ABC Corporation
Comparative Statement of Financial Position
For the Year Ended 201B and 201A (in pesos)
Horizontal Analysis
201B 201A Peso Change
Cash and CashEquivalents ₱ 1,633.00 ₱ 1,396.00 ₱ 237.00
Receivables ₱ 1,209.00 ₱ 1,074.00 ₱ 135.00
Inventories ₱ 883.00 ₱ 707.00 ₱ 176.00
Prepaid Expenses ₱ 1,139.00 ₱ 1,413.00 -₱ 274.00
Total Current Assets ₱ 4,864.00 ₱ 4,590.00 ₱ 274.00
Noncurrent Assets ₱ 12,333.00 ₱ 10,491.00 ₱ 1,842.00
Total Assets ₱ 17,197.00 ₱ 15,081.00 ₱ 2,116.00
Current Liabilities ₱ 4,820.00 ₱ 5,645.00 -₱ 825.00
Long-term Liabilities ₱ 3,199.00 ₱ 2,528.00 ₱ 671.00
Common Stock ₱ 4,379.00 ₱ 2,909.00 ₱ 1,470.00
Retained Earnings ₱ 4,800.00 ₱ 4,000.00 ₱ 800.00
Total Liabilities and Equity ₱ 17,197.00 ₱ 15,081.00 ₱ 2,116.00
ABC Corporation
Income Statement
For the Year Ended 201B (in pesos)
Vertical Analysis
201B Percentage
Sales ₱ 2,500.00 100%
Less: Cost of Goods Sold ₱ 1,800.00 72%
Gross Profit ₱ 700.00 28%
Less: Operating expenses ₱ 300.00 12%
Income from operations ₱ 400.00 16%
Less: Interest expense ₱ 180.00 7%
Income before taxes ₱ 220.00 9%
Less: Income tax ₱ 66.00 3%
Net Income ₱ 154.00 6%
Agricultural Services Answer Year 1
Ratio
Industry Averages and Year 2
Liquidity Ratios
1. Net working capital -1055.00 44.00
2.Current Ratio 1.3 0.81 1.01
3. Acid-test ratio 0.73 0.44 0.59
Asset Management Ratios
4. Account Receivable Turnover 13.04 2.19
5. Inventory Turnover 14.6 2.26
Solvency Ratios
6. Debt Ratio 69% 0.54 0.47
7. Debt-to-Equity ratio 40% 1.18 0.87
8. Times-Interest-Earned 4.83 2.22 2.22
Profitability Ratios
9. Profit Margin 2.70% 0.06 0.06
10. Gross Profit Ratio 32.10% 0.28 0.28
% Change
17%
13%
25%
-19%
6%
18%
14%
-15%
27%
51%
20%
14%
Interpretation
Interpreting the Net Working Capital. It means that the
company has enough current assets to meet its
current liabilities.
The current ratio reveals how much “cover” the
business has for every £1 that is owed by the firm.
The acid-test ratio, also known as the quick ratio,
measures the liquidity of a company. Ideally,
companies should have a ratio of a 1.0 or greater.
The accounts receivable turnover ratio measures a
company's effectiveness in collecting its receivables or
money owed by clients.
Inventory turnover is a ratio showing how many times
a company has sold and replaced inventory during a
given period.
The debt ratio is defined as the ratio of total debt to
total assets, expressed as a decimal or percentage.
The debt-to-equity (D/E) ratio is calculated by dividing
a company's total liabilities by its shareholder equity.
he times interest earned (TIE) ratio is a measure of a
company's ability to meet its debt obligations based
on its current income.
Profit margin gauges the degree to which a company
or a business activity makes money, essentially by
dividing income by revenues.
It measures the gross profit percentage on sales to
recover operating expenses.
