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Common-Size Balance Sheet Analysis

This document contains tutorial materials for a financial statement analysis course. It includes sample questions about using ratio analysis with different components of the financial statements. It also includes sample exercises for common-sizing a balance sheet and constructing a balance sheet from financial ratios and calculations. The document provides the questions, exercises and problems along with blank spaces for students to show their work.

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Anis Ashsiffa
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57 views6 pages

Common-Size Balance Sheet Analysis

This document contains tutorial materials for a financial statement analysis course. It includes sample questions about using ratio analysis with different components of the financial statements. It also includes sample exercises for common-sizing a balance sheet and constructing a balance sheet from financial ratios and calculations. The document provides the questions, exercises and problems along with blank spaces for students to show their work.

Uploaded by

Anis Ashsiffa
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Tutorial Week 5 – Topic 4

Topic 4
Textbook Chapter 1

Questions – 1.26

Q1.26) Ratio analysis is an important tool in financial analysis. Identify at least four
ratios using:
a. Balance sheet data exclusively.
b. Income statement data exclusively.
c. Both balance sheet and income statement data.

a. Current ratio, acid test ratio, cash ratio, total debt ratio
b. times interest earned, gross margin ratio, operating profit margin ratio, effective tax
rate
[Link] turnover, days sales in receivables, return on total assets, return on total
equity.

SR 1
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Exercise: 1.4

E1.4)

Mixon Company’s year-end balance sheets show the following:

Express the balance sheets in common-size percents. Round to the nearest one-tenth
of a percent.

SR 2
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

SR 3
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Problem: 1.6

P1.6) You are an analyst reviewing Foxx Company. The following data are available
for your financial analysis (unless otherwise indicated, all data are as of December 31,
Year 2):

Current ratio = 2 Days’ sales in inventory = 36 days

Accounts receivable turnover = 16 Gross profit margin ratio = 50%

Beginning A/R = $50,000 Expenses (excluding COGS) = $450,000

Return on end-of-year common equity = 20% Total debt to equity ratio = 1

Sales (all on credit) = $1,000,000 Noncurrent assets = $300,000

Required:

Using these data, construct the December 31, Year 2, balance sheet for your analysis.
Current assets consist of cash, accounts receivable, and inventory. Balance sheet
classifications include cash, accounts receivable, inventory, total noncurrent assets,
total current assets, total current liabilities, total noncurrent liabilities, and equity.

SR 4
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

SR 5
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Questions are from Subramanyam, K. R., Financial Statement Analysis, 11th Edition,
McGraw Hill

SR 6

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