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7 MAS-12
RNANCIAL STATEMENT ANALYSIS
3. FINANCIAL RATIOS
LYN Merchandising has 1,OO0,000 common shares outstanding, with each share priced at P 8.00. In
2Ot7, the company declared dividends of P 0.10 per share. The balance sheet at the end of ZAfi showed
approximately the same amounts as that at the end of 2016. The financial statements for Long
Merchandising are as follows:
Lvn Merchandisino. Income Statement tor 2Ol7 (in thousands)
Sales P 4,7AO
Cost of goods sold
Gross profit
Operating expensesl
Depreciation P 320
Other 1.230 1,550
Income before interest and taxes P 850
Interest expense 150
Income before taxes P 700
Incolne taxes 280
Net income P--A&
LYN Merchandising, Balance Sheet at December 3t,2OL7 (in thou*nds)
Assets Liabilities and SHE
Cash P 22O Accounts payable P 190
Accounts receivable 440 Accrued expenses 180
Inventory 4LO Total current liabilities P 37O
Total current assets P 1,070 Long-term debt 11960
Plant and equipment 5,600 Common stock 1,810
Accumulateddepreciation (2.100) Retained earnings 43O
Total Assets P 4,52Q Total liabilities and SHE p4_ilA

6. Operating profit margin (18.09%)

7. Return on sales (RoS) (8.94"t ) tli
8. RoA - operational performance (i8.

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4. CONSTRUCTION OF FINANCIAL STATEMENTS
,W]!lr"
The following information is available concerning Yambz Company's expected results in 2017 (in thousands
of pesos). Turnovers are based on year-end values.
REQUIRED: Fill in the blanks.
1) Return on sales 60/o
2) Gros3 profit percentage 4Oo/o
3) Receivables turnover 5 times
4) Inventory tumover 4 times
5) Current ratio 3:1
6) Ratio of total debt to total assets 4Oo/o

Condensed Income Statement

Sales P 900
Cost of sales (A) qvi,
Gross profit
Operating expenses
Net income q4
[3i#
(D) (4'r:rli\
Condensed Balance Sheet
Cash P 3-0 Current liabilities (H) P
Receivables (E) lli'9 Long-term debt (r)
Inventory (F) _g[ Shareholders'equity (r)
Plant and equipment 674
Total (G).p$ rotat (K) J]{
(Adapted: Managerial Accounting by Louderback)

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