VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position Comparative Income Statement For the years 2019 and 2018 For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 160,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 185,000 Marketable Securities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Gross Profit Operating Expenses: Inventory 100,000 80,000 60,000 69,375 Total Current Assets 245,000 220,000 200,000 160,000 P445,000 P380,000 Fixed Assets Selling Expenses 22,000 25,000 Total Assets General Expenses 8,000 12,000 Income from Operations 30,000 32,375 LIABILITIES Non-operating Income 6,000 2,500 P110,800 P105,000 145,000 250,000 Current Liabilities Income before Interest Expense 36,000 34,875 Long-term liabilities 160,000 Interest Expense 3,500 4,000 P32,000 Total Liabilities 270,800 Net Income P31,375 Owner's Equity 174,200 130,000
VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position Comparative Income Statement For the years 2019 and 2018 For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 160,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 185,000 Marketable Securities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Gross Profit Operating Expenses: Inventory 100,000 80,000 60,000 69,375 Total Current Assets 245,000 220,000 200,000 160,000 P445,000 P380,000 Fixed Assets Selling Expenses 22,000 25,000 Total Assets General Expenses 8,000 12,000 Income from Operations 30,000 32,375 LIABILITIES Non-operating Income 6,000 2,500 P110,800 P105,000 145,000 250,000 Current Liabilities Income before Interest Expense 36,000 34,875 Long-term liabilities 160,000 Interest Expense 3,500 4,000 P32,000 Total Liabilities 270,800 Net Income P31,375 Owner's Equity 174,200 130,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:VII. Direction: Compute and interpret.
The following comparative financial statements are provided by Avatar Industries. You were asked
to compute the different financial ratios and provide your interpretations with regards to
profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template
below to input your answer and solution.
AVATAR INDUSTRIES
AVATAR INDUSTRIES
Comparative Statement of Financial Position
For the years 2019 and 2018
Comparative Income Statement
For the years 2019 and 2018
2019
2018
2019
2018
ASSETS
Current Assets:
Sales
P200,000
P210,000
Cash & Cash Equivalent
P65,000
P70,000
Sales Returns and Allowances
40,000
25,000
Accounts Receivable
40,000
35,000
Net Sales
160,000
185,000
Marketable Secuities
40,000
35,000
Cost of Goods Sold
100,000
115,625
Inventory
100,000
80,000
Gross Profit
60,000
69,375
Total Current Assets
220,000
200,000 160,000
P445,000 P380,000
245,000
Operating Expenses:
Fixed Assets
Selling Expenses
22,000
25,000
Total Assets
General Expenses
8,000
12,000
Income from Operations
30,000
32,375
LIABILITIES
Non-operating Income
6,000
2,500
Current Liabilities
P110,800 P105,000
Income before Interest Expense
36,000
34,875
Interest Expense
Long-term liabilities
Total Liabilities
160,000
145,000
4,000
3,500
270,800
250,000
Net Income
P32,000
P31,375
Owner's Equity
174,200
130,000
Total Liabilities & Equity
P445,000 P380,000
Transcribed Image Text:SOLVENCY
Solution and answer
Interpretation
Debt-to-equity ratio
Debt ratio
Equity ratio
Interest Coverage Ratio
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