How to compute this problem? Problem: The data shown below were obtained from the financial records of the BST Corporation for the year ended December 31, 2020. Sound Break Corporation Income and Retained Earnings Statement For the year Ended December 31, 2020 Net Sales P1,000,000 Cost of Goods Sold: Inventory, Dec. 31, 2019 P250,000 Purchases 720,000 Total Goods Available P970,000 Inventory 220,000 750,000 Gross Margin on Sales P 250,000 Selling and Administrative (including Depreciation of P20,000) 125,000 Net Income before Tax P 125,000 Provision for Income Tax 35,000 Net Income for the Year P 90,000 Retained Earnings, beginning 130,000 Total P 220,000 Dividends Paid 30,000 Retained Earnings, December 31, 2020 P 190,000 Sound Break Corporation BALANCE SHEET December 31, 2019 and 2020 ASSETS 2019 2020 Current Assets: Cash P 75,000 P 85,000 Marketable Securities 25,000 25,000 Trade Receivables, net 185,000 245,000 Inventory, at cost 250,000 220,000 Prepaid Expenses 15,000 10,000 Total Current Assets P550,000 P585,000 Property and Other Assets: Equipment, net P340,000 P320,000 Other Assets 15,000 15,000 Total Property and Other Assets P355,000 P335,000 Total Assets P905,000 P920,000 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Trade Payables P185,000 P165,000 Accrued Expenses 20,000 25,000 Other Current Liabilities 10,000 10,000 Total Current Liabilities P215,000 P200,000 Long-Term Liability Mortgage Payable P120,000 P120,000 Stockholders’ Equity Capital Stock, P100 par P300,000 P300,000 Additional Paid-In Capital 30,000 30,000 Retained Earnings Appropriated 80,000 80,000 Retained Earnings Unappropriated 160,000 190,000 Total Stockholders’ Equity P570,000 P600,000 Total Liabilities and Stockholders’ Equity P905,000 P920,000 REQUIRED: Compute the following ratios and measurements for 2020: Amount of working capital. Current ratio Acid-test (Quick) Ratio Cash flow from Operations to Current Liabilities Inventory Turnover Rate of Gross Profit on sales Book Value per Share of Stock. Ratio of Net Income to Net Sales Net Earnings per share of stock Rate of Return on invested capital Cash flow from Operations to Total Liabilities Ratio of Stockholders’ Equity to Total Liabilities
How to compute this problem?
Problem:
The data shown below were obtained from the financial records of the BST Corporation for the year ended December 31, 2020.
Sound Break Corporation
Income and
For the year Ended December 31, 2020
Net Sales P1,000,000
Cost of Goods Sold:
Inventory, Dec. 31, 2019 P250,000
Purchases 720,000
Total Goods Available P970,000
Inventory 220,000 750,000
Gross Margin on Sales P 250,000
Selling and Administrative (including
Net Income before Tax P 125,000
Provision for Income Tax 35,000
Net Income for the Year P 90,000
Retained Earnings, beginning 130,000
Total P 220,000
Dividends Paid 30,000
Retained Earnings, December 31, 2020 P 190,000
Sound Break Corporation
BALANCE SHEET
December 31, 2019 and 2020
ASSETS 2019 2020
Current Assets:
Cash P 75,000 P 85,000
Marketable Securities 25,000 25,000
Trade Receivables, net 185,000 245,000
Inventory, at cost 250,000 220,000
Prepaid Expenses 15,000 10,000
Total Current Assets P550,000 P585,000
Property and Other Assets:
Equipment, net P340,000 P320,000
Other Assets 15,000 15,000
Total Property and Other Assets P355,000 P335,000
Total Assets P905,000 P920,000
LIABILITIES AND
Current Liabilities:
Trade Payables P185,000 P165,000
Accrued Expenses 20,000 25,000
Other Current Liabilities 10,000 10,000
Total Current Liabilities P215,000 P200,000
Long-Term Liability
Mortgage Payable P120,000 P120,000
Stockholders’ Equity
Capital Stock, P100 par P300,000 P300,000
Additional Paid-In Capital 30,000 30,000
Retained Earnings Appropriated 80,000 80,000
Retained Earnings Unappropriated 160,000 190,000
Total Stockholders’ Equity P570,000 P600,000
Total Liabilities and Stockholders’ Equity P905,000 P920,000
REQUIRED:
Compute the following ratios and measurements for 2020:
Amount of
Acid-test (Quick) Ratio
Cash flow from Operations to Current Liabilities
Inventory Turnover
Rate of Gross Profit on sales
Book Value per Share of Stock.
Ratio of Net Income to Net Sales
Net Earnings per share of stock
Cash flow from Operations to Total Liabilities
Ratio of Stockholders’ Equity to Total Liabilities
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