Answer to Question #287197 in Finance for nicole

Question

Directions: Provide the answer to the following financial ratios problem:

NOTE: USE UP TO TWO DECIMAL PLACES ONLY

6. GROSS PROFIT MARGIN= 0.60

  INVENTORY TURNOVER= 3

  AVERAGE INVENTORY= P 450,000

  NET PROFIT MARGIN= 0.12

  NET PROFIT= ?

7. CURRENT RATIO = 4

  DEBT RATIO= 0.2

  EQUITY= P 600,000

  NONCURRENT ASSETS= P 200,000

  NONCURRENT LIABILITIES= ?

8. AVERAGE DAYS IN INVENTORY= 20

  INVENTORY TURNOVER= ?

9. CURRENT LIABILITIES= 50% OF TOTAL ASSETS

  CURRENT ASSETS= 75% OF TOTAL ASSETS

  CURRENT RATIO= ?

10. NET PROFIT= P 300,000, MARGIN= 0.1

   INCOME TAX EXPENSES= 25% OF OPERATING PROFIT

   OPERATING PROFIT MARGIN= ?

Answer 1

Answer 6:

GROSS PROFIT MARGIN= 0.60

INVENTORY TURNOVER= 3

AVERAGE INVENTORY= P 450,000

NET PROFIT MARGIN= 0.12

$Inventory Turnover=\frac{Sales}{Average Inventories}$

$3=\frac{Sales}{450000}$

Sales = 1,350,000

$Net Profit=Sales\times Net Profit Margin=1350000\times0.12=162000$

 

Answer 7:

CURRENT RATIO = 4

DEBT RATIO= 0.2

EQUITY= P 600,000

NONCURRENT ASSETS= P 200,000

$Debt Ratio=\frac{Total Liabilities}{Total Assets}=0.2$

Equity = Total assets - Total liabilities

Total assets =Equity + Total liabilities

$\frac{Total Liabilities}{600000+Total Liabilities}=0.2$

$Total liabilities=120000+0.2Total liabilities$

$Total Liabilities=\frac{120000}{0.8}=150000$

$Total Assets=600000+150000=750000$

$Current Assets=750000-200000=550000$

$Current Liabilities=\frac{55000}{4}=137500$

$Noncurrent Liabilities=Total liabilities - Current Liabilities$

$Noncurrent Liabilities=150000-137500=12500$

Answer 8:

AVERAGE DAYS IN INVENTORY= 20

$Inventory Turnover=\frac{365}{20}=18.25$

Answer 9:

CURRENT LIABILITIES= 50% OF TOTAL ASSETS

CURRENT ASSETS= 75% OF TOTAL ASSETS

Let X = Total assets

Current assets = 0.75X

Current liabilities = 0.5X

$Current Ratio=\frac{0.75X}{0.5X}=1.5$

Answer 10:

NET PROFIT= P 300,000

MARGIN= 0.1

INCOME TAX EXPENSES= 25% OF OPERATING PROFIT

OPERATING PROFIT MARGIN= ?

$Revenue=\frac{300,000}{0.1}=3,000,000$

$Operating Profit=\frac{300,000}{1-0.25}=400,000$

$Operating Profit Margin=\frac{400,000}{3,000,000}=0.133\approx13.3\%$