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www.shsph.blogspot.com, Fundamentals of Accountancy, Business and Management 2 – Grade 12, Alternative Delivery Mode, Quarter 1 – Module 6: Analysis and Interpretation of Financial Statements, First Edition, 2020, Republic Act 8293, section 176 states that: No copyright shall subsist in any work, of the Government of the Philippines. However, prior approval of the government agency or, office wherein the work is created shall be necessary for exploitation of such work for profit., Such agency or office may, among other things, impose as a condition the payment of, royalties., Borrowed materials (i.e., songs, stories, poems, pictures, photos, brand names,, trademarks, etc.) included in this module are owned by their respective copyright holders., Every effort has been exerted to locate and seek permission to use these materials from, their respective copyright owners. The publisher and authors do not represent nor claim, ownership over them., Published by the Department of Education, Division of Palawan, Schools Division Superintendent:, Natividad P. Bayubay, CESO VI, Assistant Schools Division Superintendents:, Loida Palay-Adornado, Ph.D., Felix M. Famaran, Development Team of the Module, Writer: Daisy S. Dela Peña, Language Editor: Marianne R. Valdez, Reviewer: Eric N. Quillip, Management Team: Aurelia B. Marquez, Rodgie S. Demalinao, Eric N. Quillip, , Printed in the Philippines by ________________________, Department of Education – MIMAROPA Region – Schools Division of Palawan, Office Address:, Telephone:, E-mail Address:, Website:, , PEO Road, Bgy. Bancao-Bancao, Puerto Princesa City, (048) 433-6392, [email protected], www.depedpalawan.com, , ii

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www.shsph.blogspot.com, , Introductory Message, For the facilitator:, Welcome to the Fundamentals of Accountancy, Business and Management 2 –, Grade 12 Modular Distance Learning (MDL) Self-Learning Module on the Analysis, and Interpretation of Financial Statements!, This module was collaboratively designed, developed and reviewed by educators, from public institution to assist you, the teacher or facilitator in helping the, learners meet the standards set by the K to 12 Curriculum Most Essential Learning, Competencies (MELCs) in the “New Normal” situation while overcoming their, personal, social, and economic constraints in schooling., This learning resource hopes to engage the learners into guided and independent, learning activities at their own pace and time. Furthermore, this also aims to help, learners acquire the needed 21st century skills while taking into consideration, their needs and circumstances., In addition to the material in the main text, you will also see this box in the body of, the module:, , Notes to the Teacher, This contains helpful tips or strategies, that will help you in guiding the learners., , As a facilitator, you are expected to orient the learners on how to use this module., You also need to keep track of the learners' progress while allowing them to, manage their own learning. Furthermore, you are expected to encourage and assist, the learners as they do the tasks included in the module., , iv

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www.shsph.blogspot.com, For the learner:, Welcome to the Fundamentals of Accountancy, Business and Management 2 –, Grade 12 Modular Distance Learning (MDL) Self-Learning Module on the Analysis, and Interpretation of Financial Statements!, This module was designed to provide you with fun and meaningful opportunities, for guided and independent learning at your own pace and time. You will be, enabled to process the contents of the learning resource while being an active, learner., This module has the following parts and corresponding icons:, What I Need to Know, , This will give you an idea of the skills or, competencies you are expected to learn in, the module., , What I Know, , This part includes an activity that aims to, check what you already know about the, lesson to take. If you get all the answers, correct (100%), you may decide to skip this, module., , What’s In, , This is a brief drill or review to help you link, the current lesson with the previous one., , What’s New, , In this portion, the new lesson will be, introduced to you in various ways; a story, a, song, a poem, a problem opener, an activity, or a situation., , What is It, , This section provides a brief discussion of, the lesson. This aims to help you discover, and understand new concepts and skills., , What’s More, , This comprises activities for independent, practice to solidify your understanding and, skills of the topic. You may check the, answers to the exercises using the Answer, Key at the end of the module., , What I Have Learned, , This, includes, questions, or, blank, sentence/paragraph to be filled in to process, what you learned from the lesson., , What I Can Do, , This section provides an activity which will, help you transfer your new knowledge or, skill into real life situations or concerns., , Assessment, , This is a task which aims to evaluate your, level of mastery in achieving the learning, competency., v

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www.shsph.blogspot.com, Additional Activities, , In this portion, another activity will be given, to you to enrich your knowledge or skill of, the lesson learned., , Answer Key, , This contains answers to all activities in the, module., , At the end of this module you will also find:, , References, , This is a list of all sources used in, developing this module., , The following are some reminders in using this module:, 1. Use the module with care. Do not put unnecessary mark/s on any part of, the module. Use a separate sheet of paper in answering the exercises., 2. Don’t forget to answer What I Know before moving on to the other activities, included in the module., 3. Read the instruction carefully before doing each task., 4. Observe honesty and integrity in doing the tasks and checking your, answers., 5. Finish the task at hand before proceeding to the next., 6. Return this module to your teacher/facilitator once you are through with it., If you encounter any difficulty in answering the tasks in this module, do not, hesitate to consult your teacher or facilitator. Always bear in mind that you are, not alone., We hope that through this material, you will experience meaningful learning, and gain deep understanding of the relevant competencies. You can do it!, , vi

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www.shsph.blogspot.com, , What I Need to Know, This module was designed and written with you in mind. It is here to help you, master the Statement of Financial Position. The scope of this module permits it to, be used in many different learning situations. The language used recognizes the, diverse vocabulary level of students. The lessons are arranged to follow the, standard sequence of the course. But the order in which you read them can be, changed to correspond with the textbook you are now using., The module is divided into two lessons, namely:, •, •, , Lesson 1 – define the measurement levels, namely, liquidity, solvency,, stability, and profitability, Lesson 2 – perform vertical and horizontal analyses of financial statements of, a single proprietorship, , After going through this module, you are expected to:, Lesson 1:, 1. Identify and define measurement levels;, 2. Differentiate the various financial ratios;, 3. Solve exercises and problems that require computation and interpretation, using various financial ratios., Lesson 2:, 1. Compare and contrast vertical and horizontal analyses;, 2. Perform vertical and horizontal analyses of financial statements of a single, proprietorship; and, 3. Determine the importance of vertical and horizontal analyses of financial, statements of a single proprietorship., , 1

