ABC Company Comparative Statement of Comprehensive Income (In Thousand Pesos) Horizontal Analysis 2012 2011 Increase (Decrease) % Change Sales P 240.00 P 200.00 Less: Cost of Sales 182.00 140.00 Gross Profit P 58.00 P 60.00 Less: Operating Expenses Selling P 17.00 P 18.00 General and Administrative 11.80 14.00 Total Operating Expenses P 28.80 P 32.00 Net Operating Income P29.20 P28.00 Add: Other Income & Expenses Interest Income P7.50 P4.80 Interest Expense (7.40) (9.50) Net Income P29.30 ====== P23.30 ====== ABC Company Comparative Statement of Comprehensive Income Vertical Analysis 2012 % 2011 % Sales P240.00 P200.00 Less: Cost of Sales 182.00 140.00 Gross Profit P58.00 P60.00 Less: Operating Expenses Selling P17.00 P18.00 General and Administrative 11.80 14.00 Total Operating Expenses P28.80 P32.00 Net Operating Income P29.20 P28.00 Add: Other Income & Expenses Interest Income P7.50 P4.80 Interest Expense (7.40) (9.50) Net Income P29.30 ====== P23.30 ====== Financial Ratios: 2011 and 2012 Liquidity Status Current Ratios Quick Asset Ratios Efficiency Status Asset Turnover Fixed Asset Turnover Inventory Turnover Days in Inventory Accounts Receivable Turnover Days in Receivable Profitability Status: Gross Profit margin Ratio Operating Income Ratio Net Profit Ratio Return on Assets Return on Equity PART 2 ABC Company Comparative Statement of Financial Position Horizontal Analysis 2012 2011 Increase (Decrease) % Change Assets Current Assets: Cash & Cash Equivalents P12,445 P1,060 Trading Securities 5,000 Trade and Other Receivables 8,000 3,000 Merchandise Inventory 4,000 5,000 Prepaid Expenses 480 300 Total Current Assets P29,925 P9,360 Non-Current Assets: Investment in Dacanay Corporation P8,000 P10,000 Property, Plant & Equipment (Net of Accumulated Depreciation): Building P47,000 P50,000 Office Equipment 12,000 15,000 Furniture and Fixtures 16,000 15,640 Total Non-current Assets P83,000 P90,640 Total Assets P112,925 ======= P100,000 ======= Liabilities and Owner’s Equity Current Liabilities Trade and Other Payables P4,200 P1,675 Income Tax Payable 5,300 5,825 Accrued Expenses 450 300 Total Current Liabilities P9,950 P7,800 Non-Current Liability Loans Payable (payable 2024) 36,775 50,000 Total Liabilities P46,725 P57,800 Owner’s Equity P66,200 P42,200 Total Liabilities and Owner’s Equity P112,925 ======= P100,000 ====== ABC Company Comparative Statement of Financial Position Vertical Analysis 2012 % 2011 % Assets Current Assets: Cash & Cash Equivalents P12,445 P1,060 Trading Securities 5,000 Trade and Other Receivables 8,000 3,000 Merchandise Inventory 4,000 5,000 Prepaid Expenses 480 300 Total Current Assets P29,925 P9,360 Non-Current Assets: Investment in Dacanay Corporation P8,000 P10,000 Property, Plant & Equipment (Net of Accumulated Depreciation): Building P47,000 P50,000 Office Equipment 12,000 15,000 Furniture and Fixtures 16,000 15,640 Total Non-current Assets P83,000 P90,640 Total Assets P112,925 ======= P100,000 ======= Liabilities and Owner’s Equity Current Liabilities Trade and Other Payables P4,200 P1,675 Income Tax Payable 5,300 5,825 Accrued Expenses 450 300 Total Current Liabilities P9,950 P7,800 Non-Current Liability Loans Payable (payable 2024) 36,775 50,000 Total Liabilities P46,725 P57,800 Owner’s Equity P66,200 P42,200 Total Liabilities and Owner’s Equity P112,925 ======= P100,000 ====== Financial Ratios: 2012 only Liquidity Status Current Ratios Quick Asset Ratios Efficiency Status Asset Turnover Fixed Asset Turnover Inventory Turnover Days in Inventory Accounts Receivable Turnover Days in Receivable Profitability Status: Gross Profit margin Ratio Operating Income Ratio Net Profit Ratio Return on Assets Return on Equity

