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    (Financial Analysis) MANALO, Frances M. LM2-1

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    1900118
    The document provides financial statements for LMV Company for the years 2019 and 2018, including the statement of financial position, income statement, and key financial ratios. It shows that total assets increased 43.24% from 2018 to 2019, with non-current assets growing faster than current assets. Net income increased 17.82% in 2019. Key financial ratios like the current ratio, debt ratio, and return on equity indicate the company is in a strong financial position.

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    (Financial Analysis) MANALO, Frances M. LM2-1

    Uploaded by

    1900118
    93 views3 pages
    The document provides financial statements for LMV Company for the years 2019 and 2018, including the statement of financial position, income statement, and key financial ratios. It shows that total assets increased 43.24% from 2018 to 2019, with non-current assets growing faster than current assets. Net income increased 17.82% in 2019. Key financial ratios like the current ratio, debt ratio, and return on equity indicate the company is in a strong financial position.

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    The document provides financial statements for LMV Company for the years 2019 and 2018, including the statement of financial position, income statement, and key financial ratios. It shows that total assets increased 43.24% from 2018 to 2019, with non-current assets growing faster than current assets. Net income increased 17.82% in 2019. Key financial ratios like the current ratio, debt ratio, and return on equity indicate the company is in a strong financial position.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    93 views3 pages

    (Financial Analysis) MANALO, Frances M. LM2-1

    Uploaded by

    1900118
    The document provides financial statements for LMV Company for the years 2019 and 2018, including the statement of financial position, income statement, and key financial ratios. It shows that total assets increased 43.24% from 2018 to 2019, with non-current assets growing faster than current assets. Net income increased 17.82% in 2019. Key financial ratios like the current ratio, debt ratio, and return on equity indicate the company is in a strong financial position.

    Copyright:

    © All Rights Reserved
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    Manalo, Frances M.

    LM2-1
    Exercise for Financial Analysis
    Below is the given data from the LMV Company.

    LMV Company
    Statement of Financial Position
    December 2019 and 2018
    Assets 2019 2018 Amount Percent
    Current Assets

    Cash 805,000.00 766,000.00 39,000.00 5.09%

    Accounts Receivables 410,000.00 532,000.00 - 122,000.00 -22.93%

    Treasury Bills 250,100.00 152,800.00 97,300.00 63.68%

    Inventories 375,900.00 416,000.00 - 40,100.00 -9.64%

    Total Current Assets 1,841,000.00 1,866,800.00 - 25,800.00 -1.38%


    Non Current Assets

    Plant , Property and Equipment 3,500,000.00 2,355,000.00 1,145,000.00 48.62%

    Land 2,855,000.00 1,500,000.00 1,355,000.00 90.33%

    Total Non- Current Assets 6,355,000.00 3,855,000.00 2,500,000.00 64.85%

    Total Assets 8,196,000.00 5,721,800.00 2,474,200.00 43.24%

    Liabilities and Owner’s Equity


    Current Liabilities

    Accounts Payable 525,000.00 767,200.00 - 242,200.00 -31.57%

    Taxes Payable 328,400.00 254,300.00 74,100.00 29.14%

    Total Current Liabilities 853,400.00 1,021,500.00 - 168,100.00 -16.46%


    Non – Current Liabilities

    Bonds Payable 842,600.00 442,300.00 400,300.00 90.50%

    Total Liabilities 1,696,000.00 1,463,800.00 232,200.00 15.86%

    Owner’s Equity 6,500,000.00 4,258,000.00 2,242,000.00 52.65%


    Total Liabilities and Owner’s
    Equity 8,196,000.00 5,721,800.00 2,474,200.00 43.24%
    LMV Company
    Income Statement
    December 2019 and 2018

    2019 2018 Common Size Percentages

    Sales 14,698,000.00 10,755,000.00 100.17% 100.13%

    Less: Sales returns 25,400.00 13,800.00 0.17% 0.13%

    Net Sales 14,672,600.00 10,741,200.00 100.00% 100.00%

    Less: Cost of goods sold 9,386,000.00 6,350,000.00 63.97% 59.12%

    Gross Profit 5,286,600.00 4,391,200.00 36.03% 40.88%


    Less: Operating Expenses

    Selling Expenses 897,000.00 900,000.00 6.11% 8.38%

    Administrative Expenses 1,398,400.00 1,276,000.00 9.53% 11.88%

    Interest Expenses 250,200.00 237,400.00 1.71% 2.21%

    Net Income before Tax 2,741,000.00 1,977,800.00 18.68% 18.41%

    Less: Income tax 126,700.00 98,700.00 0.86% 0.92%

    Net Income 2,614,300.00 1,879,100.00 17.82% 17.49%

    II. Financial Ratios

    Compute and Interpret results of:

    a. Current Ratio
    = Current Asset/Current Liabilities
    = 1,841,000 / 853,400
    = 2.15

    Interpretation: With a current ratio of 2.15, the company has P2.15 in current assets to cover every P1 in
    current liabilities.

    b. Debt Ratio
    = Total Liabilities / Total Assets
    = 1,696,000 / 8,196,000
    = 0.20
    Interpretation: A debt ratio under 0.50 indicates that the company's debts are lower than its
    stockholders' equity. If the debt ratio is 0, it signifies that the total debts and stockholder' equity are
    precisely equal.

    c. Debt to Equity Ratio


    = Total Liabilities / Total Stockholder’s Equity
    = 1,696,000 / 6,500,000
    = 0.26

    Interpretation: The debt to equity ratio should be less than one since the company's debt ratio is less than
    one.

    d. ROE
    = Net Income / Stockholder’s Equity x 100
    = 2,614,300 / 6,500,000 x 100
    = 40.22%

    Interpretation: The ROE of 40.22% implies that in 2019, Php .4022 was earned for every P1 of stockholders'
    equity.

    e. Gross Profit Margin


    = Gross Profit/Sales x 100
    = 5,286,600 / 14,672,600 x 100
    = 36.03%

    Interpretation: This ratio implies that the corporation gets Php .3603 in gross profit for every P1 peso in sales.

    f. Accounts Receivable T-Over Ratio


    = Sales/Accounts Receivables
    = 14,672,600 / 410,000
    = 36.68%

    Interpretation: This indicates that in 2019, the corporation collects receivables 36.68 times.

    ****ACP/Average Collection Period


    = 360 / 36.68
    = 9.81 / 10 days

    Interpretation: This means that the corporation collected a 9.81/10-day accounts receivable. It
    demonstrates that the LMV Company took an average of 10 days to collect its account receivable from
    the date of the transaction.

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