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Fif, T n'1t : Q, o D.".-,". R, , 5-Il, L"!,' 2qC! 2) I Ti 2) JT

1) This document discusses various financial analysis techniques including ratio analysis, break-even analysis, and variance analysis. 2) It provides examples of calculating current ratio, acid-test ratio, accounts receivable turnover, operating cycle, and profit margin given various financial inputs. 3) Methods for analyzing variances in gross profit are described, including calculating variances in sales volume, price, and costs to determine whether actual gross profit is higher or lower than budgeted.

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49 views

Fif, T n'1t : Q, o D.".-,". R, , 5-Il, L"!,' 2qC! 2) I Ti 2) JT

1) This document discusses various financial analysis techniques including ratio analysis, break-even analysis, and variance analysis. 2) It provides examples of calculating current ratio, acid-test ratio, accounts receivable turnover, operating cycle, and profit margin given various financial inputs. 3) Methods for analyzing variances in gross profit are described, including calculating variances in sales volume, price, and costs to determine whether actual gross profit is higher or lower than budgeted.

Uploaded by

CPA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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F'INANCIAL STATEMENT ANAL YSIS

5- R.ELATIONSHIPS. Assume a 360-ciay year for each of tlre folkrwing independent cases:
Case A; The cr:rrent ratio is 2.5 to 1; the acid-test rol;o i:, 0.9 to 1; cash and receivabies are p 270/000.
l'he current aesets are conlro.spd of cash, rece,ivabks, and invenrory. Compute:
1) Current liabi[tjeq iL,l"!,' ( 2qC! l' . -t ,i
2) Inventory j<n .'
Case B: The age of receivatrles is 45 days. Annuai sales of P 900,000 are spread evenly throughouLthe
year. Inventory turnover is 4 tirnes. Compute:
1) Average accounts /l:', hi i ti .. ,;riir'i'
2) Operatirrg cycle leceivable
lilr . jt,,,, I 1 -v1.,, .f ... .,..,, :'
Case C: Net sales total P 100,000. Net profit margill ts L2o/o.Interest charges are earnecl-6,times.
1) How much is the earninqs before interests and taxes (tax rate: 4oo/o)? 'lL!'
2) Assunring that inventory age is 30 days aricl average annual amount of inventory is p 5,000,
how much is the company's operatirrg experrses? !'rl
Case D; Given the following:
' Return on sales is 5o,h.
.'
Return on assets is 10Yo.
.
Return on equity is 259b.
.
There is no preferred stock.
Determine the folk:winS u:ii,g Du Ponr technique: pf r ; i,'' 'll':. : ' j
i. t
,l fif,T lii,l"'"'q,u2'i
n'1t*;
u. ,,.) '1"\ !
3) ':i'rt; .;../U
Case E;
oent Lqrity ,ati['
^| l] , \
A company decided to go publrr At ttrht tidrie,'ridt income available fo common shareholders
anrounted to p 300,000. The number of common shares issued and outstancling is 125,000.
1) Assume that the pay-out ratto is 60o/c, how; r4uch of the total dividends shall a shareholder
owning 10,000 corlrmon shares rec-eive? l.t:
2) Assume that tFe pay-oul ratio is 60%r iinci,Uthe price per share is P 20, what is the dividerrd
'
Yielci? r-' 'r '
3) Assume that the price-earninrls !-at.io rr.,ili be set 12 times and 25,000 new shares wilf he
rssued:
34) l"iow much is the initial publit offering (iPO) per share of the 25,000 new shares,
38) How nruch is the nei proceeds frorn issuance if underwriter spread is Zola? {,1,
?q
l_
* '{l ';k

GROSS PROFIT VARIANCE ANALYSIS


The analysis of variation in gross profit is an ,r'rdispensable tool in evaluatinq operational perforrnance;
the adequacy or inadequacy of gross profit determins:s l-he final rr:sults of operalions (net income). Gross
profit must be adequate to cover operating and other expenses, along with a desirecJ amount of prr:fit.
Sales - Sales Volurne x Unit Selling price
I Cost of GoorJs Sold = Sales Volurne x Unit fjost
Gross Profit = Sales Volume x (Unit Selling prrce - Unit Cost)
GP variance rnay be analyzed though the following;
'. GP (Actual) vs. Gp (Budget)
GP (Current Period) vs. GP (Last period)

Gross profit variance * GP (Actual) "- Gp (Budget)

Favarable: If actual (current) Gp is greater ttran budgetecl (last year) Gp


unfavorable.' If actual (current) Gp is less than budgeted (last year) Gp.
Analysis:
Sales price variance = AQ x A Sp
Cost price variance = AQ x A Unit Cost
Volume variance * AQ x Budgetecl r,Jr-rit. Gp
I

F Sales volume varlance = A e x Burlgeted Sp


L-9, Cost volume variance - A Qx l}_rdgeted Unit Cost
.Lesen"dl
AQ - Actual quantity SP - Selling price per unit .i1
Alternative analysis:
sares varan.n { 3:l:: 3:,,:;'j}:X::." r il:::Xl;:ih;i}lT;X;;t*9lJff"",:"T:J",
variance
Cost varian.u *.[] Cost price = currerlt CGS * currentlolunre (0 buclgeted unit cost
Cost volume variail/:e -: crri'rer)l
'",olrirne (d bLrdgeted unit cost - bLrdqeted CGS
i)a,.:t. : .. i :. r;ti

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