Credit Management/ Finance
IN CLASS EXERCISE
RATIO ANALYSIS
PETRONAS METHANOL
Statements of Financial Position
December 31, Assets 2013 2012 Cash RM 25,000 RM 40,000 Short-term investments 15,000 60,000 Accounts receivable 50,000 30,000 Inventory 150,000 170,000 Property, plant and equipment (net) 160,000 200,000 Total assets RM400,000 RM500,000 Liabilities and Stockholders' Equity Accounts payable RM 20,000 RM 30,000 Short-term notes payable 40,000 90,000 Bonds payable 80,000 160,000 Common stock 160,000 145,000 Retained earnings 100,000 75,000 Total liabilities and stockholders' equity RM400,000 RM500,000
PETRONAS METHANOL Income Statement For the Year Ended December 31, 2013 Net sales RM360,000 Cost of goods sold 184,000 Gross profit 176,000 Expenses Interest expense RM12,000 Selling expenses 30,000 Administrative expenses 59,000 Total expenses 101,000 Income before income taxes 75,000 Income tax expense 30,000 Net income RM 45,000
Additional information: 1. Cash dividends of RM20,000 were declared and paid in 2013. 2. Weighted-average number of shares of common stock outstanding during 2013 was 30,000 shares. 3. Market value of common stock on December 31, 2013, was RM21 per share.
Compute the following ratios for Syarikat Telekom for 2013. 1. Current ratio 2. Return on equity 3. Price-earnings ratio 4. Acid-test ratio 5. Inventory turnover ratio 6. Trade receivables’ ratio 7. Profit margin 8. Asset-turnover ratio
ANSWER:
Ratios Answer for Petronas Methanol Company
$240,000 1. Current ratio 4:1. ———— $60,000 $45,000 2. Return on equity 17.3%. ________________
RATIO ANALYSIS
PETRONAS METHANOL
Statements of Financial Position
December 31, Assets 2013 2012 Cash RM 25,000 RM 40,000 Short-term investments 15,000 60,000 Accounts receivable 50,000 30,000 Inventory 150,000 170,000 Property, plant and equipment (net) 160,000 200,000 Total assets RM400,000 RM500,000 Liabilities and Stockholders' Equity Accounts payable RM 20,000 RM 30,000 Short-term notes payable 40,000 90,000 Bonds payable 80,000 160,000 Common stock 160,000 145,000 Retained earnings 100,000 75,000 Total liabilities and stockholders' equity RM400,000 RM500,000
PETRONAS METHANOL Income Statement For the Year Ended December 31, 2013 Net sales RM360,000 Cost of goods sold 184,000 Gross profit 176,000 Expenses Interest expense RM12,000 Selling expenses 30,000 Administrative expenses 59,000 Total expenses 101,000 Income before income taxes 75,000 Income tax expense 30,000 Net income RM 45,000
Additional information: 1. Cash dividends of RM20,000 were declared and paid in 2013. 2. Weighted-average number of shares of common stock outstanding during 2013 was 30,000 shares. 3. Market value of common stock on December 31, 2013, was RM21 per share.
Compute the following ratios for Syarikat Telekom for 2013. 1. Current ratio 2. Return on equity 3. Price-earnings ratio 4. Acid-test ratio 5. Inventory turnover ratio 6. Trade receivables’ ratio 7. Profit margin 8. Asset-turnover ratio
ANSWER:
Ratios Answer for Petronas Methanol Company
$240,000 1. Current ratio 4:1. ———— $60,000 $45,000 2. Return on equity 17.3%. ________________