Guide Questions.1. Compute the ratios of the sample companies and compare the three companies using the ratios computed (ratio on the work sheet only).2. What are the possible reason why the sample companies have different ratios? What could have possibly caused these differences? What are the implications?3. What is a good current ratio? 1? 2? 0.5?4. Can a current ratio be lower than the quick ratio?5. Is a high current ratio always good? Is a low current ratio always bad?6. What factors affect company's decisions in managing current ratio?7. If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company?8. Which ratio is more relevant - quick ratio or current ratio?9. What other factors would a bank or supplier look into in deciding whether to lend short term credit? JFCPetronGlobeEQUITYCapital Stock1,0649,4858,429Additional Paid-in Capital4,45219,65336,049Retained Earnings22,64640,81510,852Other Equity Accounts(84)43,739(792)Total Equity28,078113,69254,538TOTAL LIABILITIES AND EQUITY54,119391,324179,507Sales Revenue90,671482,535103,235Cost of Sales/Service(73,728)(463,100)(10,661)Gross Margin16,94319,43592,574Operating Expenses(10,806)(11,830)(59,506)Operating Profie6,1377,60533,068Other Income7481,7361,255Other Expenses(126)(5,528)(14,940)Net Income Before Tax6,7593,81319,383Income Tax(1,271)(804)(6,011)CastNet Income After Tax5,4883,00913,372 Provide Ratio analysis of the following companies and answer the following questions.Show the statement of financial position of three companies: Jollibee, Petron, and Globe.JFCPetronGlobeASSETSCurrent assetsCash7,61990.60216,757Receivables7,62117,92723,543Inventories5,97253,1803,186Other current assets2,81057,3203,25624,022219,02946,742Non-current AssetsProperty, plant and equipment13,364153,650117,299Financial Investments3,4101,613451Other non-current assets13,32317,03215,01530,097172,295132,765TOTAL ASSETS54,119391,324179,507LIABILITIESCurrent LiabilitiesAccounts Payable2,45529,49612,458Income Tax Payable182731,587Short-term debt1,865133,388Other current liabilities14,58939,63046,30519,091202,58760,350Non-current LiabilitiesLong-term Debt4,42866,26959,146Other Liabilities2,5228,7765,4736,95075.9564,619TOTAL LIABILITIES26,041277,634124,969

The question is related to Ratio Analysis. The Current Ratio and Quick Ratio are two best indicators…

Answered: Guide Questions. 1. Compute the ratios…

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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Guide Questions. 1. Compute the ratios of the sample companies and compare the three companies using the ratios computed (ratio on the work sheet only). 2. What are the possible reason why the sample companies have different ratios? What could have possibly caused these differences? What are the implications? 3. What is a good current ratio? 1? 2? 0.5? 4. Can a current ratio be lower than the quick ratio? 5. Is a high current ratio always good? Is a low current ratio always bad? 6. What factors affect company's decisions in managing current ratio? 7. If company A has current ratio of 1.3 while company B has a current ratio of 2.3, which is a better company? 8. Which ratio is more relevant - quick ratio or current ratio? 9. What other factors would a bank or supplier look into in deciding whether to lend short term credit?

JFC
Petron
Globe
EQUITY
Capital Stock
1,064
9,485
8,429
Additional Paid-in Capital
4,452
19,653
36,049
Retained Earnings
22,646
40,815
10,852
Other Equity Accounts
(84)
43,739
(792)
Total Equity
28,078
113,692
54,538
TOTAL LIABILITIES AND EQUITY
54,119
391,324
179,507
Sales Revenue
90,671
482,535
103,235
Cost of Sales/Service
(73,728)
(463,100)
(10,661)
Gross Margin
16,943
19,435
92,574
Operating Expenses
(10,806)
(11,830)
(59,506)
Operating Profie
6,137
7,605
33,068
Other Income
748
1,736
1,255
Other Expenses
(126)
(5,528)
(14,940)
Net Income Before Tax
6,759
3,813
19,383
Income Tax
(1,271)
(804)
(6,011)
Cast
Net Income After Tax
5,488
3,009
13,372

Provide Ratio analysis of the following companies and answer the following questions.
Show the statement of financial position of three companies: Jollibee, Petron, and Globe.
JFC
Petron
Globe
ASSETS
Current assets
Cash
7,619
90.602
16,757
Receivables
7,621
17,927
23,543
Inventories
5,972
53,180
3,186
Other current assets
2,810
57,320
3,256
24,022
219,029
46,742
Non-current Assets
Property, plant and equipment
13,364
153,650
117,299
Financial Investments
3,410
1,613
451
Other non-current assets
13,323
17,032
15,015
30,097
172,295
132,765
TOTAL ASSETS
54,119
391,324
179,507
LIABILITIES
Current Liabilities
Accounts Payable
2,455
29,496
12,458
Income Tax Payable
182
73
1,587
Short-term debt
1,865
133,388
Other current liabilities
14,589
39,630
46,305
19,091
202,587
60,350
Non-current Liabilities
Long-term Debt
4,428
66,269
59,146
Other Liabilities
2,522
8,776
5,473
6,950
75.95
64,619
TOTAL LIABILITIES
26,041
277,634
124,969

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