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EZ Problem Set 8

This document contains 5 problems related to accounting and financial ratios. Problem 1 requires calculating working capital, current ratio, and quick ratio for Blanche Corporation. Problem 2 requires calculating inventory turnover, accounts receivable turnover, and average age of receivables for Gumban, Inc. and evaluating its inventory and receivables management. Problem 3 requires calculating various ratios to evaluate the liquidity position of Burgos Fitness Center. Problem 4 requires calculating times interest earned ratio, debt ratio, and equity ratio for Rodriguez, Inc. Problem 5 requires calculating return on total assets and return on ordinary equity ratios for Parada, Inc.

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723 views

EZ Problem Set 8

This document contains 5 problems related to accounting and financial ratios. Problem 1 requires calculating working capital, current ratio, and quick ratio for Blanche Corporation. Problem 2 requires calculating inventory turnover, accounts receivable turnover, and average age of receivables for Gumban, Inc. and evaluating its inventory and receivables management. Problem 3 requires calculating various ratios to evaluate the liquidity position of Burgos Fitness Center. Problem 4 requires calculating times interest earned ratio, debt ratio, and equity ratio for Rodriguez, Inc. Problem 5 requires calculating return on total assets and return on ordinary equity ratios for Parada, Inc.

Uploaded by

Teyang
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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EMILIO AGUINALDO COLLEGE

Gov. D. Mangubat Ave., Brgy. Burol Main, City of Dasmariñas, Cavite 4114, Philippines
Tel. Nos. (046) 416-4339/41 www.eac.edu.ph

SENIOR HIGH SCHOOL

FUNDAMENTALS OF ACCOUNTANCY, BUSINESS, AND MANAGEMENT 2


EZ PROBLEM SET No. 5
Instructions: Answer the following problems based on what is required. Do not forget to show your
solutions or it will be deducted by 3 points.
Problem No. 1 (15 points)
The following information was taken from the statement of financial position of Blanche Corporation:
Cash P 13,250
Accounts Receivable (Net) 33,000
Merchandise Inventory 40,000
Prepaid Expenses 9,950
Accounts Payable 25,200
Accrued Payables 1,800
Notes Payable (due in 6 months) 10,000

Required: Calculate the working capital, current ratio, and quick ratio.

Problem No. 2 (20 points)


You have been assigned to evaluate Gumban, Inc.’s management of merchandise inventory and
receivables. You decided that inventory turnover, accounts receivable turnover, and average age of
receivables statistics will prove valuable in your analysis. The following data are available from Gumban’s
annual report:

Merchandise Inventory:
Jan. 1 P 245,000
Dec. 31 375,000
Accounts Receivable:
Jan. 1 250,000
Dec. 31 297,000
Cost of Goods Sold 2,480,000
Cash Sales 1,000,000
Total Sales 5,100,000
Gumban’s Credit Terms n/30

Required:
1. Calculate inventory turnover, accounts receivable turnover, and average age of receivables.
2. In your opinion, is Gumban doing a good job in managing inventory and receivables? Explain.

QF-PQM-035 (11.10.2021) Rev.04


-
• VIRTUE • EXCELLENCE • SERVICE
EMILIO AGUINALDO COLLEGE
Gov. D. Mangubat Ave., Brgy. Burol Main, City of Dasmariñas, Cavite 4114, Philippines
Tel. Nos. (046) 416-4339/41 www.eac.edu.ph

SENIOR HIGH SCHOOL

Problem No. 3 (30 points)


You have been tasked to evaluate the liquidity position of Burgos Fitness Center. The following data are
from Burgos’ Annual Report:
Cash P 130,000
Trading Investments 60,000
Accounts Receivable:
Jan. 1 156,000
Dec. 31 214,000
Merchandise Inventory
Jan. 1 252,000
Dec. 31 186,000
Current Liabilities 240,000
Cost of Goods Sold 3,000,000
Credit Sales 5,000,000
Required:
1. Working Capital
2. Current Ratio
3. Quick Ratio
4. Inventory Turnover
5. Accounts Receivable Turnover
6. Average Age of Receivables

Problem No. 4 (15 points)


The president of Rodriguez, Inc. has asked you to gather some statistics about his corporation’s solvency.
Profit P 900,000
Income Tax Rate (please base on the profit) 35%
Interest Expense 100,000
Total Liabilities 2,048,000
Total Equity 4,352,000

Using these data, calculate:


1. Times interest earned ratio.
2. Debt Ratio
3. Equity Ratio

QF-PQM-035 (11.10.2021) Rev.04


-
• VIRTUE • EXCELLENCE • SERVICE
EMILIO AGUINALDO COLLEGE
Gov. D. Mangubat Ave., Brgy. Burol Main, City of Dasmariñas, Cavite 4114, Philippines
Tel. Nos. (046) 416-4339/41 www.eac.edu.ph

SENIOR HIGH SCHOOL

Problem No. 5 (10 points)


The following data are from the financial statements of Parada, Inc.
Dec. 31, 2019 Jan. 31, 2019
Total Assets P 180,000 P 140,000
Total Equity 144,000 112,000
Total Preference Equity 30,000 30,000
Preference Dividends Declared 2,400 -
Profit 20,000 -
Interest Expense 5,750 -

Calculate the following ratios:


1. Return on Total Assets
2. Return on Ordinary Equity

QF-PQM-035 (11.10.2021) Rev.04


-
• VIRTUE • EXCELLENCE • SERVICE

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