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www.shsph.blogspot.com, , What I Know, Directions: Choose the letter of the best answer. Write the chosen letter on a, separate sheet of paper., 1., , It pertains to the company’s capacity to pay long term debts or liabilities., a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 2., , What do we call the company’s ability to pay short-term debts that are coming, due?, a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 3., , What is the process of evaluating risk, performance, financial health, and, future prospects of a business by subjecting financial statement data to, computational and analytical techniques with the objective of making economic, decisions?, a. Financial statement technique, c. Financial statement comparison, b. Financial statement analysis, d. Financial statement evaluation, , 4., , It refers to the company’s ability to be structurally firm and can support its, long-term debts by its equity., a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 5., , What is the company’s ability to convert its sales into cash flow and profit?, a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 6., , It is a technique used that compares the relationship between each line item of, the financial statements in one given period., a. Horizontal Analysis, c. Vertical Analysis, b. Sequential Analysis, d. Situational Analysis, , 7., , It is a technique used in analyzing and evaluating financial statements using a, series of financial statement data over a period of time that determine if each, item increases or decreases., a. Horizontal Analysis, c. Vertical Analysis, b. Sequential Analysis, d. Situational Analysis, , 8., , In vertical analysis of financial statements, what will be the base amount if the, Statement of Financial Position will be analyzed for the period?, a. Total Assets, c. Total Equity, b. Total Liabilities, d. Total Liabilities and Equity, , 2

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www.shsph.blogspot.com, 9. What is the other term used for horizontal analysis because it shows the, percentage of change from one period to another?, a. Time analysis, c. Total analysis, b. Change analysis, d. Trend analysis, 10. A business has liabilities of PhP 200, 000.00 and equity of PhP 800, 000.00., What is the percentage of total liabilities to total assets?, a. 20%, c. 60%, b. 40%s, d. 80%, 11. A business had owner’s equity of PhP 2, 000,000.00 for 2018 and PhP 2,, 700,000.00 for 2019. What is the increase in owner’s equity?, a. 39%, c. 37%, b. 38%, d. 35%, 12. If current assets are PhP 550, 000.00 and total assets are PhP 3,050,000.00,, what is the percentage of non-current assets?, a. 82.97%, c. 83.75%, b. 81.97%, d. 84.20%, 13. During the period, Dale Merchandising reported net sales amounting to PhP 2,, 875,000.00, gross profit of Php 1,515,000.00 and operating expenses of PhP, 718,000.00. What is the percentage of cost of goods sold to net sales?, a. 43%, c. 46%, b. 45%, d. 47%, 14. Based on the data given on item no. 13, what is the percentage of Net, Income to Net Sales??, a. 28%, c. 26%, b. 25%, d. 27%, 15. A business had net sales of PhP5, 956,000.00 for 2018 and PhP4, 898,000.00, for 2019. What is the percentage of net sales?, a. -19%, c. -17%, b. -16%, d. -18%, , 3

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www.shsph.blogspot.com, , Lesson, , 1, , Define the Measurement, Levels, namely, Liquidity,, Solvency, Stability, and, Profitability, , Evaluating and analyzing how the business is doing is a very important task for, business owners and other financial statement users. It is done by reviewing its, financial statements because it will give them a clearer picture as to where their, business is heading and will help them in making good economic decisions., Analysis and interpretation of financial statement have measurement levels as to, the firm’s liquidity, solvency, stability and its profitability. These ratios and other, financial ratios will be discussed further on the succeeding module. Each, measurement level has various financial ratios that gauge the firm’s performance., , What’s In, As what you have learned from the previous modules, the financial statements,, Statement of Financial Position (SFP), Statement of Comprehensive Income (SCI),, Statement of Changes in Equity (SCE) and Cash Flow Statement (CFS), are needed, by the business because these are the sources of data and information needed to, calculate the financial ratio and analysis for each measurement level (liquidity,, solvency, stability and profitability)., , Notes to the Teacher, Begin the lesson by letting the students do Activity No 1., “MATCH IT”. Let the students answer the given worksheet which, will help them define the measurement levels, namely, liquidity,, solvency, stability, and profitability., , 4

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www.shsph.blogspot.com, , What’s New, Activity 1: “MATCH IT”, Directions: Match Column A with its corresponding answer on Column B and, write the letter of your choice at the space provided before each number., COLUMN A, ________1., , Liquidity Ratios, , ________2., , Solvency Ratios, , ________3., , Stability Ratios, , ________4., , Profitability Ratios, , ________5., , Current Ratio, , ________6., , Debt to Asset Ratio, , ________7., , Debt to Equity Ratio, , ________8., , Gross Margin Ratio, , ________9., , Operating Margin Ratio, , ________10., , Net income Ratio, , COLUMN B, a. Ratio of current assets to, current liabilities, b. Ratio of total debts to, total assets, c. Ratio of total debts to, total assets, d. Ratios that shows the, capacity of the business to, pay its short- term debts., e. Ratio of net income to, sales, f. Ratios that shows the, capacity of the business to, pay its long- term debts., g. Ratio of operating profit to, sales, h. Ratios that shows the, capacity of the business, to convert its sales into, cash flow and profit., i. Ratio of gross profit to, sales, j. Ratios that shows the, capacity of the business to, pay its short- term debts, by its equity., , 5

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www.shsph.blogspot.com, , What is It, In Activity 1, you were able to define the measurement levels, namely, liquidity,, solvency, stability, profitability and some of the financial ratios in relation to the, analysis and interpretation of financial statements. In this part of the module, you, will learn further the most common ratios for the following measurement levels, with its corresponding formulas and sample problems., The most common ratios for the following measurement levels are as follows:, 1. Liquidity - the company’s ability to pay debts that are coming due /short, term debt., a. Current ratio- the ratio of current assets to current liabilities, meaning, the firm’s ability to pay its current debt., 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =, , 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬, 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬, , Example:, Dale’s Apparel Store applies a loan for the store’s remodeling. He presented, his detailed Statement of Financial Position for the bank to compute its, Current Ratio. The Statement of Financial Position includes the following, accounts:, Cash, Accounts Receivable, Merchandise Inventory, Investments, Prepaid Expenses, Current Liabilities, , P 25,000.00, 18,000.00, 8,000.00, 10,000.00, 1,500.00, 18,000.00, , Current Ratio computation is:, 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 =, , 𝐏 𝟐𝟓, 𝟎𝟎𝟎 + 𝟏𝟖, 𝟎𝟎𝟎 + 𝟖, 𝟎𝟎𝟎 + 𝟏𝟎, 𝟎𝟎𝟎 + 𝟏, 𝟓𝟎𝟎, 𝐏 𝟏𝟖, 𝟎𝟎𝟎, 𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑹𝒂𝒕𝒊𝒐 = 𝟑. 𝟒𝟕, , Interpretation:, Dale’s current ratio of 3.47 means that the store is liquid considering it can, pay off all of its current liabilities with current assets and still have some, current assets that will be left for them., b. Quick ratio – also called Acid Test Ratio, is a stricter measure of, liquidity. It does not consider all the current assets, only those that are, 6

