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    Financial Statement Analysis Current Ratio

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    Adrian Montemayor
    The document provides financial analysis metrics for 2015-2016 including current ratio, acid test ratio, inventory turnover, average collection period, debt ratio, time interest earned, total asset turnover, fixed asset turnover, operating profit margin, net profit margin, return on total assets, and return on equity. It also includes gross profit variance analysis using 4-way and 6-way approaches, as well as financial planning and forecasting problems analyzing income statements, balance sheets, cash flows, and break even analysis.

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    Financial Statement Analysis Current Ratio

    Uploaded by

    Adrian Montemayor
    55 views8 pages
    The document provides financial analysis metrics for 2015-2016 including current ratio, acid test ratio, inventory turnover, average collection period, debt ratio, time interest earned, total asset turnover, fixed asset turnover, operating profit margin, net profit margin, return on total assets, and return on equity. It also includes gross profit variance analysis using 4-way and 6-way approaches, as well as financial planning and forecasting problems analyzing income statements, balance sheets, cash flows, and break even analysis.

    Original Title

    FINANCIAL-STATEMENT-ANALYSIS

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    The document provides financial analysis metrics for 2015-2016 including current ratio, acid test ratio, inventory turnover, average collection period, debt ratio, time interest earned, total asset turnover, fixed asset turnover, operating profit margin, net profit margin, return on total assets, and return on equity. It also includes gross profit variance analysis using 4-way and 6-way approaches, as well as financial planning and forecasting problems analyzing income statements, balance sheets, cash flows, and break even analysis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    55 views8 pages

    Financial Statement Analysis Current Ratio

    Uploaded by

    Adrian Montemayor
    The document provides financial analysis metrics for 2015-2016 including current ratio, acid test ratio, inventory turnover, average collection period, debt ratio, time interest earned, total asset turnover, fixed asset turnover, operating profit margin, net profit margin, return on total assets, and return on equity. It also includes gross profit variance analysis using 4-way and 6-way approaches, as well as financial planning and forecasting problems analyzing income statements, balance sheets, cash flows, and break even analysis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 8

    FINANCIAL STATEMENT ANALYSIS

    Current Ratio

    2015 2016
    1,180/275 = 4.29 1,140/200 = 5.7

    Acid Test Ratio

    2015 2016
    305 + 275 / 275 270 + 290 / 200
    = 2.11 = 2.8

    Inventory Turnover

    2016
    760 / 590 = 1.29

    Average Collection Period

    2016
    1330 /282.5 = 4.71 Receivables Turnover
    360 days / 4.71 = 76.43 days

    Debt Ratio

    2015 2016
    775 / 2380 = 0.33 700 / 2480 = 0.28

    Time Interest Earned

    2015 2016
    256 + 64 / 64 = 5 283 + 57 / 57 = 5.96

    Total Asset Turnover

    2015 2016
    1100/2830 = 0.39 1330/2480 = 0.28
    Fixed Asset Turnover

    2016
    1330/1270 = 1.05

    Operating Profit Margin

    2015 2016
    320 / 1100 = 0.29 340/1330 = 0.26

    Net Profit Margin

    2015 2016
    169 / 1100 = 0.15 187 / 1330 = 0.14

    Return on Total Assets

    2016
    187 / 2430 = .08

    Return on Equity

    169 / 1693 = .10


    GROSS PROFIT VARIANCE ANALYSIS
    4 WAY APPROACH
    Sales Price Variance
    200D Sales 164,000
    200D Units @ 200C SP
    Product A (2400 x 18) 43,200
    Product B (7850 x 15) 117,750 160,950
    SP Variance 3050 F

    Quantity
    200D units @ 200C SP 160, 950
    200C Sales 156,000
    SV Variance 4,950 F
    SP Variance 8,000 F

