FINANCIAL RATIOS AND INTERPRETATIONS

CONDENSED STATEMENT OF FINANCIAL POSITION OF ABC INC.

Assets

Cash----------------------------------------Php 300,000

Accounts Receivable------------------------ 600,000

Inventory--------------------------------------1,350,000

Prepaid Expenses-----------------------------450,000

Plant assets (net)--------------------------- 3,000,000

Other Assets------------------------------------300,000

TOTAL-----------------------------------Php 6,000,000

Liabilities

Current Liabilities------------------------Php 750,000

Non-current Liabilities----------------------1,500,000

Shareholder's Equity

Share capital, par 10 ----------------Php 3,000,000

Accumulated profits---------------------------750,000

Total Liabilities and Equity----------Php 6,000,000

For the year, the company earned a gross profit of Php 4,800,000 on its sales of Php 12,000,000 (all on accounts). Accounts receivable, inventory and plant assets remained relatively constant during the year.

Required: Compute the following

1.Acid test ratio

2.Current ratio

3.Inventory turnover

4.Total Assets Turnover Ratio

5.Accounts Receivable Turnover Ratio

6.Debt Ratio