Question

Describe the process by referring to the financial ratio of how the numbers in the statement of financial position came about.

Financial Ratio

Flow rate: 120%
checking ratio: 60%
Total Asset turnover: 0.73
Bond turnover: 4.0
Debt ratio: 214%

assets	Amount	liabilities, negative debt	Amount
cash and securities	200	current liabilities	1002.5
accounts receivable	401.5
inventory assets	601.5	Long-term borrowings	663.94
non-current assets	997
total assets	2,200	equity capital	700.64
X	X	debt, capital aggregate	2,200

(PLEASE NO CALCULATE FOR DOLLAR)

1 WON=1, 10,000 WON = 10,000

Answer 1

Given,

Flow Ratio = Current Ratio = (Cash and securities +Acounts receivable+ inventory assets)/Current liabilities

=(200+401.5+601.5)/1002.5 =1.2 = 120%

Checking ratio=Quick Check ratio = (Cash & securities + Accounts Receivable)/Current liabilities

= (200+401.5)/1002.5=0.6=60%

Total Asset turnover = Sales/avg assets of previous and current year)

Assuming average assets to be 2200. The sales can be estimated as, sales= 0.73*2200 = 1606

Bond Turnover ratio = 4

BBonds turnover is a measure of liquidity in the financial market. Here, the bond ratio of 4 means the bonds held by company were traded 400% of the total number of bonds held by the company.

If we assume only long term borrowings to be bonds, then value of bonds traded = Bond Ratio * Long term borrowing = 4* 663.94 =2655.76

Debt Ratio = Total Debt/Total Equity = (Total Assets-Equity Capital)/Equity Capital

= (2200-700.64)/700.64

= 2.14

=214%