ABC Company Comparative Statement of Comprehensive Income (In Thousand Pesos) Horizontal Analysis 2012 2011 Increase (Decrease) % Change Sales P 240.00 P 200.00 Less: Cost of Sales 182.00 140.00 Gross Profit P 58.00 P 60.00 Less: Operating Expenses Selling P 17.00 P 18.00 General and Administrative 11.80 14.00 Total Operating Expenses P 28.80 P 32.00 Net Operating Income P29.20 P28.00 Add: Other Income & Expenses Interest Income P7.50 P4.80 Interest Expense (7.40) (9.50) Net Income P29.30 ====== P23.30 ====== ABC Company Comparative Statement of Comprehensive Income Vertical Analysis 2012 % 2011 % Sales P240.00 P200.00 Less: Cost of Sales 182.00 140.00 Gross Profit P58.00 P60.00 Less: Operating Expenses Selling P17.00 P18.00 General and Administrative 11.80 14.00 Total Operating Expenses P28.80 P32.00 Net Operating Income P29.20 P28.00 Add: Other Income & Expenses Interest Income P7.50 P4.80 Interest Expense (7.40) (9.50) Net Income P29.30 ====== P23.30 ====== Financial Ratios: 2011 and 2012 Liquidity Status Current Ratios Quick Asset Ratios Efficiency Status Asset Turnover Fixed Asset Turnover Inventory Turnover Days in Inventory Accounts Receivable Turnover Days in Receivable Profitability Status: Gross Profit margin Ratio Operating Income Ratio Net Profit Ratio Return on Assets Return on Equity PART 2 ABC Company Comparative Statement of Financial Position Horizontal Analysis 2012 2011 Increase (Decrease) % Change Assets Current Assets: Cash & Cash Equivalents P12,445 P1,060 Trading Securities 5,000 Trade and Other Receivables 8,000 3,000 Merchandise Inventory 4,000 5,000 Prepaid Expenses 480 300 Total Current Assets P29,925 P9,360 Non-Current Assets: Investment in Dacanay Corporation P8,000 P10,000 Property, Plant & Equipment (Net of Accumulated Depreciation): Building P47,000 P50,000 Office Equipment 12,000 15,000 Furniture and Fixtures 16,000 15,640 Total Non-current Assets P83,000 P90,640 Total Assets P112,925 ======= P100,000 ======= Liabilities and Owner’s Equity Current Liabilities Trade and Other Payables P4,200 P1,675 Income Tax Payable 5,300 5,825 Accrued Expenses 450 300 Total Current Liabilities P9,950 P7,800 Non-Current Liability Loans Payable (payable 2024) 36,775 50,000 Total Liabilities P46,725 P57,800 Owner’s Equity P66,200 P42,200 Total Liabilities and Owner’s Equity P112,925 ======= P100,000 ====== ABC Company Comparative Statement of Financial Position Vertical Analysis 2012 % 2011 % Assets Current Assets: Cash & Cash Equivalents P12,445 P1,060 Trading Securities 5,000 Trade and Other Receivables 8,000 3,000 Merchandise Inventory 4,000 5,000 Prepaid Expenses 480 300 Total Current Assets P29,925 P9,360 Non-Current Assets: Investment in Dacanay Corporation P8,000 P10,000 Property, Plant & Equipment (Net of Accumulated Depreciation): Building P47,000 P50,000 Office Equipment 12,000 15,000 Furniture and Fixtures 16,000 15,640 Total Non-current Assets P83,000 P90,640 Total Assets P112,925 ======= P100,000 ======= Liabilities and Owner’s Equity Current Liabilities Trade and Other Payables P4,200 P1,675 Income Tax Payable 5,300 5,825 Accrued Expenses 450 300 Total Current Liabilities P9,950 P7,800 Non-Current Liability Loans Payable (payable 2024) 36,775 50,000 Total Liabilities P46,725 P57,800 Owner’s Equity P66,200 P42,200 Total Liabilities and Owner’s Equity P112,925 ======= P100,000 ====== Financial Ratios: 2012 only Liquidity Status Current Ratios Quick Asset Ratios Efficiency Status Asset Turnover Fixed Asset Turnover Inventory Turnover Days in Inventory Accounts Receivable Turnover Days in Receivable Profitability Status: Gross Profit margin Ratio Operating Income Ratio Net Profit Ratio Return on Assets Return on Equity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

ABC Company

Comparative Statement of Comprehensive Income

(In Thousand Pesos)

