Liquid Company has the following information available at year end 2018: Cash P60.000 Notes payable (current) P40,000 Plant and Equipment, net P252,000 Common stock P140,000 Total assets P480,000 Gross income P500,000 Additional data: Current ratio 1.9:1.0 Debt-to-equity 1.4:1.0 Inventory turnover based on (Sales divide by ending inventory) 15 times Inventory turnover based on (Cost of sales divide by ending inventory) 10 times Choices: a. P80,000 b. P60,000 c. P100,000 d. P68,000 e. P280,000 33. Retained earnings balance is: 34. Accounts payable amounts to: 35. Inventories amount to: 36. Accounts receivable balance is: 37. Total liabilities amount to: E. Straight Problems: The following income statements are being compared: A Corp B Corp C Corp Sales P 200,000 P 900,000 P 50,000 Less: Cost of Sales P 120.000 P 630.000 P 20.000 Gross Profit P 80,000 P 270,000 P 30,000 Less: Operating Expenses P 20.000 P 130.000 P 5.000 Operating Income P 60,000 P 140,000 P 25,000 Less: Interest Expense P 10.000 P 25.000 Income before income tax P 50,000 P 115,000 P 25,000 Less: Income Tax P 15.000 P 34.500 P 7.500 Net Income P 35,000 P 80,500 P 17,500 38. In which company would you invest? Why? 39. Which company has the highest operating ratio? 40. Assuming you were part of management in the three companies, in which company would you give priority to an analysis of gross profit variation?0. Multiple Choices: 16. The following are the amounts of the assets and liabilities of FLY AWAY TRAVEL AGENCY at December 3]. 2010. the end of the current year. and Its revenue and expenses for the year. The capital of Ryan Stecker. owner was P H.500 on January I. 2010 the beginning of the current year. During the year. Stacker Mthdrew P 30.000. Accounts Payable P 3.200 Accounts Receivable P 19.500 Cash P 7.200 Fees Earned ? Miscellaneous Expense P 1.750 Rent Expense P 27.000 Unused Supplies P 1.065 Supplies Expense P 2.125 Utilities Expense P102130 Wages Expense P 35.500 How much is the amount of Fees Earned during 1. .e ..-... .d? a. [340.865 b. P2536! c. P871480 d. P117160 17. Involves the assessment and evaluation of the firm's past performance. its present condition. and future business potentials a. Responsibility Accounting c. Ratio Analysis b. Transfer pricing d. F5 analysis 23. One of the useful techniques that will explain variation in revenue and cost of goods sold. a. Cash Flow analysis c. Gross profit analysis b. Ratio analysis d. Horizontal analysis 24. Just the two of Us Company raised selling price of its product by 30% in 2018. The income statement for 2018 and 2017, among others, show the following: 2018 2017 Sales P520,000 P500,000 Cost of sales P300.000 P300.000 Gross income P220,000 P200,000 Change in unit cost was a.) 20% increase b.) 20% decrease c.) 25% increase d.) 25% decrease 25. The favorable/unfavorable effect of price factor should be a. P120,000 favorable c.) P60,000 favorable b. P120,000 unfavorable d.) P60,000 unfavorable 26. Debt-Equity ratio is 2:1 and interest rates are very high. What would you recommend? a. Issue additional shares of common stock and use the proceeds in liquidating outstanding obligations to minimize financing charges b. Issue bonds and use the proceeds in liquidating outstanding obligations c. Issue shares of preferred stock and use the proceeds in liquidating outstanding obligations d. None of the above 27. Current ratio is 200% and acid-test ratio is 40%. This indicates that: a. More than half of the current assets are in quick assets b. More than half of the current assets are in inventories and prepaid expenses c. The firm is able to meet its obligations on due date d. None of the above28. Which of the following would improve a current ratio of 2:1? a. Obtaining a short-term loan b. Paying outstanding current liabilities c. Writing off bad debts d. None of the above 29. Refers to how well the management is handling the business a. Profitability b. Liquidity C. Solvency d. Managerial effectiveness 30. Selected data from the year-end financial statements of World Cup Corp. are presented below. (Note: The difference between average and ending inventories is immaterial) Current ratio 2.0 Quick ratio 1.5 Current liabilities P600,000 Inventory turnover (based on cost of sales) 8 times Gross profit margin 40% World Cup's net sales for the year were: a. P2.4 million b. P4.0 millionc. P1.2 million d. P6.0 million 31. If company A has a higher rate of return on assets than company B, this could be because company A has a profit margin on sales or a asset turnover ratio a. higher - higher c. higher - lower b. lower - higher d. lower - lower 32. At December 31, 2001, Baby Co had cash of P200,000, a current ratio of 1.5 and a quick ratio of 0.5:1.0. On December 31, 2008, all cash were used to reduce accounts payable. How did these cash payments affect the ratios? Current ratio Quick ratio increased decreased increased no effect decreased increased decreased no effect18. It is an objective of the statement of cash flows. a. To disclose changes during the period in all asset and all equity accounts b. To disclose the change in working capital during the period C. To provide information about the operating, investing, and financing activities of an entity during a period d. None of these 19. Operating Activities are a. The principal revenue-producing activities of the entity that generally result from the transactions and other events that enter into the determination of net income or loss b. The acquisition and disposal of long-term assets and other investments not included in cash equivalents c. The activities that result in changes in size and composition of equity capital and borrowings of the entity d. Cash flows arising from purchase and sale of goods in the ordinary course of business only 20. Receivable turnover rate rose from 10x to 15x in one year. This indicates that a. Receivable decreased by one-half b. The average collection period was prolonged by 12 days c. The average collection period was shortened by 12 days d. None of the above 21. Comparing a company with the leading firm in the industry is called: a. Comparative analysis c. Benchmarking b. Goal setting d. Strategic planning 22. Which of the following would be considered a "red flag" in financial statement analysis? a. A marked decrease in accounts receivable and inventory turnovers b. An increase in times-interest-earned C. A decrease in the debt-ratio d. An increase in the price-earnings ratio