STRAIGHT PROBLEMS, PROBLEM NO. 1. Listed below “LIST A” are specific ratios. In LIST B are business transactions. UST A - Ratios . Earnings per share Dividend yield : Earnings por share Net profit marain . Book value per share Return on eq - Book value per share Return on assets LIST B - Transactions a. Issued a stock dividend. b. High earnings causes a substantial rise in market price of the common stock. . Collect accounts receivable, |. Experienced a substantial rise in cost of goods sold. . The firm experiences a net loss. The firm has a 10% increase in profit. | The firm has a 2-for-1 stock split. . Net income increases 20%. Requirement: Indicate the effect of this transaction on the given ratio. Use + for increase, - for decrease, and 0 for no effect. PROBLEM NO. 2. Gray Corporation's financial statements for the last year are shown below. All figures are in thousands (P00). The firm paid a 1,000 dividend to its stockholders during the year. Two million shares of stock are outstanding. The stock is currently trading ata price of P50. There were no sales of new stock. Lease payments totaling P400 are included in cost and expense.BALANCE SHEET ASSETS Cash P 2,000 Accounts receivable 12,000 Inventory 44,000 Current Assets 528,000 Gross Fixed assets 27,000 Accumulated depreciation (46,000) Net fixed azsete 11,000 Total assets LIABILITIES: Accounts payable P 3,000 Accruals 4.900 Current Liabilities 34.000 Long term Debt 10,000 Equity 25.000 Total liabilities & equity 239,000 INCOME STATEMENT Sales P199,000 cogs 20,000. Gross Margin 20,000 Cash Expenses 8,000 Depreciation 1.600 ‘9,600 eBIT Pi0.400 Interest ‘300, Ear P 3,600 Tax 2.600 Net Income B_7.000 Requirements: Compute the following for Gray Corporation: L, Current Ratio 2. Quick Ratio 3. Average Collection Pariad (ACP) Inventory Turnover Fined Asset Turnover 6, Total Asset Turnover Debt Ratio Debt to Equity ratio Times Interest Earned (TIE) 19. Cash Coverage LL, Return on Sales (ROS) 412. Return on Assets (ROA) 13, Return on Equity (ROE) 414, Price Earnings Ratio (B/E) 15. Market to Book Value Ratio PROBLEM NO. 3. The following data are from Sharon Stone, Ine., financial statements. The firm manufactures home decorative material, Sales (all credit) were P60 million. Sales to total azsets 3.0 times Total debt to total assets 40 percent Current ratio 2,0 times Inventory turnover 10.0 times ‘Average collection period 18.0 days Fixed asset turnover 7.5 times Requirements: Compute the balance or amount for the following: 4, Cash 2. Accounts receivable 3. InventoryPROBLEM NO. 4. The following ratios and other data pertsin to the financial statements of the Bulacan Company for the year then ended. Current ratio LPS tot Acid-test ratio 4.27 tot Working capital 33,000 Fixed assets to stockholders’ equity ratio 0,625 to 1 Inventory turnover (based on cost of, closing inventory) ax Gross prafit percentage 40% Earnings per share 0.50 Average age of outstanding accounts receivable {based on calendar year of 365 days) 73 days Capital stock outstanding; 20,000 no par 20,000 no par Earnings for the year as a percentage of capital stock 25% The company has no prepaid expenses, deferred, intangible assets or long-term liabilities. Requirement: Reconstruct in as much detail as is possible the company’s balance sheet and income statement for the year. PROBLEM NO. 5. Answer each of the following questions independently. 1. How much cash does Gray Computer Co. have if the firm has a current ratio of 2.5, a quick ratio of 1.2, and current liabilities of 212,000? Gray's credit sales are P98,000 and its average collection period is 40 days. (Assume 365 days per year.) 2, Net sales for the year were P720,000, cast of goods sold, operating expenses and income tax, 535,200, Asset turnover during the year was 1.8 times. Compute the return on assets. 3. Return on assets, 15%; Asset turnover, 1.5 times; Net income, P600,000. How much were net sales and net profit margin? 4. Stern Company has 100,000 shares of common stock and 20,000 shares of preferred stack outstanding. There was no change in the number of common or preferred shares outstanding during the year. Preferred stockholders received dividends totaling P140,000 during the year Common stockholders received dividends totaling 210,000. If the dividend payout ratio was 70%, how much is the net income? ‘The market price per share of Fallen Co. stack at the beginning of the year was P60.00 and at the end of the year was B72.00. Net income for the year was 48,000. Dividends to the preferred stockholders for the year totaled P12,000, and dividends of P2.50 per share were paid on the 6,000 shares of common stock outstanding during the year. What is the price-earnings ratio at year end? 6. Camper Company has 40,000 shares of common stock outstanding. The following data pertain to these shares for the most recent year ‘yen nr ereiellee jeep De ner ehare‘The total dividend on common stock was 480,000. What is the Camper Company's dividend yield ratio for the year? 7. Whitney Company has a times interest eamed ratio of 3.0. The company's tax rate is 40% and its interest expense is P2i,000, Compute the company's after-tax net income. 8. Russell Securities has P100 million in total assets and its corporate tax rate is 40 percent, The company recently reported that its basic earning power (BEP) ratio was 15 percent and its return on assets (ROA) was 9 percent. What was the company's interest expense? Culver Ine. has earnings after interest but before taxes of P3200. The company's times interest earned ratio is 7.00. Calculate the company’s interest charges. PROBLEM NO. 6. Shaker Corporation experienced a fire on December 31, 2022, in which its financial records were partially destroyed, It has bean able to salvage some of the records and haz ascertained the following balances: 3z/3a/2022 42/31/2021 cach P 300,000 © Px00,000 Receivables (net) 720,500 1,260,000 Inventery 2,000,000 1,800,000 ‘Accounts payable ‘500,000 ‘900,000 Notes payable 300,000 600,000 Commen stack, P00 par 4,000,000 4,000,000 Retained earnings 4,135,000 1,010,000 ‘Additional information: 1. The inventory turnover is 3.6 times 2. The return on common stockholders’ equity is 22%. The company had no additional paid in capital. 3. The receivables tumover is 9.4 times 4. The return on assets is 20% 5. Total assets as at December 31, 2021, were 6,050,000. Requirements: Compute the following 1. Cost of goods sold for 2022 2. Net income for 2022 3. Total assets as at December 31, 2022 PROBLEM NO. 7. ‘The Pioneer Company's partial income statements indicate the following data: 2022 2021 Net sales 1,680,000 1,500,000 Cost of goods sold 1,200,000 4,325,000 Gross profit Units sald Requirement: Prepare an analysis of gross profit variation for Pioneer Company. PROBLEM NO. 8. ‘The gross profit statements for 2022 and 2021 of Mimi Company follow: 2022 2021.Requirements: 1. Assume the unit cost decreased by 20% at the start of 2022, What are the pereentage changes in unit selling price and units sold? 2, Assume that unit sales price increased by 25% at the start of 2022. What are the percentage changes in unit cost and units cold? 3. Assume the quantity sold increased by 10% in 2022 compared to 2021, What are the percentage changes in unit selling price and unit cost?