Q No.

1 Prepare a multiple-step income statement for ABC Company from the following
data:

Cost of goods sold $450

Interest expense 30
Depreciation expense 120
Net sales 990
Interest income 80
Income tax expense 70
Advertising expense 100
General and administrative expenses 150

Q No.2 Using the following information to prepare a common size income statement:

Net sales 1,000

Cost of goods sold 600
Gross profit 400
General and administrative expenses 250
Selling expenses 120
Operating profit 30
Income tax expense 10
Net profit 20

Q No.3 Use the following information to analyze the BJ Company.Calculate any

profitmeasures deemed necessary in order to discuss the profitability of the
company.

BJ Company
Income Statements
For the Years Ended Dec. 31, 2014 and 2015

2014 2015
Rupees Rupees
Net sales 174,000 167,000
COGS 114,000 115,000
Gross profit 60,000 52,000
General and administrative expenses 54,000 46,000
Operating profit 6,000 6,000
Interest expense (1,000) (1,000)
Earnings before taxes 5,000 5,000
Income taxes 2,000 2,000
Net income 3,000 3,000
 Q#4
200,000
Net sales Rs.
Cost of goods sold 90,000
Operating expenses 80,000
Net income 10,000
Total assets 180,000
Total liabilities 120,000

Calculate: (1) Debt ratio(2) Operating profit margin(3) Return on equity (4) Net
profit margin (5) Gross Profit ratio (6) Operating expense ratio (7)Assets turnover

Q No.5 Use the following selected financial information for Cascabel Corporation
toanswer questions;
Cascabel Corporation
Balance Sheet
31-Dec-15

Assets Liabilities and stockholders' equity

Current assets Current liabilities
Cash 2 Accounts payable 36
Short-term investments 10 Accrued liabilities 25
Accounts receivable 52 Total current liabilities 61
Inventory 57 Long-term debt 102
Other current assets 8 Total liabilities 163
Total current assets 129 Stockholders' equity
Common stock (10) 110
Long-term assets Retained earnings 51
Net Plant 195 Total stockholders' equity 161
Total assets 324 Total liabilities and equity 324

Cascabel Corporation
Income Statement
For the Year Ended December 31, 2015

Net sales 345

Cost of goods sold (248)

Gross profit 97

Operating expenses (74)

Operating profit 23
 Interest expense (8)

Earnings before taxes 15

Income tax expense (4)

Net profit 11

Additional information: Market price of stock is Rs.25. Firm declared and paid dividend 20% on
par value of stock.
Compute following ratios:
Current ratio (2) Quick ratio (3) Debt ratio (4) Equity ratio (5) Inventory turnover indays
(use 360 days) (6) Receivable turnover in days (use 360 days) (7) Earnings per share
(8)Book value per share (9)Interest coverage ratio (10) Gross Profit ratio

Q No.6

Belmont Industries

Balance Sheet

As at 31-Dec-01

Assets Liabilities & Equity

Cash $ 100,000 Current Liabilities

Receivables   Long Term Debt  

Inventory   Total Debt

Plant   Common Equity $ 600,000

Total Assets   Total Claims  

Current Ratio 2.5

Average Collection Period 54 days

Total Debt to Total Assets 40%

Total Asset Turnover 2

Inventory Turnover 5
Q No. 7
Illinois Paper Products
Balance Sheet
As at 31-Dec-01
Assets Liabilities & Equity
Cash   Current Liabilities
Receivables   Long Term Debt  
Inventory   Total Debt $ 700,000
Plant   Common Equity
Total Assets   Total Claims  
 
Total debt to Net Worth 1.4
Total Asset Turnover 3
Inventory Turnover 9
Average Collection Period 20 days
Current Ratio 3.3
Quick Ratio 1.3

Q# 8 Sales of $750,000. Given the following ratios, fill in the balance sheet below:
Total asset turnover 2.5 times
Cash to total assets 2.0 percent
Accounts Receivable Turnover 10.0 times
Inventory turnover 15.0 times
Current Ratio 2.0 times
Debt to total assets 45.0 percent

SHANNON CORPORATION
BALANCE SHEET , 1999
Assets Liabilities & Shareholder's Equity
               