    Cost Variance
    Price Factor
    200D Cost of Sales 110,025
    200D units @ 200C CP
    A (2,400 x 18) 28,800
    B (7,850 x 10) 78, 500 107,300
    CP Variance 2725 U
    Quantity Factor
    200D units @ 200C CP 107,300
    200C cost of Sales 104,000
    CV Variance 3,300 U
    CPV Variance 6,025 U
    6 WAY APPROACH
    Sales Price Factor
    200C units @ 200D SP (2,000 x 16) 32,000
    (8,000 x16) 128,000 160,000
    200C units @ 200C SP (2,000 x 18) 36,000
    (8,000 x 15) 120,000 156,000
    SP Variance 4,000 F
    Volume/Quantity Variance
    200D @ 200C SP 160,950
    200C @ 200C SP 156,000
    Quantity
    Variance 4,950 F
    SPV Variance 950 U
    Cost Price Variance
    (2,000 x
    200C units @ 200D COS 11.50) 23,000
    (8,000 x
    10.50) 84,000 107,000
    200C units @ 200C COS (2,000 x12) 24,000
    (8,000 x 10) 80,000 104,000
    CP Variance 3,000 F

    Cost Volume Variance


    200D units @ 200C CP 107,300
    200C cost of Sales 104,000
    CV Variance 3,300 U

    Sales Cost Volume


    Product A (400 x .50) 200
    Product B (150 x .50) 75
    275 F

    Sales Factor
    SP Variance 4,000 F
    Vol./Qty Variance 4,950 F
    SPV Variance 950 U

    Cost Factor
    CP Variance 3,000 U
    CV Variance 3,300 U
    SCV Variance 275 F
    1975 F

    Sales Mix Variance


    200D @ 200C SP 160,950
    Less: 200D @ 200C CP 107,300 53,650

    Less: 200D units @ 200C AGP


    9250 x (52,000/10,000) 48,100
    5,550 F

    Final Sales Volume Variance


    48,100
    52,000 3,900 U
    1,650 F

    FINANCIAL PLANNING AND FORECASTING

    Problem 1

    2017 2018 Net Income 80,000


    Dividends
    Sales 1,600 2,000 Paid 90,000

    Balance Sheet
    2017 2018
    ASSET
    Current Assets 890,000 56.00% 1,120,000
    Net Fixed Assets 1,000,000 63.00% 1,260,000
    TOTAL 1,890,000 2,380,000

    LIABLITIES AND OWNER´S EQUITY


    Accounts Payable 160,000 10% 200,000
    Accrued Expenses 100,000 6.00% 120,000
    Notes Payable 700,000 700,000
    Longterm Debt 300,000 300,000
    Total Liabilities 1,260,000 1,320,000

    Common Stock 360,000 360,000


    Retained Earnings 270,000 260,000
    Owner´s Equity 630,000 620,000
    TOTAL 1,890,000 1,940,000

    2,380,000
    -1,940,000
    Additional Financing Needed 440,000
    Problem 2

    200,00
    A. 0 240,000 280,000 400,000 320,000
    Jan Feb Mar Apr May

    25% @ Time of Sale 50,000 60,000 70,000 100,000 80,000


    Collections of AR
    After 1st month 50% 100,000 120,000 140,000 200,000
    After 2 months 25% 50,000 60,000 70,000
    TOTAL CASH RECEIPTS 50,000 160,000 240,000 300,000 350,000

    75% 200,000 240,000 280,000 400,000 3


    B.
    Dec Jan Feb Mar Apr
    150,00
    COGS Purchases (75% of sales) 0 180,000 210,000 300,000 240,000
    Payments 150,000 180,000 210,000 300,000
    Other Cash Exp. 60,000 60,000 60,000 60,000
    TOTAL CASH DISBURSEMENTS 210,000 240,000 270,000 360,000

    C.
    Jan Feb Mar Apr
    280,00
    Beg. Balance 0 120,000 40,000 25,000
    Total Collections 50,000 160,000 240,000 300,000
    210,00
    Less:Total Disbursements 0 240,000 270,000 360,000
    120,00
    Unadjusted Balance 0 40,000 10,000 -35,000
    Current Borrowing 0 0 15,000 60,000
    120,00
    Ending Balance 0 40,000 25,000 25,000

    D. E.

    March short term borrowing 15,000 Sales 280,000


    April Short term borrowing 60,000 Less: COGS (75%) 210,000
    Cumulative Short term 75,000 Gross Profit 70,000
    Less: Other 60,000
    Expenses
    EBIT 10,000

    Problem 3

    Sales 261,900
    Less: COGS 145,800
    GP 116,100
    OpEX
    Salaries 22,275
    Dep. Exp 8,775
    Other Exp. 4,050 35,100
    NOI 81,000
    Interes Exp. -15,000
    EBIT 66,000
    Tax -17415
    Net Income 48,585

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