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www.shsph.blogspot.com, easier to liquidate such as cash, cash equivalents, short-term investments or, marketable securities and accounts receivable are referred to as quick, assets. Quick assets are current assets that can be converted to cash within, 90 days or shorter period., 𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 =, , 𝐂𝐚𝐬𝐡+𝐂𝐚𝐬𝐡 𝐄𝐪𝐮𝐢𝐯𝐚𝐥𝐞𝐧𝐭𝐬+𝐒𝐡𝐨𝐫𝐭−𝐭𝐞𝐫𝐦 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭𝐬+𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞, 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬, , Example:, Using the same example above, Dale’s Apparel Store applies a loan for the, store’s remodeling. He presented his detailed Statement of Financial Position, for the bank to compute its Quick Ratio. The Statement of Financial Position, includes the following accounts:, Cash, Accounts Receivable, Merchandise Inventory, Investments, Prepaid Expenses, Current Liabilities, , P 25,000.00, 18,000.00, 8,000.00, 10,000.00, 1,500.00, 18,000.00, , Quick Ratio computation is:, 𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 =, , 𝐏 𝟐𝟓, 𝟎𝟎𝟎 + 𝟏𝟖, 𝟎𝟎𝟎 + 𝟏𝟎, 𝟎𝟎𝟎, 𝐏 𝟏𝟖, 𝟎𝟎𝟎, , 𝑸𝒖𝒊𝒄𝒌 𝑹𝒂𝒕𝒊𝒐 = 𝟐. 𝟗𝟒, Interpretation:, Dale’s quick ratio of 2.94 means that the store can pay off all of its current, liabilities with its quick assets and still have some current assets that will be, left for them., c. Working Capital Ratio – pertains to the business’ ability to pay its, current liabilities with the use of its current assets. There are four examples, of changes that can affect the working capital:, Current, Current, Current, Current, , Assets increase = increase in working capital, Assets decrease = decrease in working capital, Liabilities increase = decrease in working capital, Liabilities decrease = increase in working capital, 𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑹𝒂𝒕𝒊𝒐 = 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬 − 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬, , Example:, Amor’s Water Station has made loans from banks to purchase its water and, sanitation equipment five years ago. This made its working capital decreases, because these loans are becoming due. At the end of the year, Amor’s, statement of financial statement showed a balance of P350,000.00 for its, , 7

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www.shsph.blogspot.com, Current Assets and P180,000.00 for its Current Liabilities. Compute for its, Working Capital., Computation of Working Capital:, 𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑹𝒂𝒕𝒊𝒐 = 𝐏 𝟑𝟓𝟎, 𝟎𝟎𝟎 − 𝟏𝟖𝟎, 𝟎𝟎𝟎, 𝑾𝒐𝒓𝒌𝒊𝒏𝒈 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 𝑹𝒂𝒕𝒊𝒐 = 𝐏 𝟏𝟑𝟎, 𝟎𝟎𝟎. 𝟎𝟎, Interpretation:, Amor’s Water Station showed a positive working capital ratio shows that the, business can pay all its current liabilities and still have current assets left, over., 2. Solvency- pertains to the company’s capacity to pay long term debts or, liabilities., a. Debt to asset ratio- it pertains to the ratio of total debt to total assets. It, shows a company’s ability to pay off its liabilities with its assets., 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 =, , 𝐓𝐨𝐭𝐚𝐥 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬, 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬, , Example:, Annie’s Tailoring Shop would like to expand its shop and buy additional, sewing and tailoring equipment. The owner consulted the bank for a new, loan. She presented the shop’s financial statement. It showed total assets of, P250,000.00 and total liabilities of P 85,000.00. Debt to Asset ratio is, computed as:, 𝐏𝟖𝟓, 𝟎𝟎𝟎, 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 =, 𝐏𝟐𝟓𝟎, 𝟎𝟎𝟎, 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 =. 𝟑𝟒, Interpretation:, The debt to asset ratio of the shop shows that the shop’s total liabilities is, 34% of its total assets. It can be considered as less risky because the owner, owns more of the shop’, b. Debt to equity ratio- it pertains to the ratio of total debt to owner’s, equity/ shareholder’s equity (Asset – liabilities = Equity)., 𝑫𝒆𝒃𝒕 𝒕𝒐 𝑬𝒒𝒖𝒊𝒕𝒚 𝑹𝒂𝒕𝒊𝒐 =, , 𝐓𝐨𝐭𝐚𝐥 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬, 𝐓𝐨𝐭𝐚𝐥 𝐄𝐪𝐮𝐢𝐭𝐲, , Example:, Let us assume that a business has P250,000.00 credit from a bank and a, P450,000.00 loan mortgage on its property. The owners of the business, invested P1.8 million. The debt to equity ratio is computed as:, , 8

