Financial Reporting and Analysis
Financial Reporting and Analysis
Financial Reporting and Analysis
Exercise 11-1
1. a 6. a 11. a 16. c
2. c 7. f 12. f 17. d
3. d 8. b 13. h 18. g
4. a 9. a 14. b 19. h
5. c 10. f 15. e 20. g
Exercise 11-2
1. Cash P 320,000
Inventories 500,000
Accounts receivable 220,000
Total current assets P1,040,000
Exercise 11-3
1. Investing 6. Operating
2. Operating 7. Operating
3. Operating 8. Financing
4. Operating 9. Financing
5. Investing 10. none
Exercise 11-4
Exercise 11-6
Exercise 11-7
1. a Receivable turnover
2008 = 7,000,000 / [(650,000 +720,000) /2] = 7,000,000 / 685,000 10.22
2009 = 7,800,000 / [(720,000 + 745,000 /2] = 7,800,000 / 732,500 10.65
c. Inventory turnover
2008 = 4,450,000/925,000 4.81
2009 = 4,650,000 / 1,050,000 4.43
2. Receivables are collected within the discount period of 45 days but not within the discount period
of 10 days. There is efficient collection of receivables; however, the company may review further
its discount rate and discount period so as to encourage or motivate employees to avail of such.
The movement of inventories is slow – it takes between 76 and 83 days for the company to sell its
inventories. Though receivables are collected within the credit period, the company may still face a
problem in the payment of its payable because of the long period it takes for inventories to be sold.
Exercise 11-8
NOP Corporation
Statement of Financial Position
December 31, 2009
Assets
Current assets:
Cash and cash equivalents P2,400,000
Short-term investments 3,500,000
Accounts receivable, net 5,000,000
Inventories 4,970,000
Prepaid expenses 80,000 P15,950,000
Noncurrent assets:
Noncurrent receivables P1,105,000
Property, plant and equipment 6,205,000 7,310,000
Current liabilities:
Notes payable and other short-term obligations P 312,500
Accounts payable 589,500
Accrued liabilities 4,218,000
Other current liabilities 1,815,000 P 6,935,000
Problem 11-2
RST Company
Statement of Cash Flows
For the Year Ended December 31, 2009
Problem 11-4
Problem 11-5
GHI JKL
1. LIQUIDITY RATIOS
a. Current ratio 1.06:1 1.08:1
2. SOLVENCY RATIOS
a. Debt to total assets ratio .48:1 .53:1
3. PROFITABILITY RATIOS
a. Profit margin 21% 13%
MULTIPLE CHOICE
1. C 5. A 9. B
2. B 6. A 10. C
3. A 7. C 11. D
4. A 8. 12. C