MAS - Topic: FS Analysis Prof Maria Teresa B.

de Jesus
Multiple Choice
1. If current assets exceed current liabilities, payment to 10. The net earnings of Co. XY after income taxes
creditors made on the last day of the month will of P 12,000 and bond interest of 7,500 was
a. decrease the current ratio P 48,000. The number of times bond interest is
b. increase cash flow from operations earned is a. 6.4 b. 7 c. 8 d. 9
c. decrease working capital
d. answer not given 11. If the average age of inventory is 100 days, the
average age of accounts payable is 65 days, and the
2. The ratio of analytical measurement measures the average age of accounts receivable is 40 days, the
productivity of assets regardless of capital structures is number of days in the cash flow cycle is
the a. current ratio c. return on assets a. 125 days b. 75 days c. 205 days d. 155 days
b. quick ratio d. debt ratio
12. Net income after tax is P 54,000 . Income tax
3. Indexed numbers are used in rate is effectively 40%. The number of times interest
a. trend analysis c. vertical analysis is earned was 4. The interest was
b. ratio analysis d. common-size statements a. P 20,000 b. P 36,000 c. P 30,000 d. P 22,500

4. Which of the following is a measure of long-term 13. Anson Corporation's net income last year was
solvency? P7,975,000. The dividend on common stock was
a. Current ratio c. asset turnover P8.20 per share and the dividend on preferred
b. Interest coverage d. Profit margin stock was P3.50 per share. The market price of
common stock at the end of the year was P59.10
5. When cash sales resulted in some loss , compare the per share. Throughout the year, 500,000 shares of
working capital ratio after the sale with the ratio before common stock and 200,000 shares of preferred
the sale : stock were outstanding. The dividend payout
a. The ratio after the sale is greater ratio a) 1.06 b) 0.51 c) 0.56 d) 1.29
b. The ratio before the sale is equal to the ratio
after the sale 14.The following information appeared in the
c. The ratio before the sale is greater accounting records of a retail store for the year
d. There is no effect at all ended Dec. 31, 2019:
Sales P300,000
6. Which of the following transactions will result in an Purchases 140,000
increase in current ratio , assuming that the ratio is Inventories January 1 70,000
presently 2:1 ? December 31 100,000
a. Repaid a 90 day loan Sales Commission 10,000
b. Liquidated long-term liability The gross margin was
c. Purchased merchandise on account a. P190,000 b. P 180,000 c. P160,000 d. P 150,000
d. Received payment on accounts receivable
15. Spark Co’s calculated the following ratios for one
of its profit centers :
7. At the end of year 5 , Jones Corporation has a current Gross Margin 30% Capital turnover 5 times
ratio of 2:1 . Which of the following transactions will Return on sales 25%. Return on assets was
decrease the current ratio ? a. 25% b. 20% c. 125% d. 12.5%
a. Issuance of long-term bonds at a premium 16. The following information pertains to Sergio Co.
b. Sale of merchandise on open account Net accounts receivable
c. Sale of plant assets for less than the book value December 31, 2012 P300,000
d. Declaration of cash dividends on common stock December 31, 2011 200,000
Inventories
8. When a balance sheet amount is related to an income December 31, 2012 350,000
statement amount in computing a ratio December 31, 2011 250,000
a. the balance sheet amount should be converted Accounts receivable turnover 8
to an average for the year Inventory turnover 5
b. the income statement amount should be The average collection period of receivable and the
converted to an average for the year average conversion period of inventories are:
c. both amounts should be converted to market a. 45 and 72 c. 45 and 45
value b. 72 and 45 d. 72 and 72
d. comparisons with industry ratios are not 17. Refer to no. 16 . The gross margin was :
meaningful a. 500,000 b. 400,000 c. 300,000 d. 100,000

9. The ratio of analytical measurement that shows the 18. Jones Corp. had the following results for the
rate earned by stockholders based on the current price period just ended; Sales P 2.0 million Net Income P
of a share of stock is 0.5 million; Capital Investment P 1.0 million
a. dividend yield To arrive at the return on investment, the
b. EPS on common stock following should be used:
c. price – earnings ratio a. ROI = (20/20) X (20/5) c. ROI = (10/20) X
d. return on common stockholders (20/5)
b. ROI = (20/10) X (5/20) d. ROI = (10/20) X
(5/20)
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a. P187,500 b. P387,500 c. P467,500 d. P427,500