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www.shsph.blogspot.com, Example:, Josefina’s Café reported Gross Profit of P500,000.00, Operating Expenses of, P 115,000.00 and Net Sales of P 785,000.00 on its Statement of, Comprehensive Income. Operating Margin Profit is computed as:, 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 =, , 𝐏𝟓𝟎𝟎, 𝟎𝟎𝟎 − 𝟏𝟏𝟓, 𝟎𝟎𝟎, 𝐏 𝟕𝟖𝟓, 𝟎𝟎𝟎, , 𝑶𝒑𝒆𝒓𝒂𝒕𝒊𝒏𝒈 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 =. 𝟒𝟗, Interpretation:, Josefina’s operating margin ratio shows that after paying off operating, expenses it still has 49 percent remaining portion of net sales that could, cover other expenses., c. Net income margin ratio - it is the ratio of net income margin to sales, (Net income = Operating profit – interest and taxes). Also referred to as Profit, Margin Ratio. It measures how much net profit is produced at a certain level, of sales., 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞, 𝑷𝒓𝒐𝒇𝒊𝒕 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 =, 𝐍𝐞𝐭 𝐒𝐚𝐥𝐞𝐬, Example:, Josefina’s Café reported Net Sales of P910,000.00 and Net Income of, P 315,000.00 on its Statement of Comprehensive Income. Net Income Margin, ratio is computed as:, 𝐏 𝟑𝟏𝟓, 𝟎𝟎𝟎, 𝑷𝒓𝒐𝒇𝒊𝒕 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 =, 𝐏 𝟗𝟏𝟎, 𝟎𝟎𝟎, 𝑷𝒓𝒐𝒇𝒊𝒕 𝑴𝒂𝒓𝒈𝒊𝒏 𝑹𝒂𝒕𝒊𝒐 =. 𝟑𝟓, Interpretation:, It shows that Josefina’s converted 35 percent of her sales into profits., d. Return on asset (ROA) - it is the ratio that measures the peso value of, income generated by using the business assets., 𝑹𝒆𝒕𝒖𝒏 𝒐𝒏 𝑨𝒔𝒔𝒆𝒕 𝑹𝒂𝒕𝒊𝒐 =, , 𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞, 𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬, , Note: Average assets are computed by adding the beginning balance and, ending balance and then divide it by 2. It may be only ending of total assets if, beginning balance is not given., Example:, Kiko’s Trading and Construction is a fast- growing construction business, that caters building construction and real estate development in Puerto, Princesa City. Its Statement of Financial Position showed beginning assets of, PhP 2, 500,000.00 and an ending balance of PhP 3,800,000.00. During the, year, it had made a net income of PhP 15,825,000.00. Kiko’s return on, assets ratio will be:, , 11

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www.shsph.blogspot.com, , What’s More, Activity 2: Gerlie’s Bread and Pastries, Directions: Use the following ratio to complete Gerlie’s Bread and Pastries, Statement of Financial Position:, a. Current ratio is 0.70., b. Acid-test ratio is 0.50., Gerlie’s Bread and Pastries’ incomplete Statement of Financial Position is given, below:, Cash, Receivables, Inventories, , P, 1., , Prepaid Expenses, Total Current Assets, Baking Equipment, Other assets, Total assets, , 2., 3., 4., , 45,000, 19,800.00, , Total current liabilities, Long term note payable, Other long term, liabilities, , P 109,800.00, 5., 24,500.00, , Owner’s capital, 60,000.00, 191,860.00, , Total liabilities and, equity, , 50,000.00, 6., , Activity 3: Aysid Wash and Wear Supplies- Part 1, Directions: Use the following information given by Aysid Wash and Wear Supplies, to compute for Liquidity Ratios., Cash, Accounts Receivable, Inventory, Equipment, Total Assets, Accounts Payable, Notes Payable, Owner, Capital, Total Liabilities and, equity, , P 400,000, Sales, 500,000, Cost of Goods Sold, 550,000, Gross Profit, 850,000 Operating Expenses, P 2,300,000, Operating income, P 600,000, Interest Expense, 400,000, Net Income, 1,800,000, P 2,300,000, , 13, , P 1,500,000, 700,000, 800,000, 300,000, 500,000, 50,000, P 450,000

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www.shsph.blogspot.com, Activity 4: Aysid Wash and Wear Supplies- Part 2, Directions: Use the following information given by Aysid Wash and Wear Supplies, to compute for Solvency Ratios., Cash, Accounts Receivable, Inventory, Equipment, Total Assets, , P 400,000, Sales, 500,000, Cost of Goods Sold, 550,000, Gross Profit, 850,000 Operating Expenses, P 2,300,000, Operating income, , Accounts Payable, Notes Payable, Owner, Capital, Total Liabilities and, equity, , P 600,000, 400,000, 1,800,000, P 2,300,000, , Interest Expense, Net Income, , P 1,500,000, 700,000, 800,000, 300,000, 500,000, 50,000, P 450,000, , Notes to the Teacher, Activities 2, 3 and 4 are designed to develop and enrich students’, knowledge on the Analysis and interpretation of financial, statement that have measurement levels as to the firm’s liquidity,, solvency, stability and its profitability and computation of, financial ratio. The activities ensure that students’ full, understanding of the lesson is achieved., , 14

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www.shsph.blogspot.com, , What I Have Learned, At this point, let us see how much you have gained from the discussions and, activities you have undergone., , Activity 5: “LET PROBLEM SOLVE IT”, Directions: Analyze the given situations, solve and give the appropriate answers., Use a separate sheet of paper., , 1. Wash and Wear Laundry has given the following information to its, bank as follows: Cash - Php 300,000; Accounts Receivable - PhP, 68,000; Inventory - PhP 45,000; Prepaid Rent - PhP 18,000, and, Current Liabilities- P 85,000. Compute the current ratio and interpret, its result., 2. Read Me Book Shop has financial information as follows: Inventory - P, 10,000; Prepaid Supplies - PhP 5,000; Total Current Assets - PhP, 35,800 and Current Liabilities - PhP 15,000. Compute the quick ratio, and interpret its result., 3. No Melt Ice Cream parlor has Net Income of PhP 850,000 and Asset, with beginning of PhP 524,000 and ending balance of PhP 256,000., Compute for Return on Assets (ROA) and interpret the result., 4. Everyday Bake Shop sold baked goodies and products costing PhP, 250,000 for a 50% mark-up on cost. There were no products returned., Compute for gross margin ratio and interpret the result., 5. Choose Me Boutique had the following accounts at year end: Current, Assets- PhP 450,000.00 and total liabilities of PhP 280,000. Compute, for debt ratio and interpret the results., , 15

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www.shsph.blogspot.com, , What I Can Do, This activity will help you transfer into real-life situations the knowledge and skills, you have gained or learned from this module., , Activity 6: TJ’s Bakes, Based on the financial information of TJ’s Bakes from its Statement of, Comprehensive Income, compute for Profitability Ratio and interpret the result:, , Net Sales, Cost of goods sold, Operating Expenses, Interest expense, Income tax expense, , P 238,000, 84,000, 39,800.00, 3,500.00, 5,600.00, , 16

