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JPIA Company
Comparative Statement of Financial Position
2022 2021
JPIA Company
Comparative Income Statement
2022 2021
Required:
1. Assess the rate of return that the company is generating. Compute the following for both this year and last year:
a. The return on total assets. (Total assets at the beginning of last year were P4,320,000.)
b. The return on common stockholders’ equity. (Stockholders’ equity at the beginning of last year totaled P3,016,000.
There has been no change in preferred or common stock over the last two years.)
c. Is the company’s financial leverage positive or negative? Explain.
2. Assess the well-being of the common stockholders. For both this year and last year, compute:
a. The earnings per share.
b. The dividend yield ratio for common stock.
c. The dividend payout ratio for common stock.
d. The price-earnings ratio. How do investors regard JPIA Company as compared to other companies in the industr?
Explain.
e. The book value per share of common stock. Does the difference between market value per share and book value per
share suggest that the stock at its current price is a bargain? Explain.
f. The gross margin percentage.
3. Assess creditor ratios to determine both short-term and long-term debt paying ability. For both this year and last
year, compute:
a. Working capital.
b. The current ratio.
c. The acid-test ratio.
d. The average collection period. (The accounts receivable at the beginning of last year totaled P520,000.)
e. The average sale period. (The inventory at the beginning of last year totaled P640,000.)
f. The debt-to-equity ratio.
g. The times interest earned.