MAS - FS Analysis
19. ValleMiramar has the following data: __________________________________________
Net sales, P1.8 M; Costs of Goods Sold , P 1.08;
28. Junjun Co. has debt ratio of .50 , total assets
Operating Expenses, P 315,000; Earning’s before turnover of 0.25 , and a profit margin of 10%. The
interests and profit, P405,000; Net income, president is unhappy with the current return on
P195,000; Total Stockholders’ Equity P.75M; Total equity , and he thinks it could be doubled . This
Assets P 1M. The return on investment is: could be accomplished (1) by increasing the profit
a. 22.5% b. 26.5% c. 19.5% d. 40.5% margin to 14% and (2) by increasing debt
utilization. Total assets turnover will not change.
20. Refer to no. 19. the debt. and operating ratio are What new debt ratio along with the 14% profit
a. .25 and .775 c. .25 and .175 margin is required to double the return on equity ?
b. .75 and .775 d. .75 and .175 a. 0.75 b. 0.65 c. 0.70 d. 0.55

21. Extracts from the balance sheet ( 000,000 ) of A Co. 29. Some key financial data and ratios are reported
Current Assets in the table below for Hemmingway Hotels and for its
Merchandise Inventory P 77.1 competitor, Fitzgerald Hotels:
Accounts Receivable 50.1 Ratio Hemmingway Fitzgerald
Cash on Hand and in 85.0 Profit margin 4% 3%
Creditors: Amounts falling due ROA 9% 8%
within one year 70.2 Total assets P 2.0 billion P1.5 billion
Bank Overdraft BEP 20% 20%
Other Creditors 147.0 ROE 18% 24%
What is the current ratio and the acid test ratio of the On the basis of the information above, which of
co.? the following statements is most correct?
Current ratio Acid test ratio a. Hemmingway has a higher total assets turnover
a. .96 .38 than Fitzgerald.
b. .96 .36 b. Hemmingway has a higher debt ratio than
c. .98 .61 Fitzgerald.
d. .98 .62 c. Hemmingway has higher net income than
Fitzgerald.
22. Current ratio is 1.8:1 with working capital amounting d. Statements a and b are correct.
to P 20,000, how much must the current liabilities be? e. All of the statements above are correct.
a. a. P 45,000 b.P36,000 c.P25,000 d.P20,000
30 - 34 are based on the following information:
23. Selected data from the year end financial statements The Dec. 31, 2022 balance sheet of De Jesus Inc. is
of Sister Corporation are presented below : ( The presented below. These are the only accounts in its
difference between average and ending inventories is balance sheet. Amounts indicated by (?) can be
immaterial). calculated from the additional information given :
Current ratio 3 Quick ratio 2.5 Assets
Current liabilities P400,000 Inventory turnover 10X Cash P25,000
Gross Profit margin is 40% Accounts Receivable ?
Sister’s net sales for the year were : Inventory ?
a. P 2.00 million c. P 5.0 million Property, Plant and Equipment 294,000
b. 1.20 million d. 3.3 million Total 432,000
Liabilities and Stockholders Equity
24 – 27 You are requested to reconstruct accounts of Accounts Payable P ?
Angel Trading for analysis. Income Taxes Payable 25,000
The following data were available to you: Long-term debt ?
Gross margin for 2022 amounts.……………. P800,000 Common Stock 300,000
Beginning balance of Merchandise Inventory.. 280,000 Retained Earnings ?
Long-term liabilities consisted of bonds Total ?
Payable with interest rate of………. 15% Additional-Information: ======
Total Stockholders’ Equity , Dec 31, 2022 P 625,000 Current ratio (at year end) 1.5:1
Gross margin ratio ...........................………… 40% Debt/ Equity ratio 0.8
Debt to equity ratio ........................…………. 0.6 : 1 Inventory turnover based on sales
Times interest is earned …………… ………. 8 and ending inventory 15 times
Quick ratio ....................................…………… 1.5 :1 Inventory turnover based on cost of
Ratio of operating expense to sales...………. 25% sales and Ending inventory 10.5 times
Inventory Turnover ………………………… 5 Gross margin for 2019 P 315,000
24. The operating income for 2022 was 30. The balance in trade accounts payable was:
a. P 487,500 b. P 300,000 c. P 500,000 d. P 250,000 a. P67,000 b. P 92,000 c. P 182,000 d. P 207,000
31. The balance in Retained Earnings was:
25. The bonds payable was a. P(60,000) b. P60,000 c. P132,000 d. (P132,000 )
a. P 487,500 b. P 300,000 c. P 125,000 d. P 250,000 32. The balance in Inventory account was:
26. Total current liabilities would amount to a. P 138,000 b. P 70,000 c. P43,000 d. P 135,000
a. P375,000 b. P487,500 c. P125,000 d. P250,000 33.The balance of accounts receivable was :
a. P 138,000 b. P60,000 c. P43,000 d. P34,000
27.Total current assets would amount to 34. The balance of long-term debt was:
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a. P300,000 b. P192,000 c. P100,000 d. P230,000