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www.shsph.blogspot.com, , Lesson, , 2, , Perform, vertical, and, horizontal, analyses, of, financial statements of a, single proprietorship, , Financial statement analysis is needed by every business in understanding and, analyzing its operation and financial condition. It gives them the real picture of how, well the business is doing or what should be done to improve its business, condition. It is very helpful in evaluating business’ activities from the past, the, present and project future financial performance that will help in making sound, economic decision., , What’s In, You have learned from Lesson 1 of this module the different financial ratios for, each measurement level (liquidity, solvency, stability and profitability). Liquidity is, the company’s ability to pay debts that are coming due /short term debt. Solvency, is the company’s capacity to pay long term debts or liabilities. Stability is the, company’s ability to be structurally firm and can support its long-term debts by its, equity. Profitability is the company’s ability to convert its sales into cash flow and, profit. Let us now study the other two techniques of financial statement analysis, (the vertical and horizontal analyses of financial statements of a single, proprietorship)., , Notes to the Teacher, Begin the lesson by letting the students do Activity No 1. Let the, students answer the given worksheet which will help them, perform the vertical and horizontal analyses of financial, statements of a single proprietorship., , 17

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www.shsph.blogspot.com, , What’s New, The activity below will help you check how much you know about the vertical and, horizontal analyses of financial statements of a single proprietorship, , Activity 1: “PERFORM ME”, Directions:, Based on the following information showing the Statement of, Financial Position (SFP) as of and Statement of Comprehensive Income for the year, endings December 31, 2018 and December 31,2019 of Aysid Wash and Wear, Supplies, compute the changes for each year in terms of peso value and, percentage. Write your answer on the columns provided., 2018, , 2019, , Cash, Accounts Receivable, Inventory, Equipment, Total Assets, , P 400,000, 500,000, 550,000, 850,000, P 2,300,000, , P600,000, 420,000, 350,000, 1,080,000, P 2,450,000, , Accounts Payable, Notes Payable, Owner, Capital, Total Liabilities and, equity, , P 600,000, 400,000, 1,800,000, P 2,300,000, , 270,000, 200,000, 1,980,000, P 2,450,000, , Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, Operating income, Interest Expense, Net Income, , P 1,500,000, 700,000, 800,000, 300,000, 500,000, 50,000, P 450,000, , P 1,850,000, 980,000, 870,000, 355,000, 515,000, 80,000, P 435,000, , Change in, Peso, , Change in, Percentage, , Guide questions:, , 1. What have you noticed about the changes in terms of Peso value and, percentage?, 2. Can you give some of the factors that had caused these changes?, , 18

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www.shsph.blogspot.com, , What is It, Analysis and Interpretation of Financial Statements, Financial statement (FS) analysis is the process of evaluating risks, performance,, financial health, and future prospects of a business by subjecting financial, statement data to computational and analytical techniques with the objective of, making economic decisions (White et.al 1998). There are three kinds of FS analysis, techniques:, 1., , Horizontal analysis, Vertical analysis, Financial ratios (this will be discussed further on the succeeding module), Horizontal analysis- it is a technique used for evaluating financial statements, data over a period of time. It also called trend analysis because it shows the, increases and decreases of each item in comparison with the previous years., These changes may be presented in monetary value (Phil. Peso) and, percentages using the following formulas:, Change in Peso = Current year’s balance – Prior year’s balance, Change in Percentage = (Current year’s balance – Prior year’s balance), Prior year’s balance, Example:, Net Income, , 2018, PhP 655,000.00, , 2019, PhP 932,000.00, , Change in Peso = PhP 932,000.00 – 655,000.00 = PhP 277,000.00, Change in Percentage = (PhP 932,000.00 – 655,000.00), PhP 277,000.00, = 42.29%, It can be interpreted as: Net income for year 2015 has increased by, 277,000.00, with a percentage of 42.29% as compared to year 2014., , PhP, , 2. Vertical analysis- it is a technique used that compares the relationship, between each line item of the financial statements in one given period. It is also, called common size analysis and may be used to analyze the Statement of, Financial Position (SFP) and Statement of Comprehensive Income (SCI). For, Statement of Financial Position (SFP), base amount will be the Total Assets ( it, concludes the composition of assets and the company’s financing mix- portion, 19

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www.shsph.blogspot.com, of assets financed by debt and equity) while for the Statement of, Comprehensive Income (SCI), base amount is Net Sales ( it shows how “Net, Sales” is used up by the different business’ expenses)., Example:, , For Statement of Financial Position (SFP), 2019, Cash, , PhP, , % of Assets, , 500,000.00, , 500,000/1,650,000 = 30.3%, , Accounts Receivable, , 150,000.00, , 150,000/1,650,000 = 9.1%, , Inventory, , 200,000.00, , 200,000/1,650,000 = 12.1%, , Equipment, TOTAL ASSETS, , Accounts Payable, , 800,000.00, PhP 1,650,000.00, ================, , PhP, , Notes Payable, Owner’s Capital, TOTAL LIABILITIES, AND OWNER’S EQUITY, , 800,000/1,650,000 = 48.5%, Total of the components is 100%, , 400,000.00, , 400,000/1,650,000 = 24.2%, , 150,000.00, , 150,000/1,650,000 = 9.1%, , 1,100,000.00, , 1,100,000/1,650,000 = 66.7%, , PhP 1,650,000.00, ================, , Total of the components is 100%, , It can be interpreted as:, o, o, , The largest component of asset is Equipment with 48.5%. Accounts, Receivable is the smallest component at 9.1%., 33.3% of assets are financed by debt and the rest is financed by equity., , For Statement of Comprehensive Income (SCI), Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, Rent, Salaries, Utilities, Administrative, and, other expenses, NET PROFIT, , 2019, PhP 5,300,000.00, 3,850,000.00, 1,450,000.00, 120,000.00, 385,000.00, 155,000.00, 545,000.00, PhP 245,000.00, ================, , % of Sales, 3,850,000/5,300,000 = 72.6%, 1,450,000/5,300,000 = 27.4%, 120,000/5,300,000, 385,000/5,300,000, 155,000/5,300,000, 545,000/5,300,000, , =, =, =, =, , 2.3%, 7.3%, 2.9%, 10.3%, , 245,000/5,300,000 = 4.6%, , It can be interpreted as:, o, o, , Cost of Goods Sold is 72.6% of Sales. Gross Profit rate is 27.4% of, Sales. Total Expenses is 22.7% of Sales., For every peso of Sales the business earns PhP0.046. Gross Profit, generates PhP0.274 for every peso of Sales., 20