Horizontal Analysis

	2012	2011	Increase (Decrease)	% Change
Sales	P 240.00	P 200.00
Less: Cost of Sales	182.00	140.00
Gross Profit	P 58.00	P 60.00
Less: Operating Expenses
Selling	P 17.00	P 18.00
General and Administrative	11.80	14.00
Total Operating Expenses	P 28.80	P 32.00
Net Operating Income	P29.20	P28.00
Add: Other Income & Expenses
Interest Income	P7.50	P4.80
Interest Expense	(7.40)	(9.50)
Net Income	P29.30 ======	P23.30 ======

ABC Company

Comparative Statement of Comprehensive Income

Vertical Analysis

	2012	%	2011	%
Sales	P240.00		P200.00
Less: Cost of Sales	182.00		140.00
Gross Profit	P58.00		P60.00
Less: Operating Expenses
Selling	P17.00		P18.00
General and Administrative	11.80		14.00
Total Operating Expenses	P28.80		P32.00
Net Operating Income	P29.20		P28.00
Add: Other Income & Expenses
Interest Income	P7.50		P4.80
Interest Expense	(7.40)		(9.50)
Net Income	P29.30 ======		P23.30 ======

Financial Ratios: 2011 and 2012

Liquidity Status
1. Current Ratios
2. Quick Asset Ratios
Efficiency Status
1. Asset Turnover
2. Fixed Asset Turnover
3. Inventory Turnover
4. Days in Inventory
5. Accounts Receivable Turnover
6. Days in Receivable
Profitability Status:
1. Gross Profit margin Ratio
2. Operating Income Ratio
3. Net Profit Ratio
4. Return on Assets
5. Return on Equity

PART 2

ABC Company

Comparative Statement of Financial Position

Horizontal Analysis

	2012	2011	Increase (Decrease)	% Change
Assets
Current Assets:
Cash & Cash Equivalents	P12,445	P1,060
Trading Securities	5,000
Trade and Other Receivables	8,000	3,000
Merchandise Inventory	4,000	5,000
Prepaid Expenses	480	300
Total Current Assets	P29,925	P9,360

Non-Current Assets:
Investment in Dacanay Corporation	P8,000	P10,000
Property, Plant & Equipment (Net of Accumulated Depreciation):
Building	P47,000	P50,000
Office Equipment	12,000	15,000
Furniture and Fixtures	16,000	15,640
Total Non-current Assets	P83,000	P90,640
Total Assets	P112,925 =======	P100,000 =======
Liabilities and Owner’s Equity
Current Liabilities
Trade and Other Payables	P4,200	P1,675
Income Tax Payable	5,300	5,825
Accrued Expenses	450	300
Total Current Liabilities	P9,950	P7,800
Non-Current Liability
Loans Payable (payable 2024)	36,775	50,000
Total Liabilities	P46,725	P57,800

Owner’s Equity	P66,200	P42,200
Total Liabilities and Owner’s Equity	P112,925 =======	P100,000 ======

ABC Company

Comparative Statement of Financial Position

Vertical Analysis

	2012	%	2011	%
Assets
Current Assets:
Cash & Cash Equivalents	P12,445		P1,060
Trading Securities	5,000
Trade and Other Receivables	8,000		3,000
Merchandise Inventory	4,000		5,000
Prepaid Expenses	480		300
Total Current Assets	P29,925		P9,360

Non-Current Assets:
Investment in Dacanay Corporation	P8,000		P10,000
Property, Plant & Equipment (Net of Accumulated Depreciation):
Building	P47,000		P50,000
Office Equipment	12,000		15,000
Furniture and Fixtures	16,000		15,640
Total Non-current Assets	P83,000		P90,640
Total Assets	P112,925 =======		P100,000 =======
Liabilities and Owner’s Equity
Current Liabilities
Trade and Other Payables	P4,200		P1,675
Income Tax Payable	5,300		5,825
Accrued Expenses	450		300
Total Current Liabilities	P9,950		P7,800
Non-Current Liability
Loans Payable (payable 2024)	36,775		50,000
Total Liabilities	P46,725		P57,800

Owner’s Equity	P66,200		P42,200
Total Liabilities and Owner’s Equity	P112,925 =======		P100,000 ======

Financial Ratios: 2012 only

Liquidity Status
1. Current Ratios
2. Quick Asset Ratios
Efficiency Status
1. Asset Turnover
2. Fixed Asset Turnover
3. Inventory Turnover
4. Days in Inventory
5. Accounts Receivable Turnover
6. Days in Receivable
Profitability Status:
1. Gross Profit margin Ratio
2. Operating Income Ratio
3. Net Profit Ratio
4. Return on Assets
5. Return on Equity

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