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Financial Statement Analysis Group Exercise: Instructions

BANABA Company provided financial statement information for 2015 including various ratios. The missing information on BANABA's 2015 comparative balance sheet and income statement can be filled in using the provided ratios and totals. Accounts receivable is 80,000 (receivables turnover of 4 times net sales of 200,000), inventory is 100,000 (current ratio of 3:1), total assets is 240,000, accounts payable is 20,000 (acid-test ratio of 2:1), bonds payable is 30,000 (debt to total assets ratio of 20%), total liabilities and equity is 240,000, depreciation expense is 10,000 (based on net property, plant, and equipment), total expenses

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195 views1 page

Financial Statement Analysis Group Exercise: Instructions

BANABA Company provided financial statement information for 2015 including various ratios. The missing information on BANABA's 2015 comparative balance sheet and income statement can be filled in using the provided ratios and totals. Accounts receivable is 80,000 (receivables turnover of 4 times net sales of 200,000), inventory is 100,000 (current ratio of 3:1), total assets is 240,000, accounts payable is 20,000 (acid-test ratio of 2:1), bonds payable is 30,000 (debt to total assets ratio of 20%), total liabilities and equity is 240,000, depreciation expense is 10,000 (based on net property, plant, and equipment), total expenses

Uploaded by

MARY ACOSTA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MODULE 1

FINANCIAL STATEMENT ANALYSIS

GROUP EXERCISE

The following ratios have been computed for BANABA Company for 2015.
Profit margin 12.5%
Times interest earned 7 times
Receivables turnover 4 times
Acid-test ratio 2:1
Current ratio 3:1
Debt to total assets ratio 20%

BANABA Company’s 2015 financial statements with missing information follow:

BANABA COMPANY
Comparative Balance Sheet
December 31,
——————————————————————————————————————————
—
Assets 2015 2014
Cash.......................................................................................... P 30,000 P 45,000
Short-term Investments............................................................. 10,000 25,000
Accounts receivable (net).......................................................... ? (1) 40,000
Inventory.................................................................................... ? (2) 50,000
Property, plant, and equipment (net)......................................... 200,000 160,000
Total assets........................................................................ P ? (3) P320,000

Liabilities and shareholders' equity


Accounts payable...................................................................... P ? (4) P 30,000
Short-term notes payable.......................................................... 40,000 35,000
Bonds payable........................................................................... ? (5) 20,000
Ordinary share........................................................................... 220,000 200,000
Retained earnings..................................................................... 60,000 35,000
Total liabilities and shareholders' equity............................. P ? (6) P320,000

BANABA COMPANY
Income Statement
For the Year Ended December 31, 2015
——————————————————————————————————————————
—
Net sales................................................................................... P200,000
Cost of goods sold..................................................................... 75,000
Gross profit................................................................................ 125,000
Expenses:
Depreciation expense.......................................................... P ? (7)
Interest expense.................................................................. 5,000
Selling expenses.................................................................. 8,000
Administrative expenses...................................................... 12,000
Total expenses............................................................... ? (8)
Income before income taxes...................................................... ? (9)
Income tax expense............................................................. ? (10)
Net income................................................................................ P ? (11)

Instructions
Use the above ratios and information from the BANABA Company financial statements to fill in
the missing information on the financial statements. Follow the sequence indicated. Show
computations that support your answers.

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