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www.shsph.blogspot.com, , What’s More, , Activity 2: “PRAKTISADO AKO 1”, Directions: Based on the given information showing the Statement of Financial, Position (SFP) as of December 31, 2018 and December 31,2019 of Dale, Merchandising, prepare a horizontal analysis with interpretation., , Dale Merchandising, Statement of Financial Position, As of Years 2018 and 2019, 2018, 2019, Cash, PhP, 500,000.00, PhP, 350,000.00, Accounts Receivable, 150,000.00, 340,000.00, Inventory, 200,000.00, 515,000.00, Equipment, 800,000.00, 1,400,000.00, TOTAL ASSETS, PhP 1,650,000.00, PhP 2,605,000.00, ================, ================, Accounts Payable, PhP, 400,000.00, PhP, 700,000.00, Notes Payable, 150,000.00, 355,000.00, Owner’s Capital, 1,100,000.00, 1,550,000.00, TOTAL LIABILITIES AND, OWNER’S EQUITY, PhP 1,650,000.00, PhP 2,605,000.00, ================, ================, , Activity 3: “PRAKTISADO AKO 2”, Directions:, Based on the given information showing the Statement of, Comprehensive Income (SCI) for December 31,2018 and December 31,2019 of Dale, Merchandising, prepare a horizontal analysis with interpretation., Dale Merchandising, Statement of Comprehensive Income, For Years 2018 and 2019, 2018, 2019, Sales, PhP 5,300,000.00, PhP 6,980,000.00, Cost of Goods Sold, 3,850,000.00, 4,050,000.00, Gross Profit, 1,450,000.00, 2,930,000.00, Operating Expenses, 660,000.00, 1,450,000.00, Administrative and other, 545,000.00, 568,000.00, expenses, NET PROFIT, PhP 245,000.00, PhP 612,000.00, ================, ================, , 21

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www.shsph.blogspot.com, , Activity 4: “PRAKTISADO AKO 3”, Directions: Based on the given information showing the Statement of Financial, Position (SFP) as of December 31, 2019 of Dale Merchandising and the Statement, of Comprehensive Income (SCI) for December 31, 2019, prepare a vertical analysis, with interpretation., Dale Merchandising, Statement of Financial Position, As of December 31,2019, Cash, PhP, 350,000.00, Accounts Receivable, 340,000.00, Inventory, 515,000.00, Equipment, 1,400,000.00, TOTAL ASSETS, PhP 2,605,000.00, ================, Accounts Payable, PhP, 700,000.00, Notes Payable, 355,000.00, Owner’s Capital, 1,550,000.00, TOTAL LIABILITIES AND, OWNER’S EQUITY, PhP 2,605,000.00, ================, Dale Merchandising, Statement of Comprehensive Income, For the year ending December 31,2019, Sales, PhP 6,980,000.00, Cost of Goods Sold, 4,050,000.00, Gross Profit, 2,930,000.00, Operating Expenses, 1,450,000.00, Administrative and other expenses, 568,000.00, NET PROFIT, PhP 612,000.00, ================, , Notes to the Teacher, Activities 2, 3 and 4 are designed to develop and enrich students’, knowledge on the Analysis and Interpretation of Financial, Statements- Horizontal and Vertical Analyses. The activities, ensure that students’ full understanding of the lesson is, achieved., , 22

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www.shsph.blogspot.com, , What I Have Learned, At this point, let us see how much you have gained from the discussions and, activities you have undergone., , Activity 5: “PROBLEM MO, SOLVE KO”, Directions: Analyze the given situations, solve and give the appropriate answers., Use a separate sheet of paper., , 1. Wash and Wear Laundry has current assets amounting to Php, 300,000. Noncurrent assets for the year totaled Php 89,000. What, percentage of the laundry’s total assets is current assets?, 2. Read Me Book Shop has assets of PhP 2,000,000 and owner’s equity, of PhP 600,000. What percentage of the book shop’s assets are, financed by liabilities?, 3. No Melt Ice Cream parlor has liabilities of PhP 395,000 and assets of, PhP 524,000. What percentage of the ice cream parlor’s assets are, financed by the owner’s equity?, 4. Everyday Bake Shop has total liabilities amounting to Php 35,000., Total equity had an ending balance of Php 42,000. What percentage of, the bake shop’s asset is financed by the liabilities?, 5. Choose Me Boutique had the following accounts at year end: CashPhP250,000, Accounts Payable-PhP70,000, Prepaid ExpensePhP15,000, Non- current assets- PhP 500,000.00. What percentage of, the boutique’s total assets is current assets?, 6. A hotel company has owner’s equity of PhP 5,000,000, liabilities of, PhP 2,560,000 and Current Assets of 1,500,000. What percentage of, the hotel’s total assets is non-current assets?, 7. The assets of Dale’s Services showed PhP 560,000 for 2018. In 2019 it, had an increase of PhP 280,000. What was the percentage of incre ase, for total assets?, 8. Happy Selling’s Accounts Receivable amounted to Php 500,000 for, year 1, and had increased by 50% in year 2. What is the change in, peso of the Accounts receivable?, 9. Company’s Total Liabilities and Equity amounted to Php 285,000 for, year 2018. The financial statement for 2019 showed total assets of, PhP 542,000. How much is the percentage of increase for the total, assets?, 10. Total assets amounted to Php575,000 for 2018. Total equity, amounted to Php 850,000 for 2019. What is the percentage of, increase of the total equity?, , 23

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www.shsph.blogspot.com, , What I Can Do, This activity will help you transfer into real-life situations the knowledge and skills, you have gained or learned from this module., , Activity 6: Vertical Analysis and Interpretation of SFP and SCI, Directions: From these randomly ordered accounts of Dale Merchandising prepare, a Statement of Financial Position and Statement of Comprehensive Income. Make a, Vertical Analysis and interpret the results. The balances shown are as of and for, the year ending 12/31/2019., Sales Returns and Allowances, Accumulated Depreciation, Merchandise Inventory, December 31, 2019, Sales, Merchandise Inventory, January 1, 2019, Purchases, Selling Expenses, Accounts Payable, Purchase Returns and Allowances, Cash, Office Equipment, Withdrawals, Sales Discounts, Transportation-In, General and Administrative Expense, Office Supplies, Accounts Receivable, Notes Payable, Prepaid Rent, Josh, Capital, Jan. 1, 2019, Purchase Discounts, Net Income from operation, , 24, , PhP, , 11,000.00, 50,000.00, 80,000.00, 1,050,000.00, 100,000.00, 400,000.00, 190,000.00, 100,000.00, 2,000.00, 50,000.00, 220,000.00, 50,000.00, 29,000.00, 10,000.00, 200,000.00, 30,000.00, 220,000.00, 200,000.00, 100,000.00, 200,000.00, 8,000.00, 200,000.00

