CHAPTER 2: FINANCIAL STATEMENT ANALYSIS

1. Vertical Analysis vs Horizontal Analysis

2. Financial Ratios
a. Liquidity Ratios
i. Working Capital
ii. Current Ratio (Working Capital Ratio)
iii. Quick Ratio (Acid-Test)
iv. Cash Ratio
b. Activity Ratios
i. Receivables Turnover
ii. Days Sales Outstanding (Age of Receivables)
iii. Inventory Turnover
iv. Age of Inventory
v. Operating Cycle
vi. Payables Turnover
vii. Age of Payables
viii. Cash Conversion Cycle
c. Solvency Ratios
i. Debt to Asset Ratio
ii. Times Interest Earned
iii. Debt to Equity Ratio
iv. Debt Ratio
v. Equity Ratio
d. Profitability Ratios
i. Net Profit Margin (Return on Sales)
ii. Return on Total Assets
iii. Return on Equity
iv. Equity Multiplier
v. DuPont Equation
vi. Gross Profit Ratio
vii. Asset Turnover
viii. Fixed Asset Turnover
e. Market Ratios
i. Earnings Per Share
ii. Price/Earnings Ratio
iii. Dividend Yield
iv. Dividend Payout
LEARNING ACTIVITIES

Compute all the following ratios as discussed with the given data:

MAJUBIS CORPORATION
Statement of Comprehensive Income
For the year ended: December 31, 2024
Net Sales 5,800,000
Less: Cost of Goods Sold (3,300,000)
Gross Profit 2,500,000
Less: Operating Expenses
Selling Expenses (400,000)
Administrative Expenses (300,000)
Operating Income (EBIT) 1,800,000
Less: Interest Expense (180,000)
Earnings Before Tax (EBT) 1,620,000
Less: Income Tax (30%) (486,000)
Net Income 1,134,000
Additional Information:

1. Dividends Declared for the year is P340,000 (@ P3.40 per share)

2. 100% of Net Sales are credit sales
3. Market Price per share is P85

MAJUBIS CORPORATION
Statement of Financial Position
As of: December 31, 2024
ASSETS LIABILITIES AND EQUITY
Current Assets Current Liabilities
Cash 300,000 Accounts Payable 350,000
Accounts Receivables (Net) 480,000 Notes Payable 200,000
Inventory 800,000 Accrued Expenses 100,000
Prepaid Expenses 40,000 Total Current Liabilities 650,000
Total Current Assets 1,620,00
0
Non-Current Liabilities
Non-Current Assets Notes Payable 750,000
Property, Plant, and 2,000,00 Bonds Payable 500,000
Equipment (net) 0
Long-Term Investments 400,000 Total Non-Current 1,250,000
Liabilities
Total Non-Current Assets 2,400,00
0
Shareholder’s Equity
Common Stock (P10 1,000,000
par)
Retained Earnings 1,000,000
Total Shareholders’ Equity 2,000,000

TOTAL ASSETS 4,020,0 TOTAL LIABILITIES & 4,020,000

 00 EQUITY
Additional Information:

1. Beginning Accounts Receivable: P450,000

2. Beginning Inventory: P700,000
3. Beginning Accounts Payable: P320,000
LEARNING ACTIVITY:

BURIKAT CORPORATION
Statement of Comprehensive Income
For the year ended: December 31, 2024
2024 2023
Net Sales 7,600,000 6,900,000
Less: Cost of Goods Sold (4,800,000) (4,300,000)
Gross Profit 2,800,000 2,600,000
Less: Operating Expenses
Selling Expenses (500,000) (450,000)
Administrative Expenses (400,000) (370,000)
Operating Income (EBIT) 1,900,000 1,780,000
Less: Interest Expense (200,000) (180,000)
Earnings Before Tax (EBT) 1,700,000 1,600,000
Less: Income Tax (30%) (510,000) (480,000)
Net Income 1,190,000 1,120,000
Additional Information:

1. Dividends declared for the years 2024 and 2023 respectively are P510,000 and
P450,000.
2. Market Price per share for the years 2024 and 2023 respectively are P90 and P82.
3. 100% of sales are on credit.

BURIKAT CORPORATION
Statement of Financial Position
As of: December 31, 2024
2024 2023
ASSETS
Current Assets
Cash 120,000 150,000
Accounts Receivable (Net) 570,000 480,000
Inventory 900,000 800,000
Prepaid Expenses 80,000 60,000
Total Current Assets 1,670,000 1,490,000

Non-Current Assets
Property, Plant, and Equipment (Net) 2,400,000 2,400,000
Long-Term Investment 500,000 400,000
Total Non-Current Assets 2,900,000 2,800,000

TOTAL ASSETS 4,570,000 4,290,000

LIABILITIES AND SHAREHOLDERS’

EQUITY
Current Liabilities
 Accounts Payable 380,000 350,000
Notes Payable 220,000 200,000
Accrued Expenses 150,000 130,000
Total Current Liabilities 750,000 680,000

Non-Current Liabilities
Long-Term Debt 900,000 850,000
Bonds Payable 600,000 600,000
Total Non-Current Liabilities 1,500,000 1,450,000

Shareholders’ Equity
Common Stock (P10 Par) 1,500,000 1,500,000
Retained Earnings 820,000 660,000
Total Shareholders’ Equity 2,320,000 2,160,000

TOTAL LIABILITIES AND 4,570,000 4,290,000

SHAREHOLDERS’ EQUITY

Required:

1. Find all the financial ratios