Hornilla A 11-QUIZ-1

BM2217
Name: Hornilla, Abegail S. Section: BSCPE 2.2

Date: May 21, 2023 Score:
Directions: Read the instructions and all the items in each test type carefully. You may use your calculators
and an additional sheet of paper for this quiz. (40 points)
I. MATCHING TYPE: Match the formulas in COLUMN A with the financial ratio terms in COLUMN B. Write
the letter of your answer in the space provided. (10 items x 2 points)
COLUMN A COLUMN B
1. Current assets / Current liabilities A. Acid-test ratio

2. Current assets – Inventories / Current liabilities B. Debt ratio
3. Cash and Cash equivalents / Current liabilities C. Return on equity ratio
4. Total liabilities / Total assets D. Asset turnover ratio
5. Total liabilities / Shareholder’s equity E. Interest coverage ratio
6. Net income / Shareholder’s equity F. Cash ratio
7. Net income / Total assets G. Inventory turnover ratio
8. Cost of goods sold / Average inventory H. Debt to equity ratio
9. Net sales / Total assets I. Return on assets ratio
10. Operating income / Interest expenses J. Current ratio
II. COMPUTATION: Perform what is being asked. (4 items x 5 points)
A. Analyze the balance sheet and income statement and compute the following financial ratios:
1. Acid-test ratio
2. Asset turnover ratio.
Danski Computer Shop and Café

Balance Sheet
December 31, 201X
Assets Liabilities and Capital

Cash P200,000 Accounts Payable P800,000
Temporary Investments 150,000 Mortgage Payable – 5 years 400,000
Accounts Receivable (net) 450,000 Owner’s Equity 1,400,000
Inventories 400,000
Equipment (net) 1,100,000
Other Assets (non-current) 300,000
P2,600,000 P2,600,000
11 Quiz 1 *Property of STI

Page 1 of 2
BM2217
Danski Computer Shop and Café

Income Statement
December 31, 201X
Sales P2,000,000
Less: Cost of Sales 1,200,000
Gross Income from Sales 800,000
Less: Expenses:
Selling Expense P200,000
Administrative Expenses 100,000 300,000
Net Income P500,000
B. Analyze the given problems and compute for break-even units.
1. DanTechno is a Filipino-owned company specializing in making DJ turntables and music boards. It

costs P20,000 to create a turntable, and the company sells it for P55,000. DanTechno pays
P100,000 for the rent and P80,000 for utilities. How many units should the company sell to break-
even?
2. Mech War Systems Philippines is in the business of making missiles for the Philippine Army. Its newest
model, an air-to-surface missile called the PH-170, is priced at P285,000 per unit and costs P60,000 to
produce. How many missile units should Mech War Systems sell to break-even?
Here are the other costs that the company incurred:

a. Rent – P200,000 at a 4-story building
b. Wages – P700,000
c. Taxes – P80,000
Rubric for grading

PERFORMANCE INDICATORS POINTS
Complete solution with the correct answer 5
Incomplete solution with the correct answer 3
No solution with the correct answer 1

Page 2 of 2
I. Matching Type:
1. J. Current ratio
2. A. Acid-test ratio
3. F. Cash ratio
4. B. Debt ratio
5. H. Debt to equity ratio
6. C. Return on equity ratio
7. I. Return on assets ratio
8. G. Inventory turnover ratio
9. D. Asset turnover ratio
10. E. Interest coverage ratio
II. Computation:
A. Financial Ratios:
Acid-test ratio:
Acid-test ratio = (Current assets - Inventories) / Current liabilities

Current assets =
= Cash + Temporary investments + Accounts receivable (net) + Inventories +
Equipment (net) + Other assets (non-current)
= P200,000 + P150,000 + P450,000 + P400,000 + P1,100,000 + P300,000 = P2,600,000
Inventories = P400,000
Current liabilities = Accounts payable + Mortgage payable – 5 years
= P800,000 + P400,000 = P1,200,000
Acid-test ratio = (P2,600,000 - P400,000) / P1,200,000 = 2.0
The acid-test ratio is 2.0, indicating that Danski Computer Shop and Café has sufficient liquid assets
(excluding inventories) to cover its current liabilities.
Asset turnover ratio:

Asset turnover ratio = Net sales / Total assets
Net sales = Sales - Cost of sales = P2,000,000 - P1,200,000

= P800,000
Total assets = Cash + Temporary investments + Accounts receivable (net) + Inventories +
Equipment (net) + Other assets (non-current)
= P2,600,000
Asset turnover ratio = P800,000 / P2,600,000
= 0.3077
The asset turnover ratio is 0.3077, indicating that Danski Computer Shop and Café generates
approximately 0.3077 units of sales for every unit of total assets.

Page 3 of 2
B. Break-even Units:
DanTechno:
Selling price per unit: P55,000
Cost per unit: P20,000
Fixed costs: Rent (P100,000) + Utilities (P80,000) = P180,000
Contribution margin per unit: Selling price per unit - Cost per unit
= P55,000 - P20,000
= P35,000
Break-even units = Fixed costs / Contribution margin per unit

Break-even units
= P180,000 / P35,000 ≈ 5.14
Therefore, DanTechno needs to sell approximately 6 units to break even.
Mech War Systems Philippines:

Selling price per unit: P285,000
Cost per unit: P60,000
Fixed costs: Rent (P200,000) + Wages (P700,000) + Taxes (P80,000) = P980,000
Contribution margin per unit:

Selling price per unit - Cost per unit = P285,000 - P60,000
= P225,000
Break-even units = Fixed costs / Contribution margin per unit

Break-even units
= P980,000 / P225,000 ≈ 4.36
Therefore, Mech War Systems Philippines needs to sell approximately 5 units to break even.

Page 4 of 2

Hornilla A 11-QUIZ-1

Uploaded by

Copyright:

Available Formats

Hornilla A 11-QUIZ-1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Hornilla A 11-QUIZ-1

Uploaded by

Copyright:

Available Formats

BM2217

Name: Hornilla, Abegail S. Section: BSCPE 2.2

1. Current assets / Current liabilities A. Acid-test ratio

II. COMPUTATION: Perform what is being asked. (4 items x 5 points)

Danski Computer Shop and Café

Assets Liabilities and Capital

11 Quiz 1 *Property of STI

Danski Computer Shop and Café

B. Analyze the given problems and compute for break-even units.

1. DanTechno is a Filipino-owned company specializing in making DJ turntables and music boards. It

Here are the other costs that the company incurred:

Rubric for grading

11 Quiz 1 *Property of STI

Acid-test ratio = (Current assets - Inventories) / Current liabilities

Acid-test ratio = (P2,600,000 - P400,000) / P1,200,000 = 2.0

Asset turnover ratio:

Net sales = Sales - Cost of sales = P2,000,000 - P1,200,000

11 Quiz 1 *Property of STI

Break-even units = Fixed costs / Contribution margin per unit

Therefore, DanTechno needs to sell approximately 6 units to break even.

Mech War Systems Philippines:

Contribution margin per unit:

Break-even units = Fixed costs / Contribution margin per unit

11 Quiz 1 *Property of STI

You might also like