Cash Total Current Liabilities
Accounts Receivable Long term Debt
Inventory Total Debt
Total Current assets
Fixed Assets Net Worth
Total Assets   Total Liabilities & Equity
Q No. 9 The following data are from the U Guessed it Company’s financial statements.
Thiscompany is a manufacturer of board games for young adults. The market is fiercely
competitive, therefore all sales ($20 million) for the year 1983 were on credit. Given the
following ratios, fill in the balance sheet below:

Sales to total assets 2 times

Total debt to assets 40%
Current Ratio 3.0 times
Inventory turnover 5.0 times
Average collection period 18 days
Fixed asset turnover 5.0 times

U GUESSED IT CO.
BALANCE SHEET , 1983
Assets Liabilities & Shareholder's Equity
               
Cash Total Current Liabilities
Accounts Receivable Long term Debt
Inventory Total Debt
Total Current assets
  Net Worth
Fixed Assets
Total Assets   Total Liabilities & Equity

Q No.10
Smolira Golf Corp.
Balance Sheet
As at 31-Dec-15
Assets   Liabilities & Equity  
Cash 100,000 Current Liabilities
Receivables Long Term Debt
Inventory Total Debt 200,000
Plant Common Equity
Total Assets Total Claims

Total Debt to Total Assets 0.25

Total Asset Turnover 1.5
Inventory Turnover 7
Average Collection Period 29days
 Current Ratio 2.25

Required: Complete balance sheet

Q No.11
SMOLIRA GOLF CORP.
Balance Sheet as of December 31, 2015

ASSETS LIABILITIES & OWNER'S EQUITY

RUPEE
S RUPEES
Current Assets: Current Liabilities:
Cash 710 Accounts Payable 1,215
Accounts Receivable 2106 Notes Payable 718
Inventory 4982 Other 230
Total Current Assets 7,798 Total Current Liabilities 2,163

Fixed Assets: Long-term debt 4,190

Net plant and Equipment 18,584 Owner's Equity:
18,584 Common Stock and paid-in surplus 10,000
Retained Earnings 10,029
20,029
Total Assets 26,382 Total Liabilities & Owner’s Equity 26,382

SMOLIRA GOLF CORP.

Income Statement as on December 31, 2015

RUPEES
Sales 28,000
Less: Cost of goods sold 11,600
Depreciation 2,140
Earnings before interest and taxes 14,260
Less:Interest paid 980
Taxable Income 13,280
Taxes (35%) 4,648
Net Income 8,632

Dividend Rs. 4000

Addition to retainedearnings 4,632
Calculate following ratios:

Short-term solvency ratios;

a. Current Ratio
b. Quick Ratio
c. Cash Ratio

Asset utilization ratios;

d. Total asset turnover
e. Inventory turnover
f. Receivables turnover

Long-term solvency ratios;

g. Total debt ratio
h. Debt-equity ratios
i. Equity multiplier
j. Times interest earned ratio

Profitability Ratios;
k. Profit Margin
l. Return on Assets
m. Return on equity

Q No.12 The December 31, 2015, balance sheet and income statement for Mayberry Cafeterias,
Inc. are given;

a. Compute the specified ratios, and compare them to the industry average (better or worse).
b. If you were appointed financial manager of the company, what decisions would you make
based on your findings?

Balance Sheet

Cash 17 Accounts Payable 7

Marketable Securities 5 Notes Payable 3
Accounts Receivable 3 Taxes Payable 2
Inventory 16 Other Accruals 3
Prepaid Expenses 6 Current Liabilities 15
Current Assets 47    
    Long-term debt 35
Gross plant and equipment 126 Preferred Stock 10
Less: Accumulated Dep. (57) Common Stock 20
Net Plant and Equipment 69 Capital contributed in excess of par 10
    Retained Earnings 26
 Total Liabilities and Stockholders’
Total Assets 116 116
equity

Income Statement

Net Sales 1,072

Cost of Goods sold (921)
Gross Profit 151

Selling Expense (86)

General and Administrative expense (26)
Depreciation (6)
Operating Income 33
Interest Expense (4)
Profit Before taxes 29
Taxes (12)
Net Income 17
 2015 2015 Industry
Ratios to Compute Better or Worse
Mayberry Average (%)
Current 2.86
Quick 2.31
Debt-Equity 0.51
Times interest period 12.36
Average Collection period 1.06
Inventory Turnover 95.71
Fixed-asset turnover 16.15
Operating profit margin 0.036
Net profit margin 0.019
Book return on assets 0.192
Book return on equity 0.271