days;
4. Inventory Turnover was 4 times. Beginning Inventory, 250,000;
5. Total Debt to Stockholders equity was .8 to 1;
6. Operating Expenses were 15% of sales;
7. Times Interest earned was 6 times;
8. Beginning accounts receivable was 160,000; and
9. Annual Business Day is 360 days.
10. The companys interest expense for the year is due to bond financing.
Balance Sheet
Assets
Cash
Marketable Securities
Accounts Receivable, net
Inventories
Plant Assets
Total Assets

Liabilities and Equity

50,000

Current Liabilities
Bonds Payable, 12.5% Long Term
Common Stock
Retained Earnings

500,000
300,000

Total Liabilities and Equity

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Income Statement
Net Sales
Cost of Goods Sold
Gross Profit on Sales
Less: Operating Expenses
Operating Income
Less: Interest Expense
Net Income before taxes
Less: Tax Expense (Assume 35% rate)
Net Income After Tax

525,000

Prepared by:
JONNEL S. ACOBA, CPA
Lecturer

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