A.

Liquidity Ratios GFC has a good indication of efficient use of their resources because from a very low liquidity ratio of 2007, which shows that it has a low possibility that it can pay its short-term debt as they become due, company was able to increase it every year. And also in 2011, almost half of its Current Liabilities was paid wherein the amount used for its payment was from its collection of accounts receivables.

B. Profitability Ratios GFC net income for 3 consecutive years (2007-2009) has significantly increase from 376,971 in 2007 to 811,965 in 2008, and 1,666,946 in 2009, which increased for more than fifty percent (50%). These increases were due to controlling their operating expenses, which only increased by .5% in 2008 and even decreased in 2009, which is favorable. Then in 2010-2011 it continually decreased. Even though the gross profit increased during those years, expenses specially items in administrative expenses like janitorial services (increased of 92%, 2010) associated with it also increases, which means that they do not control their costs during these years. Therefore, its gross profit margin ratio and return on investment were also affected by these significant decreases in 2010-2011.

C. Activity Ratios GFC continuously improved its implementation of credit policies because annually its Accounts Receivable turnover increases and collection period decreases. These indicate that the policies are effective and the company is receiving its payment for services or goods in a timely manner and they are realizing its profit. These increase in cash inflows are used to

pay their payables, so notice that the accounts payable turnover increases while the payment period decreases. D. Stability And Solvency The negative and over 100% ratios in year 2008 and 2007 were due to deficit in retained earnings (resulted from cumulative losses from previous years) which is higher than their share capital. During these years, funds are financed by creditors and assets are owned by them which is very risky for the company. But as years pass by, they manage to reduce it because as we noticed the companys liquidity ratios continuously improve which is a sign of better financial strength. But still their debt and debt to equity ratios still connotes high proportion of debt to creditors which may lead to unwillingness for them again to lend.

EVALUATION AND RECOMMENDATION After studying the Financial Statement of Gracious Food Corporation certain problems were found but still they were able to overcome it continuously. But what we had noticed is that while their sales increases their expenses especially also increases significantly which indicate that they need to monitor them regularly. Since they also continuously reduce their payment period by immediately using their collections to settle their short-term obligations. It is recommended to extend their payment period so that they can invest or use to maximize their funds.

GRACIOUS FOOD CORPORATION, Inc

In Partial Fulfilment of the Requirements in Management Accounting

Submitted by: Bristol, Prudylyn R. Dulnuan, Marjorie Hadap, Vircita Greth Drika Javonitalla, Krizelle Arah Valencerina, Caronette Francois

Submitted to: Mrs. Jasmin May Baniaga

April 16, 2013