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www.shsph.blogspot.com, , Assessment, Directions: Choose the letter of the best answer. Write the chosen letter on a, separate sheet of paper., 1., , What is the process of evaluating risk, performance, financial health, and, future, prospects of a business by subjecting financial statement data to, computational and analytical techniques with the objective of making economic, decisions?, a. Financial statement technique, c. Financial statement comparison, b. Financial statement analysis, d. Financial statement evaluation, , 2., , What is the other term used for horizontal analysis because it shows the, percentage of change from one period to another?, a. Time analysis, c. Total analysis, b. Change analysis, d. Trend analysis, , 3., , A business had owner’s equity of PhP 2,000,000.00 for 2018 and PhP, 2,700,000.00 for 2019. What is the increase in owner’s equity?, a. 39%, c. 37%, b. 38%, d. 35%, , 4., , What is the company’s ability to convert its sales into cash flow and profit?, a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 5., , A business has liabilities of PhP 200,000.00 and equity of PhP800,000.00., What is the percentage of total liabilities to total assets?, a. 20%, c. 60%, b. 40%s, d. 80%, , 6., , It is a technique used that compares the relationship between each line item of, the financial statements in one given period., a. Horizontal Analysis, c. Vertical Analysis, b. Sequential Analysis, d. Situational Analysis, , 7., , It is a technique used in analyzing and evaluating financial statements using a, series of financial statement data over a period of time that determine the, increases or decreases of each item., a. Horizontal Analysis, c. Vertical Analysis, b. Sequential Analysis, d. Situational Analysis, , 8., , In vertical analysis of financial statements, what will be the base amount if the, Statement of Financial Position will be analyzed for the period?, a. Total Assets, c. Total Equity, b. Total Liabilities, d. Total Liabilities and Equity, , 25

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www.shsph.blogspot.com, 9. During the period Dale Merchandising reported net sales amounting to PhP, 2,875,000.00, gross profit of Php 1,515,000.00 and operating expenses of PhP, 718,000.00. What is the percentage of cost of goods sold to net sales?, a. 43%, c. 46%, b. 45%, d. 47%, 10. Based on the data given on item no. 9, what will be the percentage of net, income to net sales??, a. 28%, c. 26%, b. 25%, d. 27%, 11. It pertains to the company’s capacity to pay long term debts or liabilities., a. Solvency, c. Liquidity, b. Profitability, d. Stability, 12. A business had net sales of PhP 5,956,000.00 for 2018 and PhP 4,898,000.00, for 2019. What is the percentage of net sales?, a. -19%, c. -17%, b. -16%, d. -18%, 13. The company’s ability to pay debts that are coming due (short term debt) is, called what?, a. Solvency, c. Liquidity, b. Profitability, d. Stability, 14. If current assets are PhP 550,000.00 and total assets are PhP 3,050,000.00., What is the percentage of non-current assets?, a. 82.97%, c. 83.75%, b. 81.97%, d. 84.20%, 15. The company’s ability to be structurally firm and can support its long-term, debts by its equity., a. Solvency, c. Liquidity, b. Profitability, d. Stability, , 26

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www.shsph.blogspot.com, , Additional Activities, Let us reinforce the skills/knowledge that you have gained from this lesson by, doing the next activity., , ACTIVITY 7: “BUSINESSIKAT SA PANAHON NI PANDEMIK”, Directions: Identify a particular business in your locality that has boomed during, this time of pandemic and answer following guide questions., Guide Questions:, 1. What did you feel while you were doing the activity?, 2. What do you think are the reasons that the particular business you have, identified became a booming business in this time of pandemic?, 3., , How does this particular business operate? How does it sell its products?, , 4. How fast will its inventory/ supplies will last?, 5. How will it collect its sales or receivables?, 6. Do you think it will be able to generate income for every peso of the owner’s, investment? How?, Rubrics in Rating Activity 7: “BUSINESSIKAT SA PANAHON NI PANDEMIK”, Standard, , Identifying one’s own assets, liabilities and equity, , 5, , Able to identify a business and comprehensively and clearly, answered the guide questions., , 4, , Able to identify a business and satisfactorily and clearly, answered the guide questions., , 3, , Able to identify a business and fairly and clearly answered the, guide questions., , 2, , Able to identify business and provided short discussions on the, guide questions., , 1, , Able to identify a business and provided a little idea about the, guide questions., , 27

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LESSON, 1. P, 2. P, 3. P, 4. P, 5. P, , 28, What I Know, 1., 2., 3., 4., 5., , A, C, B, D, B, 6., 7., 8., 9., 10., , 11., 12., 13., 14., 15., , LESSON 1- Activity 1, “MATCH IT”, , D, B, D, D, D, , 1. D, 2. F, 3. I, 4. H, 5. A, 6. C, 7. B, 8. I, 9. G, 10. E, , C, A, A, D, A, , 1 - ACTIVITY 2: GERLIE’S BREAD AND PASTRIES, 9,900.00 ( .50 X P109,800)- P45,000, 2,160.00, 76,860.00 (.70X 109,800), 55,000.00, 7,560.00 ( Total Liabilities and Equity – Total Current Liabilities- Other, Long-term Liabilities – Owner’s Capital ), , 6. P 191,860.00, LESSON 1 - ACTIVITY 3: AYSID WASH AND WEAR SUPPLY- PART1, 1. Current Ratio, 2.42, 2. Quick Ratio, 1.5, 3. Working Capital Ratio P850,000, (Interpretations may vary depending on the student’s analysis), LESSON 1 - ACTIVITY 4: AYSID WASH AND WEAR SUPPLY- PART2, 1. Debt to Asset Ratio .43, 2. Debt to Equity Ratio .77, 3. Equity Ratio, .57, (Interpretations may vary depending on the student’s analysis), LESSON 1 - ACTIVITY 5: LET THE PROBLEM SOLVE IT, 1. 5.07, 2. 1.39, 3. 2.18, 4., .50, 5. .62, (Interpretations may vary depending on the student’s analysis), LESSON 1 - ACTIVITY 6: TJ BAKES, a. Gross Margin Ratio - .65, b. Operating Margin Ratio -.48, c. Net Income Margin - .47, (Interpretations may vary depending on the student’s analysis), , Answer Key, www.shsph.blogspot.com

