Scribd
Upload
11 views2 pages

FSA Problem Set

The document presents an analysis of various financial transactions and their effects on specific financial ratios, such as Asset Turnover and Current Ratio. It also includes common size financial statements for 2017 and 2018, detailing changes in assets, liabilities, and equity. Additionally, it provides information necessary to calculate Asset Turnover and Change in Net Working Capital.

Uploaded by

the.ethereal.factor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
11 views2 pages

FSA Problem Set

The document presents an analysis of various financial transactions and their effects on specific financial ratios, such as Asset Turnover and Current Ratio. It also includes common size financial statements for 2017 and 2018, detailing changes in assets, liabilities, and equity. Additionally, it provides information necessary to calculate Asset Turnover and Change in Net Working Capital.

Uploaded by

the.ethereal.factor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Problem 1: Analyse each given transaction on the given ratio and suggest if it will increase or

decrease or will not affect the ratio.

Sr Transaction Ratio Formula Effect


No (Increase/Decrease
/No Effect)
1 Issued common stock for Asset Turnover Net Sales / Avg
Cash Ratio Total Assets

2 Declared Cash dividend Current Ratio Current Assets /


Current Liabilities
3 Declared stock dividend Current Ratio Current Assets /
Current Liabilities
4 Borrowed Cash by issuing Liabilities to Total Liabilities /
Notes Payable Equity Ratio Total Stockholders’
Equity
5 Paid Salaries Expense Inventory COGS / Avg
Turnover Inventory

6 Sold Equipment for Cash Receivables Net Credit Sales /


Turnover Average Net
Account
Receivables
7 Sold Merchandise on Quick Ratio (Current Assets –
Account Inv – PE)/Current
Liability
8 Purchased marketable Quick Ratio (Current Assets –
securities for Cash Inv – PE)/Current
Liability
9 Paid current portion of Return on Net Income / Avg
long-term debt Assets Total Assets

10 Gave sales Discount Profit Margin Net Profit / Net


Sales
11 Pays Accounts Payables Current Ratio Current Assets /
Current Liabilities
12 Purchases Inventory on Current Ratio Current Assets /
Credit Current Liabilities
13 Sold Merchandise for Cash Current Ratio Current Assets /
Current Liabilities
Problem 2: Information pertaining to common size financial statements is given below:

Common Size Balance Sheet 2018 2017


Current Assets 0.2 0.2
Property, Plant & Equipment 0.5 0.4
Long-term Investments 0.3 0.4
Total Assets 1 1
Current Liabilities 0.14 0.14
Long term liabilities 0.27375 0.2
Common Stock 0.48 0.56
Retained Earnings 0.10625 0.1
Liabilities and Stockholders’ 1 1
Equity

Common Size Income Statement For the year ended 31/03/2018


Net Sales 1

Less: COGS 0.3675

Gross Profit 0.6325

Less: SG&A Expenses 0.35

Operating Income 0.2825

Interest Expenses 0.1

Profit Before Tax 0.1825

Income Tax Expense 0.045

Net Income 0.1375

Further it is known that:

a) Total common stock in the year 2017 was US $ 140,000

b) Dividend paid for 2018 was $ 6875.

c) Return on assets of Paradise Ltd was 5%

d) Dividend payout ratio for the year was 50%.

Find the following:

1. Asset Turnover

2. Change in Net Working Capital

You might also like