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29, , Lesson 2 – Activity 1 Perform Me, 2018, , 850,000, , Equipment, , 550,000, , Inventory, , 500,000, , Accounts Receivable, , 400,000, , Cash, , Total Assets, , 2,300,000, , 400,000, , Notes Payable, , 600,000, , Accounts Payable, , 1,500,000, , Sales, , 2,300,000, , Total Liabilities and, equity, , 1,800,000, , Owner, Capital, , 500,000, , Operating income, , 300,000, , Operating Expenses, , 800,000, , Gross Profit, , 700,000, , Cost of Goods Sold, , Interest Expense, Net Income, , 50,000, 450,000, , 2019, 600,000, , Change in Peso, 200,000.00, , 150,000.00, , 2,450,000, , 230,000.00, , 1,080,000, , 200,000.00, , -, , 350,000, , -, , 420,000, , 80,000.00, , 30,000.00, , 80,000, , 15,000.00, , 515,000, , 55,000.00, , 355,000, , 70,000.00, , 870,000, , 280,000.00, , 980,000, , 350,000.00, , 1,850,000, , 150,000.00, , 2,450,000, , 180,000.00, , 1,980,000, , 200,000.00, , -, , 200,000, , -, , 270,000, , 435,000, , -, , 330,000.00, , 15,000.00, , Change in, Percentage, 33%, -19%, -57%, 21%, , 6%, -122%, -100%, 9%, 6%, , 19%, 29%, 8%, 15%, 3%, 38%, -3%, , Answer Key, www.shsph.blogspot.com

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30, LESSON 2- ACTIVITY 2: PRAKTISADO AKO 1, Dale Merchandising, Statement of Financial Position, As of Years 2018 and 2019, 2018, 2019, Difference, , 800,000.00, , Equipment, , 200,000.00, , Inventory, , 150,000.00, , Accounts Receivable, , 500,000.00, , Cash, , 150,000.00, , Notes Payable, , 400,000.00, , Accounts Payable, , 1,650,000.00, , TOTAL ASSETS, , 1,650,000.00, , TOTAL, LIABILITIES AND, OWNER’S EQUITY, , 1,100,000.00, , Owner’s Capital, , %, , 955,000.00, , 2,605,000.00, , 450,000.00, , 1,550,000.00, , 205,000.00, , 355,000.00, , 75.0%, , 300,000.00, , 700,000.00, , 57.9%, , 955,000.00, , 2,605,000.00, , 600,000.00, , 1,400,000.00, , 315,000.00, , 515,000.00, , 190,000.00, , 340,000.00, , -150,000.00, , 350,000.00, , -30.0%, 126.7%, 157.5%, 75.0%, , 136.7%, , 40.91%, 57.9%, , Dale Merchandising, Statement of Comprehensive Income, For Years 2018 and 2019, , 367,000.00, , 612,000.00, , 245,000.00, , 323,000.00, , 868,000.00, , 545,000.00, , Administrative and, other expenses, NET PROFIT, , 790,000.00, , 1,450,000.00, , 660,000.00, , Operating Expenses, , 200,000.00, 1,480,000.00, , 4,050,000.00, 2,930,000.00, , 3,850,000.00, 1,450,000.00, , Cost of Goods Sold, Gross Profit, , 1,680,000.00, , 6,980,000.00, , 5,300,000.00, , Sales, , Difference, , 2019, , 2018, , %, 32%, 5%, 102%, 120%, 59%, 150%, , Answer Key, www.shsph.blogspot.com

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31, LESSON 2- Activity 5:, “PROBLEM MO, SOLVE KO”, 1. 70%, 2. 70%, 3. 25%, 4. 45%, 5. 33%, 6. 80%, 7. 50%, 8. PhP 250,000.00, 9., 90,000.00, 10., 48,000.00, , Assessment, , 1., 2., 3., 4., 5., 6., 7., 8., , B, D, D, B, A, C, A, A, , LESSSON 2- ACTIVITY 4: “PRAKTISADO AKO 3”, Dale Merchandising, Statement of Financial Position, As of December 31,2019, Cash, 350,000.00, 13.4%, Accounts Receivable 340,000.00, 13.1%, Inventory, 515,000.00, 19.8%, Equipment, 1,400,000.00, 53.7%, TOTAL ASSETS, 2,605,000.00, Accounts Payable, 700,000.00, 26.9%, Notes Payable, 355,000.00, 13.6%, Owner’s Capital, 1,550,000.00, 59.5%, 2,605,000.00, , 9., 10., 11., 12., 13., 14., 15., , D, A, A, D, C, B, D, , LESSON 2, Activity 7:, Students’ answers, might vary. Scoring, will be based on the, Rubrics, , Dale Merchandising, Statement of Comprehensive Income, For the year ending December 31,2019, Sales, 6,980,000.00, Cost of Goods Sold, 4,050,000.00, 58.0%, Gross Profit, 2,930,000.00, 42.0%, Operating Expenses 1,450,000.00, 20.8%, Administrative and, 568,000.00, 8.1%, other expenses, NET PROFIT, 612,000.00 8.8%, , Answer Key, www.shsph.blogspot.com

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www.shsph.blogspot.com, , References, , Monfero, R.P. , et. Al. Teaching Guide for Senior High School: Fundamentals of, Accountancy, Business and Management 2. Philippines: Published by, Commission on Higher Education (CHED), 2016, De Guzman, A. Fundamentals of Accountancy, Business and Management 2 For, Senior High School. Philippines: Lorimar Publishing, Inc., 2018, Ballada, W. Fundamentals of Accountancy, Business and Management 2 Made, Easy. Philippines: DomDane Publishers, 2018, , Internet resources:, http://www.business-planning-for-managers.com/maincourses/finance/financial-ratios/stability-ratios/ Date retrieved: September, 30, 2020, http://www.theel1tetrader.com/2015/05/4-financial-stability-ratios.html, retrieved: September 30, 2020, , 32, , Date